Q:  Isn’t the SBDC only for start-ups?

A:  While the SBDC certainly has information helpful to those starting a business, our primary function is accelerating the high-growth potential of existing and emerging businesses, to become more innovative and competitive.

Q: What types of business issues do you help with?

A:   Customized services are delivered by a team of professional business consultants with a diverse and comprehensive array of knowledge and expertise. We do not do the work for you, but we equip you with the information and resources that you need. Below are some of the areas in which our consultants provide relevant and realistic advice:

  • Business plan development
  • Access to capital and loan packaging
  • Business operations
  • Cash flow management and financial analysis
  • Bookkeeping and QuickBooks
  • Marketing and market research
  • Website and social media
  • Buying or selling a business
  • Business valuation
  • Turn-around assistance for distressed businesses
  • Start-up assistance

NOTE:  SBDCs cannot provide individual legal advice or engage in public accounting, including rendering tax advice.

Q: Are your services free?

A: Yes. Absolutely. Really. Thanks to the support of the U.S. Small Business Administration and matching funds from regional partners. Nominal fees may be charged for training workshops to cover costs related to speakers, materials or refreshments.

Q:  What will my consultant do for me?

A:  Once we receive your completed Application for Services, a consultant will contact you as soon as possible, generally within several business days. At your initial meeting, your consultant will review your business plan, proposal or need, determine a course of action and identify areas that each of you will be responsible for completing.

You can expect that all proprietary information shared with your SBDC consultant will be kept confidential and will be accessible to the SBDC only for the sake of providing further assistance. The SBDC will not disclose the contact information of any individual or business without consent from the business owner(s) or unless required by law.

Q:  Is there a limit on how many times I can see a consultant?

A:  The SBDC does not guarantee the time it may take to complete services.  Consulting engagements typically remain open as long as both parties feel worthwhile progress is being made. The working relationship may be limited by time or budget constraints and ongoing demand for the services of the SBDC.

Q:  Does the SBDC provide financing?

A:  The SBDC does not provide financing. However, we help you assess what you need and identify appropriate sources. We can also advise you on how to improve your business plan and loan application.

Q: How do I finance my start-up business?

A: Committing your own funds is often the first step. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. You may want to consider a partner for additional financing.

Most businesses are financed out of a combination of owner’s equity (owner’s investment) and a commercial loan. If an entrepreneur were seeking a commercial loan, a lending bank typically expects at least 10 – 20 percent of the needed dollars to come from the entrepreneur.  Banks may vary substantially in their lending practices.

Q: What about grants?

A:  Despite what you may have heard, grants given to start-ups are extremely rare.

Some business grants may be available through federal and state programs, as well as the private sector, for research & development, high-tech businesses or highly specialized areas. These grants usually are not free money, and may require the recipient to match funds or combine the grant with other forms of financing. The amount of the grant available varies with each business and each grantor.

Government grants are supported by your tax dollars and often tied to specific agency agendas such as the Department of Energy or the Department of Agriculture.  Therefore, they require very stringent compliance and reporting measures to ensure the money is well spent. Grants are typically for nonprofit and educational organizations, not for-profit businesses. Announcements for grants will appear on grants.gov.

Q: How can I get an SBA loan?

A: The SBA does not make direct loans; you must work with a bank. You can think of the SBA as a level above your bank that is providing incentives to your bank to make it easier for you to get debt financing. The bank plays a major role in evaluating your loan application and administering the loan. The bank’s agreement is necessary before the SBA will participate.

Q: How important is my credit score when I am seeking a commercial loan?

A: A borrower’s credit score is critical to the approval of a commercial loan. While there are occasional exceptions, most lenders want a credit score of 650 or better for a commercial loan. In addition, a recent bankruptcy (last seven years) is almost always a stumbling block.

Q: Do I have to have experience in the business I am considering in order to have a reasonable chance of success?

A: Realistically, there is a high failure rate for start-up businesses. Successful entrepreneurs usually have a solid understanding of their new ventures. This means that they or members of their management team have operated a similar business before, or that they have unique skills and contacts that enable success. Your odds of success are going to be much greater if you are taking on risks that you understand. If you are going to need a loan to get your business started, most lenders will strongly prefer that you are experienced in the new business.

Q: Who are the most important key advisers for my business?

A: Key advisers should be knowledgeable about small business issues in general and about your specific type of business in particular. Over the long haul, you will benefit from these trusted advisers:  accountant, attorney, insurance agent and banker. You should also include your SBDC consultant.

Q:  Who funds the SBDC?

A:  Minnesota SBDCs are supported by a mix of funds from the U.S. Small Business Administration (SBA), State of Minnesota (DEED) and matching funds from many regional support partners.  The South Central Minnesota SBDC is also supported by our host, Minnesota State University, Mankato.