New venture fund in Utah offers hope for small firms -Lender licensed to give loans to Utah companies

Shrinking venture capital funds have made it hard on small businesses.
"The biggest problem rural America and small businesses have is venture funding," said Elton Ringsak, Small Business Association
regional administrator for Utah and five other Western states.

By Dave Anderton
Deseret News business writer

But a new fund is promising some hope for small businesses searching for capital.
On Thursday, UTFC Financing Solutions LLC, a Salt Lake-based private lending institution, was presented with a Small Business
Investment Company license, one of only nine firms in Utah to hold the license. The designation, which was initially approved last August,
allows a lending institution to leverage private funds with federal dollars.
Designed as convertible debt investments, UTFC has raised $9 million in private funds and $7 million in federal monies.
The fund has already helped several businesses, like Salt Lake-based Infopia, a company that helps businesses sell products online.
Infopia obtained a $250,000 loan in December and used the money for marketing and payroll expenses.
"It gave us new life at a very critical time in our business," said Bjorn Espenes, president and chief executive officer of Infopia. "We
probably would have had to resize the company had we not obtained the loan."
Most loans made by UTFC amount to $250,000, the maximum allowed, and carry a 14 percent interest rate over a five-year term.
"It’s the cheapest money we could possibly find," Espenes said.
Between 2000 and 2001, Utah’s SBIC program closed on 77 fundings amounting
to $44 million, according to Stan Nakano, SBA director for Utah.
UTFC raised all of its private monies from institutional investors, which included
Merrill Lynch, American Express Centurion Bank, Conseco, Zions Bank and Wells
Fargo.
Steve Grizzell, chief executive officer of UTFC, said entrepreneurs are no longer
calling the shots when it comes to financing.
"It’s a real swing in the marketplace from the way things were, say, in 1999 or
2000. Now, it’s 180 degrees from that. The funding entities are pretty much calling the
shots," Grizzell said.
Loans made by UTFC are convertible debt with warrants, meaning that UTFC has
the option to convert the loan into equity if it chooses. The warrant allows the option of
purchasing stock in the company at a price set at the time the loan is made.
"We’ve got about five business plans on our desk right now requesting money,"
Grizzell said. "This is a real tough time to raise money, with the capital markets down
and all of the out-of-state venture funds pretty much having pulled out."
Eight Utah companies have benefited from the new fund, including Salt
Lake-based Champion Industrial Services, Orem-based NetDocuments and
Provo-based Cogito.
Ringsak praised the new fund as a "societal need," saying most venture firms
won’t make investments in companies unless they can receive a 10-to-one return.
"You don’t get that in rural America," Ringsak said.

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