FAQ: Answers to Frequently Asked Questions

Q. Are there any grants available for my start-up business?

A. Generally speaking, grants given to business start-ups are very rare. An exception may be for a high technology business or for businesses producing products that can be used by certain agencies or departments involved in our nation's defense. Also, non-profit businesses are sometimes eligible for grants. The North Carolina Community Resources Information System has a web site, www.cris.state.nc.us, that lists grants and loans administered by North Carolina State agencies. Additional sources of information can be found at The Foundation Center, http://fdncenter.org.

Q. What kind of registration and licenses are generally required to start my business?

A. Obviously, there are specific requirements in each state, county, and locality, but it is possible to list the basic licenses and registrations a new business will need:

Local:
A business license from your city, town, or county, depending on your location, will usually be necessary. In addition, you'll have to meet zoning laws, building codes, and similar regulations. Contact the North Carolina Secretary of State's office at (919) 733-4201.

State:
In most states, if your business isn't a corporation and your full name isn't in the name of the business, you'll have to register under what's called a Fictitious Name Registration. You should also file for a Sales and Use tax number. In some lines of business (like liquor stores, barber shops, real estate offices) specific licenses are needed.

Federal:
You'll need an Employer's Identification Number (EIN), and it's a good idea to request the "Going Into Business" tax kit from the Internal Revenue Service (IRS).

Q. How do I get a business loan?

A. The kind of financing most entrepreneurs seek through commercial lenders is debt financing, and most banks provide debt financing for existing and start-up businesses. Banks vary substantially in their lending practices. While one bank may decline your loan application, another may be willing to take a higher risk or be interested in lending to small businesses. It is advisable to understand a bank's lending guidelines before applying for a loan. The general guidelines that would enable a lending officer to at least make an informed decision regarding your loan proposal are as follows:

1. Consideration of the business idea, usually explained in a business plan
2. Collateral
3. Down payment (also known as "equity" in an ongoing business)
4. Credit history and personal financial net worth
5. Management ability
6. Ability to repay the debt
7. Conditions of the economy and/or market area.

Q. Are SBA loans just available for people who can't get regular bank loans?

A. SBA loan guaranty programs provide funding to viable small businesses that cannot qualify for loans from traditional sources. The loans are made by private lenders with the SBA guaranteeing up to 85%.

Q. If I'm thinking of starting a business, what should I do first?

A. Before you quit your job or print business cards, it is wise to take stock of personal considerations. Ask yourself: Do I have what it takes to be an entrepreneur? Am I a risk-taker? Do I have a grasp of basic financial and marketing principles? Am I resourceful and organized? Can I support myself and/or my family financially during the early stages of the venture when cash may be short? Will my family and friends be supportive during the start-up process? Am I knowledgeable and experienced enough in my chose field? If the answer to any of these questions is "No," you may want to focus on some form of self-improvement before proceeding. If most of your answers are "yes," then it is time to become a realist! Get as much information as you can on the feasibility of your data from the library; taking seminars and workshops; speaking to trade or professional groups which represent your chosen industry; consulting with people who are already in the same or similar line of business; and seeking advice from professional counselors like the SBTDC.

Q. My business has been established for some time. How can the SBTDC help me?

A. The SBTDC provides an array of services to established businesses including counseling in business planning; marketing and promotion; financial analysis; and accounting. In addition, the SBTDC offers:

1. A procurement assistance program for companies that want to bid on federal, state, or local government contracts.
2. An international trade program for firms that want to enter into or expand in the global marketplace
3. Educational services designed to sharpen the skills of management teams, boards of directors, and or employees.
4. A Boating Industry Services service to provide business development support to marine industry firms.
5. Technology development and commercialization personnel to help business commercialize innovative new technologies.

Q. How long will it take to write a business plan?

A. A well thought-out business plan generally takes anywhere from six months to a year to complete, but it can be less depending on how committed you are to the business and how much time you are willing to spend on writing your plan. The SBTDC counselor will not write a business plan for you but will assist in assessment of the plan. They may offer recommendations in order to make it a viable business plan to gain financing through a lending institution. It can also be used as a guide for your business to make sure you stay on track with your goals and objectives. The writing of the plan is an educational process in which you learn about your business and how you expect it to operate. It should reflect your goals, objectives, priorities, and management style.

Q. Does the SBTDC provide financing?

A. The SBTDC does not provide financing. Our assistance is technical and education in nature. We work with banks and other lending agencies and organizations to assist in putting together financial projections, but the actual financing comes from outside sources. Generally, you start with the bank where you normally do business and have established accounts. You may have to apply at several lending institutions or look for alternative sources such as outside investors.

Q. Do I have to register the name of my business and if so, where?

A. If you decide that your company will be a sole proprietorship or partnership - and you wish to use a name other than your own name - you must either perform a name search at your county's Register of Deeds office or at the North Carolina Secretary of State's Corporations Division website. Either location will also help with your specific licensing questions. You must also register the company name at the Register of Deeds office.

