Quoted: If it was a good risk, your friend would have no problem securing a loan from the bank.
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That is absolutely not true from what I've seen.
The owner of the company I work for has invested in about three dozen start-up or very small companies that I've handled all of the details for. Most had very good business plans and all looked like a good risk (or we wouldn't have dealt with them). Not a one of these businesses was able to get a bank loan even with us, a long time customer of a couple of the banks and a vendor to three of them, helping them with high-level contacts.
Out of the businesses, the best looking ones were the technical ones, but all of them failed through no fault of the business plan since it was due to customers that wouldn't pay. The rest have done well. The banks just weren't interested in loaning money even with a good business plan, owners/employees with experience in the field, and even with customers/contracts lined-up for several of the businesses.
As an example, for one of the companies that made buffing wheels I'm still shocked that they were turned down five times for a loan when they needed about $125k to start-up and already had two contracts that totaled over $300k in sales for the first year. The owner of my company loaned the guy $70k and the guy got a second mortgage for his house for the rest. The business now has about 40 employees, and the guy recently moved from his $40k mill village house into a $600k house on a lake. The owner and I (obviously) put together a very sound plan, but the banks just weren't interested in providing a loan.z