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Frequently Asked Questions
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1. What is the Northwest Texas Small Business Development Center (NWTSBDC)?
3. What is a SBA loan and how do I get one?
4. Where do I get a SBA loan application? My bank doesn't have any.
5. What assistance does the SBDC provide to me if I am seeking a loan?
6. How long will it take to get a loan?
7. Will the SBA deny a loan application based on personal history?
8. What is SCORE and how do I contact them for assistance?
10. How can I receive grant money for my small business?
11. How do I become a non-profit organization?
12. What do I need to do to start my business?
13. Do I need to write a business plan? What do I need to include in my business plan?
14. Who can write my business plan?
15. What do I need to do to obtain a business license?
16. I want to start a business from my home, what should I do?
17. How do I know if my business name is being used? How do I register my name?
19. Do I need a Federal Employer Identification Number (FEIN)? If so, how do I obtain it?
20. How do I sell my product or services to the government?
Q.
What is the Northwest Texas Small Business Development Center (NWTSBDC)?
A.
The Northwest Texas Small Business Development Center
is the premier small business resource for the South Plains, with sub
centers in Amarillo, Lubbock, Stephenville, Abilene, Odessa, and Wichita
Falls. The friendly staff at your local SBDC are highly trained and willing
to go the extra mile to provide the best in service and assistance to the
local community.
A. A small business size standard is a threshold measured either in number of employees or by average annual receipts, depending upon the industry. Each SIC code has a small business size standard assigned to it. Businesses that meet or fall below the assigned size standard for a particular industry are considered to be a small business for that particular industry. Generally, a business is considered to be small if it has no more than 500 employees.
Q.
What is a SBA loan and how do I get one?
A.
A SBA loan is a loan that has been guaranteed by the U.S. Small Business
Administration (SBA). The guarantee assures the lender that it will be
repaid a portion of the money it loans even if the borrower fails to repay
it. The SBA will guarantee up to 85% on loans of $150,000 or less and up to
75% on loans over $150,000. With few exceptions, the maximum SBA guaranty is
$1 million.
SBA is a federal agency created in 1953 to help America's entrepreneurs form successful small businesses. One way SBA helps existing and potential small business owners is when owners obtain financing from a bank. The SBA does not administer grants or provide direct funding to individuals or businesses. The SBA does not provide low interest loans.
As a business owner, you will make a request to a lender (usually your local bank) for funds needed for your business plans. The lender will evaluate your request and decide whether it can make the loan to you on its own. If the lender feels the request has merit but cannot make the loan without additional support, then the lender can request a SBA guarantee. Not all banks participate in the SBA loan guarantee program, so don't hesitate to ask whether the bank makes SBA loans. So, the SBA loan is requested by your lender. Although you are the borrower, SBA considers its applicant to be the lender to whom it provides the guarantee. The SBA guarantee enables the lender to make a loan that it would not otherwise provide.
In addition to getting a loan that you would not otherwise receive, SBA- guaranteed loans usually can be borrowed for a longer time and cannot be set up with a balloon payment due at maturity. This assures you of having long-term debt for your business needs that you repay in equal installments.
Q.
Where do I get a SBA loan application? My bank doesn't have any.
A.
The SBDC does not provide blank SBA loan application forms. Individuals
seeking SBA loan applications should contact participating lenders.
A borrower can download applications from the SBA web site. However, SBA prefers original applications. Therefore, applications from the SBA web site should be used as reference only and not as the official application.
Q.
What assistance does the SBDC provide to me if I am seeking a loan?
A.
The SBDC is knowledgeable about the type of information that lenders and SBA
want to see when you make a loan request of them. The SBDC can guide you
through the process of assembling a good business plan and/or loan proposal
that presents your plans clearly. If you already have a proposal, we can
offer feedback on its contents and any modifications that may be advisable.
When you present your loan request, the lender may suggest that you work with the SBDC in preparing a formal SBA loan application. Since we are very familiar with SBA's loan requirements, we can assist you in presenting your loan application so that it contains all of the required exhibits and tells your business story completely. Lenders and SBA have told us that borrowers who work with our office usually do a better job of presenting their loan request, thereby making it easier for the lender and SBA to do their jobs and make a decision regarding your loan request.
The SBDC does not have authority to approve your loan request. We cannot influence the lender or the SBA in their decision about your loan. The SBDC does not have any money to loan to individuals or businesses.
Q.
How long will it take to get a loan?
A.
The time it takes to get a loan varies with each situation and is determined
by the amount and complexity of the loan request. A good rule of thumb is to
allow 60 to 90 days to have money. But realize that this is only a rule of
thumb, and your experience may differ.
