According to our friends at SBA, despite the challenges facing our economy, there is probably no better time to start or expand your own business.   Just like the decision regarding whether "to go into or to start a business," the decision to seek financing is a critical step which will translate into whether your business will ultimately be successful.
 
First and foremost, you need a good business plan that addresses the following issues pertaining to financing.  If your plan does not, you need to go back to the drawing board. 

Begin by asking yourself the following questions: 

Uses and Sources of the funds:  Have you clearly identified the purpose of the financing?  Do you intend to purchase inventory? Are you planning on expanding your business?  Is it the right time to expand?  Why are you seeking financing now?  Do you need more capital or can you manage existing cash flow more effectively?

How urgent is your need?  One can obtain the best terms when you anticipate your needs rather than looking for money under pressure. How great are your risks?  All businesses carry risks, and the degree of risk will affect cost and available financing alternatives including using credit cards, using local and microlenders, financing from friends and family.  Remember that the true cost of borrowed funds takes into account not only the interest rate, but the length of the term and any associated fees.

What is the state of your industry?  Depressed, stable, or growth conditions require different approaches to money needs and sources. Is your business seasonal or cyclical?  Seasonal needs for financing generally are short term. Loans advanced for cyclical industries such as construction are designed to support a business through depressed periods.

  
You should have a clear idea of how much you want to borrow and what you are going to do with the loan proceeds.   A bank wants specificity.   If I am asked how much funds I wish to borrow, a bad response is not knowing or asking, “How much can you lend?”  Let us say, for example, that you would like to borrow $20,000.  You should be able to say to your banker in very specific terms that you need $10,000 to purchase inventory whose listing is found on your business plan and $15,000 for working capital which is supported in your pro forma in the plan.
 
These are challenging times.   One can substantially increase their chances of obtaining approval if a little homework is done.  Speak to the SBA, SBDC, Chambers of Commerce and other sources on the economic climate and seek their opinion.   Seek assistance!  If you do, our first recommendation is that you apply to the institution where you keep your checking account since they know you better.   Beyond that, one needs to determine which banks are more aggressive in making loans.  Determine the niches that banks have.  Some banks may not be in a lending mode.   Based on a cursory look of the business section of your local newspaper determine which lenders are more actively marketing their loan products.  Are they promoting term loans, lines of credit, factoring of receivables, etc.?   Knowing the niche and focus of your financial institution will move you forward.  
 
Now that you have contemplated such key initial questions as your loan amount and purpose, the economic and lending environment, and trimmed all expenses, one are ready to proceed to on to the next step.