Are there any special loan programs available for minority groups or women?
What criteria do banks use in either approving or denying a small business loan?
How do I know which bank to approach for a loan?
Q. What type of licensing do I need for my business?
A. A new small business should first contact the City Hall of the city (cities) in which the business will generate income. Each individual City Hall will determine if a business license will be required for their area. You will need a business license for the city in which your home office is located and might need additional licenses in other areas where you perform services. The cost of a business license is based on the projected revenues of the business and the type of business you are opening.
Secondly, the small business owner will want to contact the Building Permit Division of the county in which the business will be located. If your business is located in a county (outside city limits) and you generate all of your income in the county, you are not required to have a business license. However, you might be required to obtain a Certificate of Occupancy issued by the permit office in that county. For regulations concerning Certificates of Occupancy, building permits and zoning, contact your local county agency.
Before engaging in business, a retailer must apply for a Retail License by completing and submitting South Carolina Business Tax Registration Application Form SCTC-111, to the South Carolina Department of Revenue and Taxation. Additional state licensing and employee forms can also be obtained from this office.
Finally, each business owner should investigate any Special Licensing Requirements that might be enforced by the industry in which they are going to operate. A few examples of businesses that are highly regulated include daycare centers, restaurants, contractors and dry cleaners.
Refer to The Fact Sheet for Starting a Small Business<LINK> for detailed information, addresses and phone numbers.
Q. How do I check the name I have chosen for my business?
A. Once you have chosen a name for your business, it is important that you research the name to make sure that another company does not have exclusive rights to that name. The Secretary of State's Office in Columbia maintains a list of all businesses incorporated within the State of South Carolina. If a business is incorporated within the state, that business has legal rights to their name within state borders. The Secretary of State's Office can perform this search for you over the telephone, informing you if your name is available for use: 803-734-2158.
Businesses can also check in the Mercantile Establishments Book located at the Clerk of Court's Office in their respective town. Although businesses are not required to register at this office, many do, and therefore it is a useful resource when researching a name.
In addition, there are general resources that a business owner can access to determine if a business is already using their proposed name, including local telephone books and association membership rosters.
Q. Where can I go for assistance in getting my small business started?
A. There are many resources available to help prospective and existing small business owners, many of which are free of charge. Small Business Development Centers are located across the state, providing free and confidential counseling and technical assistance to small business owners and entrepreneurs. The Service Corps of Retired Executives (SCORE) also provides free one-on-one counseling through a group of volunteers who represent a variety of business backgrounds and experiences. Additional assistance can be accessed through your local Chamber of Commerce, public library, industry associations and governmental licensing agencies.
Q. Are there any special loan programs available for minority groups or women?
A. Most loan programs that are directed toward minorities and women are administered on a bank-by-bank basis. Each individual bank has its own special loan programs that are unique to that bank's economic policy. In addition, the Small Business Administration (www.sba.gov) has information on loan programs on their Web site. For more information, you should contact your local SBDC office.
Q. What criteria do banks use in either approving or denying a small business loan?
A. Bankers generally evaluate a loan package based on the 5 Cs of Credit. Their criteria are as follows:
Capital: The equity injection in your project. Lenders are almost never willing to finance 100 percent of the money required to begin a business or to expand an existing business. Just as one must make a down payment when purchasing a house or automobile, the borrower must make this down payment of capital when obtaining a business loan.
Collateral: Assets that are pledged by the borrower to secure a loan. In the event that the borrower is unable to repay the debt, the lender can exercise its claim on the property pledged as collateral and sell it to recover the amount of the loan.
Cash Flow: This is the ability of the borrower to repay the loan. The lender determines this by reviewing the projected financial statements that the borrower must provide.
Character: Character is a very important part of the financing process, and includes such qualities as work experience, honesty, intelligence, energy level, positive motivation, personal history and personal credit history. Be prepared to explain any potential credit problems.
Conditions: Conditions encompass a number of tangible and intangible factors, including the ability of the business to obtain market share and to compete with other similar businesses. Other considerations include the proposed location of the business, form of ownership, purpose of obtaining the loan, overall health of the economy, interest rate levels and the demand for money.
Q. How do I know which bank to approach for a loan?
A. Almost all commercial banks engage in small business lending. If you presently have a relationship with a bank, that is the best place to start when requesting a small business loan. If you are new to the banking environment, ask other professionals in your area such as attorneys, accountants and existing small business owners for a referral or recommendation. It is a good idea to limit the number of banks who are reviewing your loan package to two or three at one time, thus avoiding any misconceptions that might arise about the credit-worthiness of the loan.
Q. How do I locate suppliers for my business?
A. Locating suppliers often takes perseverance through research and telephone calls. One of the best resources to obtain this information is your local public library. The business reference librarian can direct you to the appropriate publications and databases according to your specific needs. Industry associations that have extensive supplier relationships already established can also provide a wealth of information. And don't forget about your competition! A little detective work can go a long way in identifying suppliers for your product needs.