FAQ's about Arkansas Small Business and Technology Development Center

ASBTDC is a university-based economic development program that assists Arkansas entrepreneurs, both new and seasoned. We help with every aspect of business creation, management, and operation. Through our seven offices around the state, ASBTDC works with all types of for-profit businesses, from home-based to high-tech.

Our knowledgeable staff can provide guidance, recommendations, and resources that are specifically designed to meet your needs, whether you are a prospective or current small business owner. Most services are available at no cost. Primary areas of focus include business planning, business expansion and growth, financing, marketing, management, market research, and training.

No, the Arkansas Small Business and Technology Development Center does not provide loans or grants for small businesses. 

One of the most important things to do before starting your own business is to determine whether or not your business idea is feasible. You must research your idea to ensure that your business has a favorable chance for success, will meet your expectations, and will provide an adequate reward for the risk involved. It is wise to validate your beliefs about your business concept through research and careful planning because you will not have time to do it once you start your business.

As you begin, the ASBTDC recommends that you attend one of our startup classes in your area.

In addition, see our Business Startup resources and tools available on this website.

Typically, new businesses are based on the owner’s interest or passion, since business ownership requires a big investment of time and resources. Having previous skills or knowledge relevant to a particular trade or industry is also a plus when considering what kind of business to start. Regardless of the type of business, you must determine whether adequate demand exists for the product/service you will offer.

As to whether to buy or start a business, consider your goals and potential return on investment.

An existing business should have established procedures and processes, operations, reputation, and a customer base. These are assets – and the reason existing businesses frequently sell at a premium. If the business is lacking in these areas (and priced accordingly), beware. Also, an existing business may have “baggage” that can cause problems for the future owner.

A new business can start with a clean slate. While it may take less money to start a new business than it does to purchase a going concern, it takes time and can be very difficult to build the business. The new business also has no track record on which to base decisions. Significant working capital is often required to grow a new business.

The bottom line is that every business purchase situation is different and should be carefully evaluated on its own merits.

As with any other business, you should first determine whether or not the business idea is feasible.

A special consideration for home-based businesses is proper zoning approval and a business license. Check with the city or county clerk to find out the zoning laws for your particular area and licensing requirements.

In addition, since your homeowner’s policy may not provide coverage for business activities, check with your insurance agent about adequate coverage for your home-based business and related assets. You may also consider working with an accountant to determine the tax implications of having a home office.

Most Arkansas businesses will be required to obtain a license. Review Business Startup – Licenses and Permits for a basic overview of requirements. For more information, contact your local city or county clerk’s office.

Some occupations and industries in Arkansas further require specialized licenses and permits. For example, restaurants must seek approval from the Arkansas Department of Health. Contact the governing board or agency that oversees your particular occupation/industry.

A Doing Business As (DBA) Certificate is required for any sole proprietorship or general partnership operating under a fictitious name or business names other than the owners. Register in the county where the business is located. The DBA Certificate records the full name and address of the business owner, and the fictitious name and is kept on file at the county clerk’s office. There is a nominal fee that varies from county to county.

To do a business name search for a sole proprietorship or partnership, contact the county clerk’s office in the county where the business is located. The records are open to the public, so you can check to make sure the name is not currently being used in that county.

To do a statewide business name search for a corporation, contact the Arkansas Secretary of State’s office at 501.682.5151.

If you need to write a business plan, you are in the right place. The ASBTDC has a wealth of information regarding business planning, and we are here to help you every step of the way.

A great way to start would be to attend one of the business plan seminars that we offer throughout the year.

We encourage you to use the ASBTDC To The Point Business Plan Outline, and our can serve as a guide as you write your business plan. Once you have a draft plan, we can review it and offer feedback. Contact your nearest ASBTDC office to schedule an appointment.

The length of time needed to craft a business plan and get a loan varies from plan to plan and person to person. Several factors that affect how quickly your business plan can be completed include the scope of the research required for the plan and the length of time a bank will take reviewing the plan.

There is no one right way to write a business plan, so don’t get caught up in trying to make your plan look like someone else’s. The goal is not to produce a boring document. Instead, focus on assessing key areas of your business and developing a strategy for success.

The loan application and approval process differ in each situation. The size of the loan request, complexity of the project, and participation in guaranty programs are factors that may affect the length of the application and approval process.

Financial projections are estimates of the financial future of your business. Creating financial projections is an important step in determining the feasibility of your business. To ensure sufficient cash is available for operations, you must be aware of your business’s current and future financial position.

Additionally, financial projections are a critical part of your business plan and/or loan proposal. Although the numbers are based on estimates, do not consider such projections as “a guess.” Research plays an important role in accurately determining future sales and costs.

The projections serve as a basis for planning and are likely to change as more information becomes available. Creating financial projections may seem intimidating. It is important to remain conservative as you develop them. In other words, understate revenues and overstate costs.