Q.
Will the SBA deny a loan application based on personal history?
A.
The SBA will not decline a loan solely due to bad credit, no credit,
unemployment, or serving prison time. However, these circumstances will make
the process more challenging. In some cases, eligibility to apply for a loan
can be limited or restricted due to personal history issues. Explanation of
prior bankruptcy experience and investigation of past arrest records or
criminal conviction may delay a decision regarding a loan request.
Therefore, a prospective business owner should put forth the time and effort
to produce a well thought-out business plan that discusses owner experience
and personal character issues that may affect a loan decision.
Q.
What is SCORE and how do I contact them for assistance?
A.
The Service Corps of Retired Executives, commonly called SCORE, is a
volunteer program administered by the SBA that also provides small business
assistance. Retired and actively employed individuals from a variety of
business backgrounds volunteer to help small business owners manage their
businesses more profitably and compete more effectively. S.C.O.R.E.
volunteers also provide start-up assistance to individuals considering
opening a business.
For more information about S.C.O.R.E. services or to sign on for online consulting, log on to their web site at www.score.org.
Q.
Is assistance available to help minority entrepreneurs to start a small
business? Women? Veterans? Disabled?
A.
The services provided by the SBDC are available to all groups including
minorities, women, veterans and disabled on a non-discriminatory basis.
The SBA has created the small business loan pre-qualification program that is designed especially for those groups who are historically underrepresented in the business community. Other groups may include borrowers in specially designated geographic areas, exporters, rural businesses and other selected industries. The pre-qualification program works in reverse order to the standard loan application process. The pre-qualification application is prepared and submitted directly to SBA. If the loan application is approved, the SBA issues a pre-qualification letter stating the agency's intent to authorize a loan guaranty. You can take the letter to prospective lenders to seek their participation in the SBA-guaranteed loan. Until you have a lender willing to participate with SBA, you do not have a loan.
The SBA also offers the 8(a) Business Development Program to help small disadvantaged businesses compete in the American economy and access the federal procurement market. For more information on the programs offered by the SBA log onto their web site at www.sba.gov.
The Veterans' Business Outreach Program (VBOP) is offered by the SBA and designed to provide entrepreneurial development services such as business training, counseling, and mentoring to eligible veterans owning or considering starting a small business.
The Veterans' Business Outreach Center provides business training, counseling, technical assistance and mentoring to veteran business owners and start-up candidates. The VBOC is located in Edinburg, TX and provides assistance for veterans within SBA's Region VI serving Arkansas, Louisiana, New Mexico, Oklahoma and Texas. For more information, contact the VBOC at 956-316-2610 or log on to their web site found at http://www.sbaonline.sba.gov/VETS/vbop.html
The DISABLED BUSINESSPERSONS ASSOCIATION (DBA) is a national 501(C)(3) nonprofit, public charity and educational organization founded in 1991 to help disabled entrepreneurs and professionals maximize their potential in the business world and to encourage the participation and enhance the performance of the disabled in the workforce. For more information, log on to their web site found at http://www.disabledbusiness.com.
Q.
How can I receive grant money for my small business?
A.
To our knowledge, there is no grant money available for starting a small
business. In some cases, there may be grant programs available to existing
small businesses or entrepreneurs for a particular industry serving a
specific purpose. Nonprofit organizations, 501(c)(3), are the most likely
candidates to receive grant monies. Locating grant-funding sources is a
time-consuming process that entails utilizing resources such as grant
indexes available at public libraries and on the Internet.
Refer to: BizFacts
document #510, Grant/Non-profit Information Sheet
Q.
How do I become a non-profit organization?
A.
The SBDC serves the for-profit business community. Those wanting to form a
nonprofit organization should contact local or national groups that
specialize in the nonprofit arena. To become a non-profit organization you
must become 501(c)(3) certified through the IRS and incorporate as a
non-profit organization at the Secretary of State's office.
Refer to: BizFacts document #510, Grant/Non-profit Information Sheet
Q.
What do I need to do to start my business?
A.
One of the most important things to do before starting your business is to
plan and research your idea to ensure that your business has a favorable
chance for success, will meet your expectations, and will provide an
adequate reward for the risk involved. It is wise to validate your beliefs
about your plans through research and careful planning because you will not
have time to do it once you start your business. We offer some excellent
tools that you can use during your planning. Our Business Industry and Data
Center (BIDC) in our Region office,
provides a variety of services to counselors in the NWTSBDC network. The
NWTBIDC focuses on demographic and business statistics and market research
in order to compliment the services provided by the counselors in the
NWTSBDC network , in addition our "Starting your own
Business" workshops can help the person who has not owned or managed a
business before. Check our
Workshop Schedule for upcoming classes.
