Panelists Megan Sheehan, Elena Mikhaylova, Robin Roberts, Sean Avery and Jim VanHorn answered financing questions.

Two major events influenced veteran Fred Johnson: the Oklahoma City bombing and the 9/11 attacks. 

He was living in Oklahoma City in 1995 when the federal building there was bombed in a domestic terrorist attack. Johnson moved to Texas, where on the day of the 9/11 attacks he was working as a travel assistant.

These events caused him to “start protecting the homefront,” according to his website. He began working airport security in Texas, then moved to Colorado Springs to go to college and start a business, Liberty Quest Contracting.

The business sells office supplies, and he is working on selling to government installations.

“I came here to go to college, and I found other veterans who were still having problems finding jobs,” Johnson said. “That’s the initial reason for starting this: to develop jobs for veterans.”

Johnson was among a large group of veterans seeking assistance and networking last week during the Small Business Development Center’s 2014 Veterans Conference at the Pinery at the Hill. Also among the 150 or so in attendance was Gary Stacy, a former soldier whose business is videography for the web. Most of the conference had to do with financing, and Stacy said he’s attempting to launch his business with $10,000 of his own money.

The conference featured sessions on brand presence, government contracting, QuickBooks, the media, federal procurement, franchising for veterans and funding.

The session on funding options featured Sean Avery of the Colorado Lending Source; Elena Mikhaylova, Crowdfund Productions; Robin Roberts, Pikes Peak National Bank; Megan Sheehan, Colorado Enterprise Fund; and Jim VanHorn, Small Business Administration.

The panel was moderated by Kelly Manning of the Colorado Small Business Development Center. For a loan application for a start-up that won’t produce immediate income, a bank will look for cash flow and collateral, said Roberts. If it’s an app or a different kind of business, an angel investor is a good place to start to obtain money, she said.

The High Altitude Investors are angel investors based in Colorado Springs who want to invest in start-ups, while venture capital is for larger businesses, Roberts said. While the HAI meets monthly here, there are not many venture capitalists in southern Colorado.

“You will want at least $5 million” to request from a venture capitalist, said Mikhaylova.

“If you are willing to give away a percentage of your company, and it’s the only way you can start, maybe that’s an option,” Manning said of asking angels to invest. “There are not any angels in the world who are doing things out of the kindness of their heart.”

Angels want a quick rate of return, from one to three years, Manning said.

Manning said budding entrepreneurs will often obtain funding from “friends, family, fools — the three Fs.”

Funding for veterans is made through the SBA’s boots-to-business program, to transition soldiers from active duty to the business world, VanHorn said.

Colorado was one of only four states to increase its lending to the small business community through the Small Business Administration, VanHorn said. He underscored the need for veterans to “mark on your applications that you’re a veteran.”

The CEF offers business acceleration services, which include legal advice, marketing assistance, cash flow planning, human resources advice and more, Sheehan said.

“We understand once you start a business, the learning doesn’t end. And you’ll still continue to have questions come up,” Sheehan said.

Commercial loans are quite different from mortgages or car loans, Roberts said. “With a car and a mortgage, just make payments every month and no one’s ever going to bother you again,” she said.

When a client signs commercial loan paperwork, it might require yearly additional financial information, tax returns, financial statements and the like, she said. If it’s a start-up business, the bank may require quarterly financial statements, “so they can look at where your business is versus the projections you made,” Roberts said.

“They’re going to re-run your numbers. Sometimes you have covenants that say you can’t exceed a certain debt ratio,” Roberts said. “Being in default of the loan can mean more than just making payments. You can make all the payments and still be in default of the loan. Absolutely understand the covenants.”

In closing, Manning asked for one- to two-word answers to the question: What is the main reason businesses are denied finances?

The panelists said denials happen if the business is speculative, illegal or a pyramid scheme. Denials also happen when entrepreneurs are not organized, they lack equity or planning. Of credit scores, Roberts’ bank does not rely on them.

“We’re looking at borrower history. I’ve seen credit scores of 750 that I wouldn’t loan to, and I have borrowers who probably have a 500 credit score that I would loan to any day,” Roberts said. “Every borrower has a story, and that’s why we don’t look at credit scores.”

Sheehan said the CEF is also flexible.

“We provide loans for people who have credit scores under 500, but you’re not going to qualify for more than $4,000,” said Sheehan, who added people need 640 to qualify for a loan of $250,000, the CEF’s maximum loan amount.

“If you have a 640, you’re golden,” Sheehan said.