One of the questions most often asked that SCORE Mentors get from their small business clients relates to financing for businesses. Many folks have the mistaken idea that there is a lot of “free money” out there somewhere. Generally, that is never the case and we need to start to discuss various alternatives for finding the financing for their business. Most startup businesses will need to raise capital through various sources of loans. Although I have written about this several years ago, I will cover a few basics about this topic because it continues to be a hot topic.

The typical requirements to obtain a bank loan generally include:

- Credit score of 700 or above.

- Cash flow sufficient to make loan payments from day one.

- Collateral sufficient to cover entire loan.

- Obtaining a loan for 100 percent of capital needs is usually not possible. Lenders usually required borrowers to have some personal or other source of cash to cover at least 25 percent or more of the total need.