Financial Planning

Because financial circumstances vary for all new business start-ups, there is no generic approach to funding a venture.  What is consistent however, is the need to invest time in properly estimating start-up costs and exploring available funding options; efforts that can only add value to your business in the future.

Exploring Your Options

The Michigan Small Business and Technology Development Center offers several useful tools to assist in your determination of financial need and borrower qualification, as well as general information required by most lenders:

• Options.  Types of financing sources available.

• Comparisons.  Risk and benefit analysis of financing sources.

• Financing Checklist.  Information required by most lenders.

Financial Statements

Lenders often require projected financial statements, or cash analysis spreadsheets accompanied by a written narrative.  This financial picture will make or break your opportunity to secure funding, as it will demonstrate your ability to generate income and achieve your financial goals. Some excellent models include:

• Spreadsheets.  The SBTDC provides blank cash analysis spreadsheets for your use, as well as examples of completed financial plan documents.

• Templates.  SCORE offers numerous downloadable templates including financial statements and outlines for bank loan requests.

Other Resources

• FAQ's.  The U.S. Small Business Association offers extensive information and articles regarding small business financing.  A good place to start is in the site's "Frequently Asked Questions About Business Financing" section. 

The Truth About Grants

Generally speaking, grants are not available from federal, state or local units of government to start a business.  Infomercials and other forms of media attention have led to widespread misunderstanding about the availability of capital to fund for-profit businesses.

But that is not to say that grants don’t exist. They are specific, difficult to receive, and come with very stringent guidelines for results, bookkeeping and reporting.  Most importantly, grant requests must clearly demonstrate some type of long-term benefit to the overall population or community, generally measured in number of jobs created or retained, or in the amount of private investement the grant will leverage.  

Alternative Funding

Non-traditional funding sources are an alternative to grants.  Your gender, industry, or other criteria may qualify you for low cost loan programs and competitions.  Cities seeking to attract new business to their area are another source for incentives or low cost loan programs.  Check with your city’s planning or development department, or local Chamber of Commerce for more information.

If you choose to explore grant or alternative funding options, some excellent resources include:

• Grants.  The SBTDC's grant and alternative funding resource page.