Make sure you're prepared with a well-thought-out business plan.
You'll get myriad questions about your business model, how you expect to make money, who your competitors are and why your product or service may be in demand. Your business plan should cover all those issues, so potential financiers can be confident that you've done your homework.
Be passionate, persistent and patient. You may hear plenty of no's from potential investors before you get a yes.
Stephen D. Umberger, director of the Small Business Administration's Baltimore District Office, suggests entrepreneurs approach their banks first. You may already have a relationship with a bank that participates in the SBA's most-used loan program, called 7(a). Participating banks make loans to borrowers, but the SBA provides a guaranty on a portion of the loan.
The maximum borrowing amount is $2 million with a 75 percent SBA guaranty, according to Umberger.
Umberger's office, which covers most of the state, except Prince George's and Montgomery counties, administered the guaranty of 988 loans representing $134 million in the fiscal year that ended Sept. 30, 2007.
"When a potential borrower goes to their lender looking to start up or expand their business, and they are unable to meet traditional lending requirements, the SBA guaranty could help overcome that obstacle," he said. "There are many situations in which the SBA guaranty is an attractive option, such as an insufficient down payment or longer-term repayment requirement."
Besides the federal government, check out state, county and local development offices, which offer other loan and funding opportunities.
In Maryland, where biotech commercialization is a priority, the state's Department of Business and Economic Development runs the Maryland Venture Fund, a seed and early-stage equity fund that invests in technology and life sciences companies. The fund is just one example of available programs.
Even better than loans are grants, which entrepreneurs don't have to repay. Fishback, of the Kauffman Foundation, noted the federal government's Small Business Innovation Research program, which provides grants for research and development that fit the needs of various federal agencies.
Another option is equity funding in the form of angel investors and venture capitalists, two avenues mostly associated with Silicon Valley. The catch: You may have to give up some management control, and it likely could mean selling out to a bigger enterprise or taking the business to the public market down the road.
