By James Wright, Special to the

Entrepreneurs who operate their businesses in the District of Columbia’s Eastern End often complain about getting capital to fund their businesses. However, a lending expert with the Washington Area Community Investment Fund (WACIF) recently told a group of entrepreneurs how small business financing works.

Stephanie Thomas is the director of Programs and Small Business Services for WACIF, a non-profit community loan fund based in the District but reaching Prince George’s and Montgomery counties and Northern Virginia. Thomas was the keynote speaker for the Marshall Heights Community Development Organization’s “DC First Fridays”, a monthly networking forum, that took place July 6 at the organization’s headquarters in Northeast.

Stephanie Thomas is the director of programs and small business services for WACIF. (Courtesy photo)

“These events allow Ward 7 business owners to network with local government officials and others to provide information about opportunities that are out there for them,” Babatunde Oloyede, president of the development organization said. “We want to help Ward 7 residents start and grow their businesses.”

Past speakers for DC First Fridays have included D.C. Council Chairman Phil Mendelson (D) and D.C. Council members Elissa Silverman (I-At Large), Anita Bonds (D-At Large) and Robert White (D-At Large).

Thomas talked to the gathering of 35 about the five stages of a business; existence, survival, success, take off, and maturity. She said that when businesses get money they should pay their bills, meet other obligations, and have some sort of way of paying off debt.

Thomas talked about financing in terms of self-financing, using financial institutions such as banks or credit unions with loans or lines of credit or both. She also talked about alternative methods of getting capital such as an asset-based loan, purchase order financing, accounts receivable financing and factoring.

“We had one customer whom we helped with a bridge loan,” she said. “We gave that person a $7 million loan and they paid it back in eight hours.”

Thomas talked about the “Five Cs of Credit.” They are character, capital, capacity, collateral, and conditions. She also talked about the importance of a balance sheet, profit and loss statement, and cash flow document.

She warned against business owners who used their company’s profit for personal use. “Taking money out of your business is very rarely explained well,” she said.

She explained credit scores, saying that 350 is considered very low while 700-plus is positive. “This really affects the type of interest rate that you will get on your loan,” she said.

She said WACIF has no minimal credit score to get a loan with it.

Thomas told the AFRO that getting financing from a Black bank is fine but should be done strategically. “I believe in community banks,” Thomas, a former employee with Industrial Bank, said. “If they meet your needs, utilize them. With a financial institution, it’s all about relationships and they should be interested in partnering with you as you grow your business.”

Thomas said she’s not speaking to the entrepreneurs merely as an assignment from her job. “There will be $300 million coming to Ward 7 in the near future,” she said. “This community will not look the same three and five years from now. We are here to help businesses grow in Ward 7. Our executive director, Harold Pettigrew, is a resident of Ward 7 and wants to see it prosper.”