In the loose and fast '80s, companies like Baltimore furniture manufacturer L.U.I. Corp. would have had no difficulty getting capital for growth or improvements.
Now, however, even with L.U.I.'s sound financial history, no one is clamoring to provide it with cash.
"What we're finding is, 'If you don't need it, we'll be happy to lend it to you. If you do need it, we won't take the risk,' " laments L.U.I. President Jim Crystal.
Lenders and investors admit they've become much more conservative. But, they say, money is available to good companies in need of capital. They just have to look harder to find it, then be willing to make deals to get it.
Here's a look at some options.
* Bank loans. "We're awash in cash. We need to lend money for any valid reason," says Bill Quade Jr., senior vice president of First National Bank of Maryland.
"But the definition of 'valid' has been adjusted. In the past, we might go into a difficult company and make a loan because we have collateral. Regulators today look through collateral. They want to see performance."
He adds, "If you have three or four years of profits and growth and management looks good, there shouldn't be any reason why a company shouldn't get the financing it needs to finance growth."
But growth companies don't look like that. They are trying to get JTC started, they make mistakes, they have to spend a lot of money to get their companies up and running. Generally that means a lack of profits.
"Banks aren't supposed to take risks. It's not in their charter."
But Mr. Quade says federal and state programs are available to reduce banks' risks and encourage growing companies to stay in business.
* Government loan programs. The Maryland Industrial Development Financing Authority (MIDFA) insures commercial bank loans to encourage economic development. Among the assistance programs MIDFA backs are start-up loans to new companies with potential for significant growth.
David Steinhoff, MIDFA commercial loan officer in Baltimore, says the agency has no maximum loan amount. "I have done loans from $20,000 to $18 million," he says.
MIDFA does, however, limit the amount of loan insurance to 80 percent of the loan, to a maximum of $1 million.
The Maryland Small Business Development Financing Authority (MSBDFA) is another funding program especially for businesses owned by socially or economically disadvantaged citizens. MSBDFA's contract finance program backs loans up to $250,000.
Besides direct loan programs, the state Department of Economic and Employment Development and MSBDFA provide other financial assistance to small businesses. One program offers equity investments to franchises. Another program guarantees bid, payment or performance bonds for eligible businesses with government public utility contracts.
Federal assistance is available for some companies, too. The U.S. Small Business Administration encourages the creation and development of entrepreneurial businesses by backing commercial bank loans and by offering other programs.
* Venture capital. Easy money for great ideas no longer characterizes the venture capital industry. John C. Weiss III, managing director of the Maryland Venture Capital Trust in Baltimore, says the industry is reeling from "a tremendous case of indigestion."
"It simply grew too fast," Mr. Weiss says. "There was too much money, too many managers," chasing too many doomed investments.
As a result, he says, it isn't as easy today as it was five years ago to convince venture capitalists that a business is a good investment risk.
Nor do start-up companies qualify as often for venture capital. Mr. Weiss says investors are looking for well-rounded proposals from mature companies, complete with details about how the investors will get out of the deal.
Mr. Weiss says venture capitalists usually expect to make five times their investment in a company in three years, or 10 times the money in five years.
* "Business angels." Mr. Weiss says private investors known as business angels are an outstanding source of capital.
"There are more of them, they control more money and make more deals than venture capitalists," he says. "They may not have pockets as deep, and they're harder to find. But they are not to be overlooked."
The University of Maryland's Michael D. Dingman Center for Entrepreneurship operates a computer matching service for entrepreneurs and angels. For $35 a year, the center will include information about an entrepreneur in its Mid-Atlantic Investors Network data base, and will try to match them with investors and venture capitalists.
"We're like a computer dating service for entrepreneurs and investors," says Susan Green, manager of the center's Baltimore office.
Alfred Whiteman, director of Walpert, Smullian & Blumenthal, certified public accountants and management consultants, says most companies find business angels through networking contacts.