After several years of financial market upheaval, banks have once again opened the lending window to viable small businesses with proposals that meet the loan threshold at the bank.

But as Chicago-based author and consultant Carol Roth notes, the number of loan approvals is not high because the banks are determined not to repeat past mistakes.

"The fallout from the lax lending decisions of several years ago has led them to focus on the creditworthiness of the business and the entrepreneur," Roth explains. "You want to show that you really have a viable way to generate a return on the investment so that you can pay back the interest and principal on the debt."

While banks remain a primary small business funding option, this is the time for entrepreneurs to consider some alternate sources of start-up or expansion capital.

Loans from friends and family members have long been a go-to source of funds. However, if the financing arrangement isn't well-structured, both business and personal relationships may be permanently scarred or even ruined. That's why everyone should be clear on the financing structure and the risks involved, including the repayment terms, whether the deal is a simple loan or involves an ownership stake.

A similar approach called "crowd funding" is growing in popularity, according to Roth. Here, the entrepreneur solicits money from customers, or "fans."

"However, there are some legal implications if you do that in a traditional capital raising structure," she warns, making prior consultation with an attorney a must.

Business planning and new venture development expert Dave Lavinsky is a big fan of individual "angel" investors.

"Like a bank, they want a return on their investment," he says, adding that their decision to support a venture may be driven by a desire to be part of a "cool" new business. "They may also invest because they like the entrepreneur, and want to see him or her succeed."

For these reasons they may be more patient than a bank with regard to repayment terms. But it remains true that a loan is a loan and not a grant. Any investor, even a friend, expects to reap a gain from the loan or equity investment.

Businesses in North Carolina and here in Moore County also have access to state and local economic development agencies, such as Partners in Progress, that can assist with acquiring work space, training and administrative support; reduced rates on existing office or production space; and tax incentives.

The Small Business Administration's microloan program is also a good source for short-term working capital.

Of course, there is the entrepreneur. Although self-financing options may provide more control and flexibility over start-up capital, extra care should be taken to ensure they are used wisely. Before dipping into savings or tapping the equity in a house, the entrepreneur should map out a realistic plan to meet existing obligations and daily living expenses.

Also to be considered are the effects of "worst-case" scenarios such as the loss of the spouse's job, major car repairs and serious health issues.

Regardless of the type of financing strategy you choose, one must evaluate the pros and cons involved in making the investment and decide if the rewards greatly outweigh the risks.

For more information on financing, bank and nonbank, contact SCORE, a nationwide nonprofit association of experienced business people who provide free, confidential business counseling to small business owners. The Sandhills Chapter is active in counseling, mentoring and presenting free business seminars.

If you wish to speak to SCORE about your business, please register as a client by entering your information at www.edmisscore.org/0364. and one of our counselors will contact you.

In addition to counseling by appointment, the Sandhills chapter of SCORE has drop-in service, for those who have registered, from 10 a.m. to noon Tuesdays and Fridays at the Moore County Chamber of Commerce building on U.S. 15-501 in Southern Pines. The phone number is (910) 692-3926.

More information on SCORE's counseling activity can be found at the Sandhills SCORE website, www. sand hillsscore.org.