SBA (Small Business Administration)  funding is something that every entrepreneur thinks is easily obtained with a good plan until they discover that the chances of getting the funding are highly unlikely for any business. The idea is that the bank will be more likely to lend the money with the guarantee than without, but the truth is that an SBA guarantee doesn't necessarily improve your chances of getting funded.

Some people believe that you go direct to the SBA for loans, but this isn't the case. The SBA doesn't give loans, banks are the ones that give the loans and the SBA provides guarantees for some loans as long as they meet certain criteria.

When you seek the SBA loan, you will need certain documents in place such as Tax Returns, bank statements, pay stubs, personal financial statements (you are going to be personally guaranteeing the loan as well) and any collateral you have that will secure the loan.

If you don't have collateral, you're not likely to get an SBA loan, wait, you're not going to get an SBA loan.

So what do you do when the bank says no?

Options include finding investors, which is difficult for many people because now you are going to have to put all the necessary documents in place such as a Subscription Agreement, Private Placement Memorandum and a Business Plan. You will also need to work with your attorney so your corporation is structures to legally accept investors.

Before structuring your corporation, you have to decide if you want to take institutional investors or Venture Capital. When you're starting out, you're not likely to get either so you may want to opt for an S Corporation or an L.L.C. (Limited Liability Corporation) taxed as an S corporation.

Each type of corporation offers specific benefits to you and your shareholders that may be the difference between getting money from one shareholder and having another pass on your company. You're not likely to satisfy everyone because each investor has different needs.

Another option for a startup company is to get a different type of loan that is done through a network such as Prosper. This is a unique opportunity to get a small (usually $25,000 or under ) seed loan for your business. You don't have shareholders but you have to make monthly payments and loans are amortized out over 1 to 5 years.

Loans from Prosper are different because the funds come from private individuals who put their money in to pool with others and then loans are processed through their network. That means that you're more likely to be approved for a loan if you have a decent credit score ( Prosper appears to be more lenient than a bank).

Ultimately, you could choose to boot strap your company, which is what I have been known to do or to simply sell your way to success. Either way leaves you less exposed as long as you don't take on more debt.