Concept of a plant and a lot of golden coins isolated on white background

By Jeanette Prenger, President, EccoSelect, WIPP Board Member

Twenty years ago I founded my company in a way that a lot of entrepreneurs do when entering the service industry; I created a business plan to provide services in a field that I had a lot of experience in – IT. Growing up as a software engineer and earning promotions into management gave me the confidence that I could offer the same type of service as more expensive firms supplying contractors in technology. I was my first billable contractor and did not quit my ‘day job’ until I had the security of knowing I would still have a paycheck coming into our household. By paying myself a salary similar to what I was earning in corporate America and saving the profits, I was able to self-fund a dozen contractors over the next year.

Fast forward twenty years later. We have several million dollars available in a line of credit. I still own 100% of my company but I have a dilemma. In order to accelerate into the next level, I need to look at funding mechanisms other than my line of credit. Those dollars are already spoken for by our accounts receivable.

So what’s the problem? Banks are hesitant to provide traditional loans to grow businesses if the business can get funding elsewhere. The SBA provides loans, of which I leveraged after 9/11, but the price was high. The interest was over 7%, the paperwork extremely time consuming and required outside assistance to help make sure that we could get a loan needed to cover losses incurred by bad receivables.

I’ve seen other companies similar to flourish with a couple of observations. One, they had investor money put into the company and the culture was driven by a quick ROI back to the investors. Ownership was diluted but the investments allowed the company to hire the type of expertise needed to grow the business. Secondly, the businesses had executives who understood how to access capita including what was needed was preparation, where to go and what the risk / rewards could be.

As a woman and a minority, my education did not prepare me to go the route of seeking investors. Nor, do I really understand how to navigate through all the red tape that banks have discussed with me if I want to borrow money to acquire another business similar to mine. Education, especially to small business owners and to disadvantaged businesses (minority, women, vets….) through the SBA, local banks, and community banks on how we can grow businesses with shared risk would be a tool that many businesses would welcome. Banks and traditional lenders were already risk adverse prior to the new regulations and oversight that have caused them to decrease loans to small businesses for growth. They are hesitant to assist in providing education to actually gain capital and yet banks, and the government, bail out big businesses.

Our elected officials need to look at the stimulus they could facilitate if small businesses and disadvantaged businesses had access to capital. If incentives were given to lenders to educate businesses about loans, the types that work best for their companies and actually provided the capital needed.

If small business is truly the ‘engine of our country’ let’s provide some fuel!

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