What/How are the shortest steps 2 getting a small bus loan/grant? How 2 cut the red tape? How much cap $ need?

Question

Looking to start a small neo soul/mordern breakfast/coffee house near universities. How much credit and capital do we need vs grants and loans? Do we need any % of the start up capital if getting a loan or grant? Pitfalls? Short route around un-necessary steps and red tape? Goverment loans and grants? Incentives? What is available? Websites? Software?

We already have costs formulated, lease, equipment, payroll, remodeling, licensing etc. What % of these will we need to bring to the table?
Referral to top notch grant writer? Worth the cost?

Thanks

Answer 1

If you want to deal with the government, there's no such thing as shortest step and cutting through the red tape. Government means slow.

You stand a greater chance of getting a government-guaranteed loan through the Small Business Administration http://www.sba.gov/financing than a government grant. Read the SBA Financing page to learn about criteria needed for borrowing

It is hard to find grants to start a business. Unlike the myths that some perpetuate, federal government and even private foundations hardly give grant money for a for-profit business. And yes, grants mean PAPERWORK - lots and lots of it, that is why a cottage industry of grant writers was born.

Nonetheless, you can go to the Catalog of Federal Domestic Assistance (CFDA) http://www.cfda.gov and Grants.gov http://www.grants.gov - these are two sites created by the federal government to provide transparency and information on grants. Browse through the listings and see if you can find any grant that would support a for-profit venture.

Even SBA does NOT give out grants. From the SBA website http://www.sba.gov/mostrequesteditems/CON_FAQ2.html

"The U.S. Small Business Administration does not offer grants to start or expand small businesses, although it does offer a wide variety of loan programs. (See http://www.sba.gov/financing for more information) While SBA does offer some grant programs, these are generally designed to expand and enhance organizations that provide small business management, technical, or financial assistance. These grants generally support non-profit organizations, intermediary lending institutions, and state and local governments."

Here is a listing of federal grants for small businesses. See if there is any available for individuals for starting a business -- THERE'S NONE.
http://12.46.245.173/pls/portal30/CATALOG.BROWSE_BENEF_RPT.show

However, if you're applying for a loan and if it is a big amount, banks and even the SBA may consider these factors:

- A business plan explaining what the business is

- Your background and experience in the business -- in my experience, this is KEY in the eyes of the bank because they want to make sure that you know what you are doing and that you can make the business work. If you don't have any experience with the business, have someone on board that knows the business to give banks assurance that someone will guide you

- Your credit factors because it shows your dependability and how well you handle credit. They will do a credit check on you and poor credit history may be frowned upon, or even reason for the disapproval of your loan application

- Your collateral. Banks, even SBA guaranteed loans, want the borrower to show collateral. They want to be guaranteed that somewhere somehow they can get payment from you

- Condition or terms of loans. Banks would want to know three important things: "How much money are you requesting? What will it be used for? and For how long will it be needed?" Banks oftentimes prefer to approve loans for items that can be identified, has lasting value, and can be repossessed and sold if things fail.

- Banks and even SBA hardly gives 100% loan so you need to have your own equity investment of at least 20% (though the more equity investment you have, the greater your chance for getting the loan)

Answer 2

There are basically 3 sources for grants ...

Federal government
Local (city) government
Private foundations

The feds only give grants for innovations. Check http://www.sbirworld.com for details. I don't believe this is a viable option.

Some cities provide grants to help create business in depressed areas. Check at your city government offices to see if anything is available. The city I live in offers small grants if you create a retail business downtown.

Foundations provide grants for very specific things. Here's a list of foundations. It will take quite a bit of time to go through them, but you might find something. http://www.foundations.org/grantmakers.html

Business loans are relatively easy (compared to grants). My best advice is to contact your local Small Business Development Center office (do a google search) to assistance.

Answer 3

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