To our knowledge, there is no grant money available for starting a small business. In some cases, grants may be available for existing small businesses, usually for a very narrow purpose, such as a lunch program for a day care or research and development for technology businesses. 

Most small business owners have to look to personal resources and loans to finance their small business. Nonprofit, 501(c)(3) organizations are the most likely candidates to receive grant monies. 

Obtaining a small business loan is not the same as getting a personal loan. It is much more challenging to obtain a loan for a small business than a loan to purchase a home or car.

You should not assume that just because you easily obtained a personal loan that you'll be able to obtain a small business loan. Business loans typically take more time, require more documentation, and are more highly scrutinized. 

The ASBTDC can help you throughout the business loan process. We can assist you with preparing a loan proposal containing the information that lenders (and SBA) need as they consider your loan request.

We can also provide information about what lenders consider when evaluating a potential small business loan and can guide you through the process of assembling a good business plan and/or loan proposal that presents your plans clearly. If you already have a proposal, we can offer feedback on its contents and any modifications that may be advisable.

Lenders often refer loan applicants to the ASBTDC. In addition to helping with your business plan and loan proposal, we can answer other small business questions, provide guidance on the project’s feasibility, or gathering information about the industry or market.

Please note, the ASBTDC is not a decision maker in the lending process. We cannot influence a lenders or the SBA’s decision about your loan or negotiate on your behalf when you apply for a business loan. The ASBTDC does not have any money to loan to individuals or businesses.

An SBA loan is a loan that has been guaranteed (backed) by the U.S. Small Business Administration. The guarantee assures the lender that it will be repaid a portion of the money it loans even if the borrower fails to repay the loan.

As a business owner, you will make a request to a lender (usually your local bank) for funds needed for your business plans. The lender will evaluate your request and decide whether it can make the loan to you on its own. If a lender feels the request has merit but cannot make the loan without additional support, then the lender can request a SBA guarantee. SBA considers issues such as collateral, credit, equity, and loan repayment ability when making a determination on a loan.

SBA does not provide grants to small businesses. With the exception of disaster loans, SBA does not provide direct loans. More information on SBA loans can be found at sba.gov.

How much you can borrow is a decision that rests with your lender. Some criteria your lender will consider are how much money your business plan says the project will require, how much collateral or personal investment you are willing to put into the business, and, to some extent, your personal credit history.

As you develop a business plan, you must gather the appropriate financial data to make informed projections regarding startup costs (or expansion costs for existing businesses). These projections should show you how much you need to borrow and help you determine your ability to repay the debt.

You are unlikely to obtain 100% financing for your project from a lender. Lenders expect the borrower to share some of the risk and typically require an individual to cover at least 20% of the financing cost to start a business. Some banks will require an even larger owner equity injection depending on the industry or type of business.

When making a decision on a small business loan request, lenders consider a variety of factors, including cash (equity), amount of loan request, collateral, credit, business plan, repayment ability, and project feasibility. Each of these factors is important and can influence the loan decision. 

When making a decision on a business loan, your lender will consider your personal credit history. Poor personal credit can be the basis for declining a business loan.

Consider getting a copy of your personal credit report to gain a better understanding of your credit history. If you have credit problems, you may need to rebuild your personal credit before applying for a business loan.

Consumer Credit Counseling of Arkansas offers free budget and credit counseling. CCOA also can provide a credit report review.

Your ability to obtain financing, such as a bank loan, to purchase a business depends on a variety of factors. These include your personal financial situation, the cash flow of the business, available collateral, business history and expectations for the future, and business purchase price.

The lender will analyze the business, the borrower, and the structure of the deal to determine whether or not to provide financing.

While deciding whether to purchase an existing business, you must thoroughly investigate the business and obtain information from the seller. See ASBTDC’s Buying a Business Checklist as a starting point for the investigation process.

You need accurate financial statements/tax returns on the business in order to make an informed decision about buying it. Should the seller tell you that the business has unreported cash sales, beware! Inaccurate reporting to tax agencies is dishonest and illegal. Seller claims of unreported sales should never be counted to determine the cash flow of a business. These claims are unreliable at best.

When making a purchase decision, the buyer should rely on financial information which can be documented (i.e. tax returns, accountant-generated financial reports). Lenders only consider documented financial information.

You should obtain a copy of the franchise agreement and review it carefully. You should also determine if you’ll be required to pay the entire franchise fee, transfer fee, royalty fees, or advertising fees.

In most cases, the franchise will have to approve the transfer or sale of the franchise. If you are seeking an SBA loan, it is important to determine if the franchise is one which is eligible for SBA financing.

For more information, see the SBA Franchise Directory.

The Arkansas APEX Accelerators is an organization through which you can learn about and access the government marketplace. The center offers consulting and information to help your business become a successful government contractor. Call 501.671.2390 to learn more.