HAMMOND | An owner of a community lending business led a workshop Thursday for prospective and current entrepreneurs on how to find sources of financing for their businesses and ideas.
The Hammond INnovation Center hosted Jeff Jentgen, president of Palos Heights, Ill.-based Fostrian Business Capital Corp., as part of its Smart Start Workshop and breakfast series.
While lending to larger businesses may have thawed, Jentgen said he sees many small businesses struggling to get infusions of capital from banks. Tight economic conditions have made lenders increase the scrutiny of each deal, but he said there are options for companies of all sizes, including startups.
Jentgen told about 15 people they should seek funding through reputable equity and community lenders in addition to the loans banks can make within and outside of U.S. Small Business Administration programs.
Fostrian is a community lender for financially distressed and emerging businesses specializing in factoring, a type of lending where a firm transfers its title to accounts receivable for money up front. Other financing arrangements include a borrower receiving loans from purchase orders, contracts or credit card receipts.
Having a strong balance sheet is one of the ways companies can put themselves in the best position to receive funding, Jentgen said.
He said two mistakes business owners can make is not understanding what financing would be best for their current situation and saying yes to the first lender that offers them money. Under some equity arrangements, owners may have to give up a portion of future profits or of company ownership in order to get capital or a business consultant.
Jentgen said the key is shopping around.
"I see too many companies latching on to the first company that approves them," Jentgen said.
He also said while at the lending table, business owners should get a sense that the institution won't desert you if times get tough.
Jentgen also urged people in the early stages of forming a business make sure their business is viable and have a quality business plan. He recommended consulting with people or groups that provide the service and doing things as simple as spell checking the plan.
"That's your face," Jentgen said referring to a business plan. "That's what any potential investor is looking at."
The Hammond INnovation Center is located at 5209 Hohman Ave. For more information about future workshops, call (219) 750-1200.