Northern Maine Development Commission
Small Business Development Center

Tip #2

The Top Ten most Frequently Asked Questions
By Northern Maine Development Commission’s Small Business Counselors

     You should prepare a business plan, you may receive free assistance with your Business Plan by contacting NMDC’s Small Business Development Center by going to http://www.nmdc.org/sbdc/sbdchome.html

     Include your loan proposal with your business plan and submit it to a local lender. If the lender is unable to approve your loan, The lender may submit your proposal to the SBA or FAME. The SBA or FAME can guaranty a percentage of a small business loan; however, the lender must agree to loaning the money with the guaranty. The lender may also request participation from a local, state or federal leverage program. If the lender needs applications and/or guidance it can contact the Business Finance Department at NMDC by going to http://www.nmdc.org/bf/bfhome.html .

     At this time, Congress has not set aside any monies for grants to start and/or expand a small business.

     SBA and FAME, does provide a loan guaranty program for loans made by your local lender. Both agencies guaranty loans that the lender could not normally approve. However, all funding is handled through your local lender.

     For information on all financial assistance available in Maine please go to www.mainebusinessworks.org and click on "Financing."

     The U.S. Small Business Administration (SBA) provides a wealth of information on starting a business at the SBA home page (www.sba.gov) under "Starting". You will find information on writing a business plan as well. You may take advantage of SBA’s resource partners. Another great place to get valuable information is the Maine Small Business development Center’s web page at http://www.mainesbdc.org/

     Licensing is generally handled through your state or local government. You will need to consult your local telephone directory in the "Government" section for an office that will assist you with a license or permit.. The Small Business Development Center can assist you with your business venture.

For a Federal Tax ID number, please contact the Internal Revenue Service for Form SS4. This Form is available through their web site at http://www.irs.gov.

     You may call the IRS at 1-800-829-3676 (Publications) and ask for the Small Business Tax Kit #454.

     You will need to contact the Department of Revenue for state taxes (if any). Please consult your local telephone directory in the "State Government" section for the office in your state.

     If you go to SBA's home page (http://www.sba.gov) and select "Starting," you will find information on starting a business and writing a business plan - see http://www.sba.gov/starting. Under "SBA local resources" you can find local contacts such as the Small Business Development Center, that provide FREE one-on-one counseling in the area of starting and expanding a small business. They can assist you by critiquing your business plan and your business ideas. Also, SBA has Business Information Centers (BICs) nationwide that are similar to a business library. There you will find reference materials on starting and expanding a business, including information on how to write a strong business plan. Some of the Centers have actual samples of business plans that have been written. You can locate a center by selecting "Local SBA Resources" under http://www.sba.gov, as well.

     Repayment ability from the cash flow of the business is a primary consideration in the SBA loan decision process but good character, management capability, collateral, and owner's equity contribution are also important considerations. All owners of twenty percent (20%) or more of the business are required to personally guarantee SBA loans.

     The SBA does not deny approval for a SBA Guaranty Loan solely due to lack of collateral; however, it can be used as a reason, in addition to, other credit factors.

     For more information on requirements on a SBA Guaranty Loan, as well as, our guaranty loan programs available, please visit us at http://www.sba.gov/financing/indexloans.html

     Small Business Development Centers (SBDC) nationwide. SCORE provides free, expert advice based on many years of firsthand experience and shared knowledge, on virtually every aspect of business. The SBDC provides a variety of management and technical assistance services to small businesses and potential entrepreneurs. To locate the nearest SCORE or SBDC in your area, please visit us at http://www.sba.gov/regions/states.html and click on your state. You may also want to visit one of our Business Information Centers (BICs) that have various books, videotapes, and training workshops on starting and expanding your business. This includes marketing, business planning, legal requirements, bookkeeping, etc. To locate the nearest BIC, please visit us at the aforementioned web site address and click on your state.

     There is no "official" certification process to be determined as a small business. The U.S. Small Business Administration (SBA) uses Standard Industrial Classification (SIC) codes in determining size standards. To see if your business is considered small by the federal government, or to determine which SIC code(s) is applicable to your business, please go to: http://www.sba.gov/regulations/siccodes/.

     It is considered a self-certifying process; therefore, no paperwork needs to be filled out.

     On a Federal level, Congress considers a minority-owned business as generally anyone other than white. The business MUST be owned and at least 51% controlled by one or more minorities. Women are not considered minorities. It is a self-certifying process and no paperwork needs to be filled out.

     However, your state and local government may have different rules and regulations regarding their contracts and what their definitions are.

     Consult your state and local government for rules and requirements.

     There is a certification process to be considered a Small Disadvantaged Business (SDB). The SDB certification ensures that small businesses are owned and controlled by socially and economically disadvantaged individuals meeting SDB eligibility criteria. If you are considered a SDB, you may receive a price evaluation credit of up to 10% when you bid on a federal contract. For more information on this program, please go to: http://www.sba.gov/sdb

     The HUBZone Empowerment Contracting Program encourages economic development in historically underutilized business zones, through the establishment of federal contract award preferences for small businesses located in such areas. To learn more about this program, please go to http://www.sba.gov/hubzone

Past Tips:

Tip #1