CREJ - page 18

Page 18 —

COLORADO REAL ESTATE JOURNAL

— November 4-November 17, 2015

Finance

here was a time when

bankers had the power

to make or break an

entrepreneur’s dreams with the

stroke of a pen. Approaching a

bank for a loan meant sweaty

palms and fear of rejection.

Loan criteria remain strict, espe-

cially in the wake of the finan-

cial crisis and housing collapse

five years ago, but bankers are

far less intimidating today, in part

because there are many other

options when seeking capital.

AU.S. Small Business Adminis-

tration guaranteed loan remains a

strong choice in business startup

financing, if you can qualify. It

offers a low-cost way of capital-

izing your business, but if you

go that route, make sure you

approach it with all of your finan-

cials at the ready. This is a link to

SBA’s six-step guide,

www.sba.

gov/blogs/6-step-guide-how-

get-business-loan, to help you

prepare to attain financing from

the SBA.

But the SBA or the bank may

not be your best first source of

capital, as so many more commu-

nity, nonprofit and online lending

options exist for new businesses

with little credit or cash.

The community of Ignacio

recently benefitted from an out-

of-the-box funding source that co-

owners used to open a brand-new

grocery store called Farmers Fresh

Market.

After the town’s only grocery

store closed in 2014, two local

families earned backing from the

Colorado Fresh Food Financing

Fund, which formed a partner-

ship between Colorado Housing

and Finance Authority and the

Colorado Health Foundation. The

funding concept was developed

to increase access to fresh foods

across the state.

The CHFA loan of $408,000

provided part of the construc-

tion financing that led to a

22,000-square-foot grocery store

that now employs more than

40 people. Farmers Fresh Mar-

ket was the first CO4F project in

Western Colorado, and the loan

is in partnership with Vectra Bank

Colorado’s Durango office to pro-

vide permanent financing.

While this public-private part-

nership proved bountiful in Colo-

rado’s Four Corners region, busi-

nesses have found much-needed

funding through many other

sources as well in their effort to

realize their dreams.

While Internet crowd funding

has become popular, entrepre-

neurs should always adhere to

common-sense business practices.

Whether they seek a standard

bank loan or hope to bring an

investment angel into the fold,

it’s best to show investors that the

person at the center of any busi-

ness venture has the experience to

handle the job.

Be ready to present a solid

business plan and have all work

e xp e r i e n c e

and

finan-

cials open for

review.

Still, there

are

other

o p t i o n s

should

e n t r e p r e -

neur’s experi-

ence or credit

history lack

the gravitas

needed

satisfy a tradi-

tional lender.

If you want

funding for a startup, and don’t

have strong credit, equity or expe-

rience, here are some options:

• Micro-lenders like Rocky

Mountain Micro Finance, Accion

or Colorado Enterprise Fund

are organizations that oper-

ate with a community develop-

ment thought process. They are

privately funded to help some

startups and existing businesses

that need funding. Often they will

lend smaller amounts than banks

are traditionally interested in, so

loans under $50,000. They may

even loan as little as $500. These

organizations can look beyond

things like credit issues that banks

just can’t.

• Angel investors can help pro-

vide seed money to start a busi-

ness. They will often look for a

defined exit to their investment

and a strong growth plan with

high margins.

• A “factor” is a specialized

lender that will purchase your

receivables and therefore looks at

your customer’s creditworthiness

and your ability to performon the

contract. Factors can be good if

you are in a high-growth industry

that is providing goods or services

to large companies since banks

can’t really adjust a line of credit

every two months to accommo-

date your next big order.

• Another way to get startup

financing is to consider tapping

into your home equity, retirement

fund or other personal assets.

These may provide an alterna-

tive

source

of financing

(if you have

continu-

ing source of

income)

they may pro-

vide an alter-

native way to

invest equity

in your new

business. For

example, you

can either liq-

uidate your

401(k) or you can self-direct the

401(k) to invest in the stock of

your new business.

There are also less well-known

options, including a lending arm

of Whole Foods, which is geared

for culinary businesses. A recent

report from Bloomberg.com stat-

ed that the Whole Foods Local

Producer loan program has lent

out $10 million since 2007.

Budding new business types

have been known to max out

credit cards or double down on

home loans to fund their ventures.

Both options come with challeng-

es. Home loans can be difficult to

get approved if you don’t have

a continuing source of income

as you start your new venture

and credit cards can often come

with higher fees and interest rates.

Those following this path must

be aware of the risks and have a

defined plan for paying the loan

back in a reasonable time frame.

Bloomberg.com reports that

online lenders have gained trac-

tion. One online lender, OnDeck,

makes term loans up to $250,000

and generated $65 million in rev-

enue in 2013, according to a recent

Bloomberg report.

Another alternative comes from

Peer to Peer lending, or P2P. This

approach cuts out the bank and

lets lenders and borrowers con-

nect online. Two of the leading

P2P sites are Prosper.com and

LendingClub.com.

Borrowers must take the time

to really understand the terms

of these online lenders because,

although they can be a quick

source of cash, they often charge

very high interest rates and fees

(both up-front and ongoing) and

require daily payments and a very

short timeline to pay back the

loan.

PayPal has even joined the lend-

ing game and offers financing for

its business customers at PayPal

Working Capital.

Other options include: tapping

into personal savings, seeking

assistance from friends, govern-

ment guaranteed loans, venture

capitalists and grants.

Often, entrepreneurs can use

any one or more of these funding

sources to get started and build a

track record and healthy balance

sheet, and then the bank may be

the place to go for loans that will

help them build growth.

Creative, alternative options

to financing a new business

Travis Craig

Senior vice president,

Durango market

president, Vectra

Bank Colorado

Mark Abell

SBA division manager,

Vectra Bank Colorado

Design. The sales price was

$363.12 per sf.

Advanced Property Services

completed the up-leg of a 1031

exchange with the acquisition of

Springhill Business Center, a two-

building, 60,480-sf warehouse

portfolio on 3.3 acres at 908-950

Salida Way and 909-943 Tellu-

ride St. in Aurora. The property

was 100 percent leased to 17 ten-

ants and also received numerous

offers, according to Leger.

Leger and Finholm handled

both sides of the transaction.

Springhill Business Center was

built in 1998. Many of the leases

are belowmarket, offeringupside

potential to the new owner.

Merritt Realty Capital LLC

sold the property. The price was

$72.75 per sf.

Advanced

Continued from Page 8

Whether they

seek a standard

bank loan or

hope to bring an

investment angel

into the fold,

it’s best to show

investors that the

person at the center

of any business

venture has the

experience to

handle the job.

For Company Profiles, Contact

Information & Links, Please Visit

www.crej.com

Commercial Real Estate

Lenders

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