There is the issues of a track record. This is really tricky to define. Without a record of sales, which a start up is lacking, the ability for forecast a year or longer out, which is essential for funding, ends up being really hard to do, thus undermines a business plan getting funded. It is one reason why lending goes to established businesses on the whole, and anyone doing a startup ends up having to get real creative to do anything, most of which is done not involving a bank.
http://articles.bplans.com/financing-a-business/how-to-get-your-business-funded/58
Commercial lenders
Banks are even less likely than venture capitalists to invest in, or loan money to, start-up businesses. They are, however, the most likely source of financing for most small businesses.
Start-up entrepreneurs and small business owners are too quick to criticize banks for failing to finance new businesses. Banks are not supposed to invest in businesses, and are strictly limited in this respect by federal banking laws. The government prevents banks from investment in businesses because society, in general, doesn’t want banks taking savings from depositors and investing in risky business ventures; obviously when (and if) those business ventures fail, bank depositors’ money is at risk. Would you want your bank to invest in new businesses (other than your own, of course)?
Furthermore, banks should not loan money to start-up companies either, for many of the same reasons. Federal regulators want banks to keep money safe, in very conservative loans backed by solid collateral. Start-up businesses are not safe enough for bank regulators and they don’t have enough collateral.
Now, once the business is established, shows a track record, then a bank will extend them a line of credit or other financing. There are exceptions to this, but this isn't the norm, as is seen by what I wrote above.
And here is more info on what the SBA does:
http://www.entrepreneur.com/article/79254
And I can tell the tale of a local tea room in the area that got squat from the bank, but now established, they want to lend money.
