The vast majority of government loans programs – state and federal – are called guaranteed loans. To apply for these loans, a business owner contacts a bank or other financial institution which applies to the government for a guarantee on the loan. There are also other forms of private financing for business owners. The Financing Chapter of the Startable Business Resource Book outlines many of these options. Before speaking to a bank or any seeking any other type of financing, a business owner should realize two important factors:
- It is very difficult to finance new businesses. The majority of financial resource for a new business will come from the personal assets of the owner and their family and friends. Banks and the government prefer to see a two or three-year business history before making a loan, regardless of the age of a business. While this does not eliminate the possibility of financing, it makes the second factor even more important.
- A complete and well-written business plan is critical to any type of financing. SBDC centers provide free one-on-one consulting to assist business owners in the writing of their business plan. The Business Plan Chapter of the Startable Business Resource Book provides a basic outline for writing a business plan.