Financial Resources

There is an old saying that “it takes money to make money.”  If you’re trying to start a new business, you may find it to be more than just an adage.  Commercial lending has become much more restrictive since the Great Recession of 2008.

Small businesses must be resourceful in attracting and combining different streams of capital.  A “first timer” may find creativity will help avoid a second mortgage on the family home.  It is often necessary to combine several sources to make a deal work.  These may come in the form of debt or equity financing or, perhaps, a rare grant opportunity.

Debt Financing

Many look to U.S. Small Business Administration (SBA) loans for debt financing, but your local bank actually administers SBA loans. The amount of the loan, length of term and interest rate depends on several factors, not the least of which is determined by the risks involved.

As expected, there is considerable “red tape” involved in debt financing.  Federal regulations require banks to ask for reams of paperwork before considering an application. Document requests typically include:

  • Business financial statements - to support your application and demonstrate your ability to repay the loan, prepare and include the following financial statements:

-  Profit and Loss (P&L) Statement - this must be current within 90 days of your application. Also include the last 3  
    years if available.

-   Projected financial statements - for start-up businesses, include a detailed, one-year projection of income and

-   Company debt schedule

  • Business lease - include a copy of the business lease or note from the landlord giving the proposed lease terms, or a proposed purchase contract- whichever is applicable.
  • Business Overview and history including a concise business plan.
  • Completed loan application from the financial institution
  • Income tax returns - include signed personal and business federal income tax returns of your business' principals for previous three years.
  • Ownership and affiliations - include a list of names and addresses of any subsidiaries and affiliates
  • Personal financial statements
  • Personal resumes for each principal

Make sure all of your books are in order well in advance of applying, be patient, and be prepared for a long and lengthy process to obtain any type of debt financing.

Equity Financing

Internet search engines will lead entrepreneurs to numerous sites highlighting the activities of venture capitalists. These organizations are centered on equity financing and are often linked to successful, rapidly growing tech-driven companies. They have the ability to bring significant sums of money to the table if there is a possibility of a comparatively large return on investment. Venture capital is attractive for new companies with limited operating histories that have not reached the point where they are able to secure a bank loan or complete a debt offering.

In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists sometimes get significant control over company decisions and they may also demand a significant portion of the companies' ownership. Be prepared to take on partners anytime equity financing is a consideration.

Some venture capitalists are known as “angel investors.”  These individuals and organization look for entry-level opportunities and sometimes high risk investments that could result in potentially large payoffs.  Crowdfunding is an example of an angel investment as is the popular reality television show ‘Shark Tank’.

Episodes of Shark Tank provide condensed – although sometimes dramatic – examples of the process involved in pursuing this “seed” money.  The owner must prove her/his concept is viable and worthy of funding by demonstrating the long-term value of the idea, product or service.

At this juncture, investors may opt to partially invest in a project by funding a feasibility study. While this sounds like a step backward it may actually be of great benefit in the long run.  Few upstart entrepreneurs have the cash to invest in studies, so consider such an offer an insurance policy to avoid a potential failure.

Oklahoma is fortunate to have a number of venture capital firms in operation.  A complete list is found by browsing the Oklahoma Capital Investment Boards’ website.  It is important to note that many of these organizations focus on specific types of products or services and some will not consider start-up companies.


Grants are often mentioned as fail-safe elixirs to cure funding problems; however, such capital is hard to find and even harder to get. Today’s grants are primarily available to those involved in businesses that focus on the medical and technology fields.

Federal grant programs are administered through the website   Most of the listings found here are available only to non-profit organizations, Indian tribes and other government entities.  However, money for private research and development may appear from time to time

The Oklahoma Center for the Advancement of Science and Technology (OCAST) sometimes offers assistance to qualified business seeking to participate in federal research programs.  OCAST may help bridge funding gaps that grant applicants may not otherwise be able to overcome.