Frequently Asked Questions
- How does the SBDC help existing small businesses?
- Who sponsors the SBDC?
- How much do SBDC services cost?
- Does the SBDC lend money?
- Can the SBDC be a guarantor and help get a loan?
- Does the SBDC work with existing business owners?
- Can I receive government financing with poor credit?
- Does the government offer special programs for minorities?
- What is the first step I need to take to start my own business?
- What is a business plan and do I need one?
- How much money will I need to get started?
- How do I obtain financing to start my business?
- What is the first step to getting a business loan?
- With all the TV commercials and Internet ads of business start-up help books and programs, how do I know if what I have is a legitimate "business opportunity?"
- Can I operate my business from home?
- Can I get a government grant to finance my business?
- What type of businesses receive grants?
SBDC counselors can help existing small businesses with issues such as, cash flow management, inventory control, hiring employees, obtaining sources of capital, market expansion and government contracting.
The Small Business Development Center was established in 1978 and operates with funds from university, federal, and state grants. A consortium of four universities (University of South Carolina, Clemson University, Winthrop University, and South Carolina State University) operates the program. A state director operationally oversees the plans of the consortium.
SBDC counseling is free, provided you comply with the definition of a small business.
The SBDC is not a lender but it can help you get in touch with lenders familiar with your situation.
The SBDC is not a guarantor. But it can help you create your business plan and loan application.
Yes. The SBDC works with existing business owners by offering counseling in various areas from financing capital expansion to developing a company web site. The SBDC also sponsors a series of seminars designed to educate business owners on various software packages.
For an applicant to receive SBA financing, you must first meet the credit requirements of your local lender. Only after these requirements are met is your application forwarded to the SBA. The SBDC uses financial analysis software to determine if new clients are likely to qualify for financing. For those clients that do not qualify, the SBDC offers counseling on alternative sources of financing.
Yes. The SBA has both Women's and a Minority Prequalification program. To qualify, the business must have at least 51% woman or minority ownership. The applicant must meet the SBA's qualifications for assistance. For more information on the SBA's minority and women's prequalification program, click here.
The Small Business Development Center offers workshops for prospective business owners. Our consultants meet with clients to discuss issues involved with starting and financing a small business.
A business plan is a formal document that provides potential lenders, investors and other parties a summary of your business. The business plan serves as a resume of the business and defines the firm, operations and goals. It is an action plan that provides a roadmap of where the firm currently is, where the owner wants the firm to be, and the resources and assistance needed to get the firm to where it should be. A business plan is necessary for entrepreneurs starting a business or facing changes within their business. SBDC consultants provide qualified entrepreneurs with assistance in formulating business plans for loan application packages. For a business plan template, click here.
The financial needs for start-up businesses vary with the nature and type of each business. Generally, lenders expect that you have at least a 15-20 percent equity position (your own personal investment that is free of debt) in your business in order to get financed. You also should have sufficient funds to cover the costs of operating expenses. These expenses include items such as insurance, rent, salary and money to repay the loan. Accurately determining your cash flow needs is crucial to a successful start-up. Insufficient start-up capital is a leading cause of business failure.
The primary source of capital is your own personal funds. Your willingness to commit your own funds is the best indicator of how serious you are about your new business venture. It boosts others confidence in your business and builds your credibility as a business owner. Other sources of capital include family, friends, taking a partner, banks, commercial finance companies, venture capital firms, local development companies and life insurance companies. Meet with a SBDC counselor to determine the types of funding for which you qualify.
The first step in acquiring financing is preparing a business plan. A business plan is required by most lenders and illustrates in writing that you have done necessary research, developed a plan of action and can demonstrate that you have the knowledge and experience to operate the business. Your business plan must provide projected financial statements, business goals, strategy, legal structure, ownership information, location and production facilities, as well as your experience and management capabilities and the expertise of any other key personnel. Click for a Business Plan Template.
There are many scams attempting to lure potential business owners. The Federal Trade Commission has developed guidelines to help protect people from such scams. For more information refer to www.ftc.gov
Before moving ahead with the advertised business opportunity, you need to ask yourself some basic questions such as:
- Is there any information available about the company or the inpidual? Is the information from a credible and reliable source?
- Does the Better Business Bureau have any reports on the company? Is so; are these reports negative or positive?
- Does it sound too good to be true?
- Am I being pressured in any way?
- Are there any risks involved and is there a chance of me losing all of my investments?
- Is the company or inpidual making unrealistic promises such as make $3 million in the first year?
- Am I expected to pay dues or membership fees to the company? Or am I asked to pay a fee to access the information advertised by the company or inpidual? Can I find this information for less elsewhere?
Yes, many new small businesses are operated out of homes.
No, despite the claims of advertisements and commercials the SBA does not grant awards or funds to start for-profit businesses. On occasion, the government may grant a for-profit small business an award; these grants are very specifically focused on very unique purposes, such as working with disadvantaged children. Such grants are restricted and monies from them cannot be used for general business operating purposes or to cover start-up costs.
Beware of scams that promise prospective business owners books and directories supposedly listing grant programs for entrepreneurs for a certain fee. After extensive research, SBDC counselors have found these offers to be fruitless and a waste of the entrepreneur's money and efforts. For more information on grants, click here.
Grants are highly competitive with a granting agency receiving 10-100 applications for every grant available. To successfully receive a grant, the applicant is likely to be well-networked with key entities such as known non-profit organization, political figures and agency professionals. When applying for a grant, the application has to be specifically responsive to the needs of the granting agency. Normal businesses such as a restaurant or a retail shop are started every day without the support of grants. You cannot state what you like, rather you have to comply with the wants and needs of the granting agency. Understanding the granting agency's needs and requirements is a key factor in the application process. For more information on grants, click here.