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Using The Government To Get Funding For Your New Business
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There are a variety of options for new entrepreneurs to acquire funding for their new businesses. It is beneficial that they comprehensively research their choices to ensure they find an option that is best suitable for their unique situation. One of the things that new business owners need to consider is the level of control they want over their company. If company founders do not want to share control with other partners, then options such as angel investors and venture capitalist funding are not good alternatives. Since many entrepreneurs do not have enough disposable income to fully fund a new business, then they will have to explore other options to obtain business capital.

What the Small Business Administration can do for you
One way to get funding for a new business is to utilize the help of the government. There is different options available for small business owners from government and local authorities in the form of low-cost loans and grants. While the Small Business Administration does not provide this type of financial assistance directly to entrepreneurs, they do work alongside local banks that will offer such funding to qualified applicants.

SBA grant requirements
The SBA will be able to advise the proper options that are available for an entrepreneur’s type of business from a list of federal and state grants. State-funded grants are non-repayable but extremely competitive to obtain. Such incentives are often given to businesses in certain industries and locations, particularly in areas that are being revitalized and in fields such as education, science, research, engineering, and/or non-profit ventures.

Often times, grants are awarded to encourage and assist small business entrepreneurs by stimulating local economic development through employment opportunities and community involvement. Female entrepreneurs and ethnic minority groups are probably the largest recipients of small business federal grants. The SBA encourages small business development in these fields by not only giving access to business capital but also educational, training, and networking opportunities to make their businesses thrive.

SBA loan requirements
Through local lending institutions, the SBA acts as a guarantor to those who qualify for small business loans. The loans are usually offered at very reasonable rates; however, the borrower must meet certain criteria in order to obtain such funding. One requirement of the applicant is to have a strong credit rating because it is indicative of their repayment history and financial motivation to pay off any existing debt. Applicants who have poor credit ratings and/or have filed for bankruptcy in the past demonstrate their difficulties in paying back any borrowed money and will most likely be unapproved for federal and state loans.

The second requirement for approval of SBA loans is the entrepreneur’s personal investment in his/her own business. The business owner is required to have invested at least 25% to 50% of their own personal capital of the loan amount requested. By investing his/her own capital in a company, the entrepreneur will show others they truly believe in their business ideas and are serious in moving their company forward.

Another major prerequisite for SBA loan approval is a comprehensive business plan. This plan should detail the company’s objectives and how the new business will distribute the prospective loan amount in order to stay financially sound throughout its development. It is necessary for every entrepreneur to have a solid business plan and confidence in their investment. It may also help if a new business owner has established a good relationship with credit rating firms and/or have prospective traders and suppliers who are willing to work with them should the company successfully launch. In this manner, an entrepreneur can add credibility to their loan application process.

Conclusion
Finding ways to raise capital for a new business is perhaps one of the most stressful aspects a new entrepreneur will face. From angel investors to bank loans, the choices are numerous. By conducting research, a new business owner will be able to find an option that is most compatible with their unique situation. If they do not like the idea of sharing ownership with others, then angel investors and venture capitalists may not be a viable option to consider. However, with the help of the SBA and certain criteria, they may be able to qualify for federal small business loans and grants.

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