Q. What form of business do you recommend for a new business?

A. Each form - sole proprietorship, partnership, corporation, or limited liability corporation - has its advantages and disadvantages. The one you should pick depends on your circumstances, including:

* Your financial condition
* The line of business you're entering
* The number of employees
* The risk involved
* Your tax situation

The North Carolina Secretary of State's Corporations Division website offer guidelines and provides forms which will be useful.

Q. What kind of insurance is needed for a small business?

A. There are two basic types of insurance for businesses:

1. A basic business owner's policy (BOP) that includes property, liability, and loss of income coverage. This would be adequate for small retail stores and service providers.

2. A commercial package policy that adds coverages to a standard BOP for business perils. Commercial packages are designed for the insurance company to assume some or all of the risk for when "bad things happen". Businesses that would benefit from this type of insurance include manufacturers, restaurants, and technology intensive services.

Q. What are the advantages of having my wife as primary owner of the business?

A. Not many. SBA offers just one type of loan specifically for minority-owned businesses. Those looking to do government contracted work might also find some advantage to bidding on jobs, but this practice is likely to be changing in the near future. In addition, soon ownership alone will not qualify the business as minority. The controlling partner also has to prove active participation in the business activity.

Q. I'm thinking about getting into the government market to sell my product but everyone I talk to confuse me about what I have to do. Is this market best left to the professionals?

A. While government procurement is a complex area, it is worth the effort and there are many resources to help you including the SBTDC here at UNCW. We offer a free, two-hour introductory course on "Selling to the Government" which is given through Southeastern North Carolina at various times. It includes information on the new internet based procurement sites of both federal and state governments. Contact us at (910) 962-7629 for dates and locations of the next course.

Q. I want to get certified as a Small Disadvantaged Business in order to receive preferences in contracting with the Federal Government. Where do I go to get the forms and who can advise me?

A. We at the SBTDC at UNCW can give you information on this federal program for socially and economically disadvantaged entrepreneurs (sometimes referred to as the "8a" Program). The Small Business Administration Regional Office in Charlotte (704-344-6590) holds monthly overview sessions (third Tuesday of each month) on this program and will provide you with the application. The SBA will determine if you meet the standards for certification.

Q. I have been selling to a local federal installation and recently they told me that I would have to "get a GSA number" before they would do any more business with me. Where do I get this number?

A. This is a "shorthand" way of saying that you must be awarded a contract on the General Services Administration (GSA) Multiple Awards Schedule. These contracts provide federal agencies a fast and economical way to order products or services from you. Having a contract on the schedule, however, is no guarantee of receiving orders. The process of preparing a proposal to the appropriate solicitation may be somewhat complex for some but we at the SBTDC can advise and assist you in this process.

Q. Where do I get certified as a "Small Business"?

A. For federal procurement purposes, your status as a "Small Business" is one that you, yourself certify on whatever bid or proposal you are submitting. The guidelines or standards for your particular occupation-business are published by the SBA and we at the SBTDC can direct you to those standards. If your status is questioned on that procurement, the Small Business Administration will then review the matter and make a determination. The status of "women owned" business is currently also a self certifying status.

Q. I think that my business may be located in a federal Hub Zone. Should I care?

A. The federal program for Historically Underutilized Business Zones provides various preferences in federal procurements, including price preferences and procurements set aside just for firms certified as HubZone business. To determine if you are located in such a zone, you can enter your physical business address at www.SBA.gov/hubzone. There are further requirements to be met in order to be certified by the Small Business Administration, and we at the SBTDC at UNCW will be happy to discuss these requirements with you. There is also a separate North Carolina program "Historically Underutilized Business (HUB) Program" which provides assistance to minority, women and disabled owned firms; see www.doa.state.nc.us/doa/servepub.htm.

Q. I'm a military veteran and a friend recently told me that there is a federal program to help veteran-owned firms. What help is provided and by who?

A. Several years ago, a law was passed that provided a variety of technical, loan and procurement assistance to small-business owners who are veterans. The assistance is focused on the service disabled veteran but there is also assistance provided to all veterans. The program is managed by both the Veterans Affairs Dept. and by the Small Business Administration. Information is available, toll free, at (866) 584-2344 or on the internet at www.vetbiz.gov.

Q. I have decided that my firm will have a better chance as a subcontractor to a firm receiving a government prime contract. What do I have to do?

A. Generally, the government has no contractual relationship with a "sub" so there are far fewer requirements and registrations required of a subcontractor. There are some official internet sites that you would want to register on to make your availability known to prime contractors and you should take the free, two hour "Selling to the Government" course that we offer. We are sometimes contacted by prime contractors looking for "subs" so it is recommended that you be in our database at the SBTDC.

For further assistance go to our contact page.