Here are some questions one should ask when faced with this general question:
- Will you need financing?
- Have you written a business plan?
- Have you received zoning approval?
- Have you obtained a business license?
Q.
Do I need to write a business plan? What do I need to include in my business
plan?
A.
The SBDC always recommends that individuals wanting to start a business
complete a business plan. The business plan is used as an operating guide
and as an aid to securing financing. Existing businesses wanting to grow or
expand their product and service offerings, relocate their facility or add
facilities, or better meet other challenges are also encouraged to prepare a
business plan. The business plan helps you evaluate your business on paper
to determine if the idea is worth the investment of more time and resources.
Our research library contains sample business plans, business plan outlines
that are helpful in writing your business plan. Our center has
business consultants you can meet with on an appointment basis who will
review your business plan once it is completed and suggest possible changes
that need to be made before you present it to a bank.
Q.
Who can write my business plan?
A.
The SBDC strongly advises prospective and existing business owners to
prepare their own business plans. Neither the SBDC nor SCORE will write a
client's business plan. However, either will provide feedback on a completed
business plan before it is presented to a lender.
Q.
What do I need to do to obtain a business license?
A.
A business license or privilege license is required to operate a business in
Texas. The first step is to visit your city or county zoning commission to
make sure the location of the business is zoned properly. If zoning is not a
problem, the business application license will be approved, and the next
step is to go to the city or county clerk's office to pay a fee and obtain
the license.
Refer to:
- BizFacts document #1006, Licensing, Zoning, and Tax Requirements
- BizFacts document #4512, Signs...And the Small Business - How to select a sign for your business
Q.
I want to start a business from my home, what should I do?
A.
As with any other business, a home-based business must have proper zoning
approval and a business license. For home-based businesses, zoning is
particularly important. Please check with the city or county clerk to find
out the zoning laws for a particular area.
Q.
How do I know if my business name is being used? How do I register my name?
A.
A Doing Business As (DBA) Certificate is required for any sole
proprietorship or general partnership operating under a fictitious name or
names other than the owners. There is a nominal fee that varies from county
to county. The DBA Certificate records the full name and address of the
business owner and the fictitious name and is kept on file at the county
clerk's office. To do a business name search for a sole proprietorship or
partnership, contact the county clerk's office in the county where the
business is located. The records are open to the public, so you can check to
make sure the name is not currently being used.
Q.
What is the difference between a sole proprietorship, partnership,
corporation, and limited liability company. Should I incorporate my
business?
A.
A sole proprietorship is a business with one owner. The owner
is the business and the business is the owner. All income and expenses pass
through to, and are filed as part of, the owner's personal return. If there
is a business loss, the owner will enjoy a deduction to offset personal
(paycheck) income. If the business makes a profit, the owner is responsible
for any taxes due.
A partnership is similar to a sole proprietorship but has two or more owners. The partnership is not a separate legal entity from its owners but can hold property and incur debt in its name. A partner can be held liable for the acts of the other partners, increasing personal liability. The partnership must also file an informational tax return with the IRS.
A corporation is a separate legal entity. Incorporating allows a group of entrepreneurs to act as one, much the way a partnership does. It can protect its owners by absorbing the liability if something goes wrong. For example, lawsuits can be brought against the company instead of you personally; debt is incurred in the company name and you are not personally liable (unless you provide a personal guarantee). The owner of a corporation is known as a shareholder.
The limited liability company features pass-through taxation of the partnership, and limited liability of the corporation. Laws are still developing on this form of business organization.
Q.
Do I need a Federal Employer Identification Number (FEIN)? If so, how do I
obtain it?
A.
The FEIN is essentially the social security number for your business. A FEIN
is a nine-digit number assigned to sole proprietors, partnerships,
corporations, estates, trusts, and other entities for filing and reporting
purposes. Every business with employees has to have a FEIN as do businesses
that need to collect and remit sales tax. However, even a sole proprietor
might need to have a FEIN to open a business account at a bank. Otherwise,
sole proprietors can use their social security number for tax reporting
purposes. You can apply for a FEIN by telephone, fax, or by mail.
Q.
How do I sell my product or services to the government?
A.
The Procurement Assistance Center (PAC) provides training and
technical assistance to area businesses interested in contracting with
federal, state, and local governments. For more information, contact PAC at
(806) 745-3973 or log on to
http://www.nwtsbdc.org/PAC.htm
