Capital financing for your business is available from a variety of sources, including both commercial and government sources. Be prepared to request financing. Prepare a business plan in advance of your request for financing.

Commercial banks are the most visible lenders to small business, although many savings and loan associations also offer business loans. The lender will want to see your business plan, including a cash flow analysis. The specific reason for the loan and your plans for repayment will also need to be carefully spelled out. The loan officer will want assurance that the firm’s management is capable. In short, the commercial lender wants to keep lending risks to a minimum. Finally, don’t expect the lending institution to provide all of your capital needs. Your banker generally wants to see at least 20 percent of your own money up front as security to guarantee the loan.

If your chances of obtaining a business loan from a commercial source are slim you still have several options. You can use personal assets as collateral, this means taking out a personal loan rather than a business loan. You shouldn’t have much trouble with the concept of mortgaging your house if you really believe in your business idea. However, this decision should not be taken lightly, since it does put your family home at risk if the business fails. Another option is a Small Business Administration (SBA) guaranteed loan.

Under its guaranteed loan program, the SBA will guarantee a loan offered to an applicant by a bank that participates in the SBA lending program. Keep in mind that the loan application must meet both the bank’s and SBA’s loan application requirements. In addition, the applicant’s reason for applying for a guaranteed loan can not include credit unworthiness. The SBA has the option of being a little more lenient about factors such as real estate value and inventory assets in the application process. Your local SCORE® office can help you determine your chances of obtaining a loan. In addition, counselors can describe the various guaranteed loan programs the SBA offers and suggest the loan that may make the most sense for your business. Call upon SCORE® for business counseling related to applying for a business loan.

SCORE® counseling is offered as a free and confidential service. More than 3.5 million Americans have benefited from SCORE® counseling. If you are opening a new business or writing that first in-depth business plan, complete with budgets—call SCORE®. SCORE® offers a free workbook "How To Really Start Your Own Business," as part of a three-session counseling program to help you develop a solid business plan with realistic budget goals. For a referral to the SCORE® chapter nearest you, call 1 (800) 634-0245.