Lenders' favorite SBA success stories
April 19, 2017 11:00 AM
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Even big companies start somewhere — and many got their starts with help from a Small Business Administration loan. Think Nike, Ben and Jerry’s and Chobani, the latter of which was tabbed as SBA’s National Entrepreneurial Success Story of the Year in 2012. With National Small Business Week set to kick off April 30, American Banker asked several prominent lenders to share their favorite success stories.
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Banker meets baker
While Scott Heitkamp, CEO of ValueBank Texas in Corpus Christi, won’t cop to having a sweet tooth, he fondly recalls helping a local baker open a cupcake shop. Mary Jo Cheesman, who repaid her loan in just three years, employs several people in her Smallcakes franchise. She also continues to work as a substitute teacher for the Corpus Christi Independent School District.
“That loan made a difference for Mary Jo and our community,” Heitkamp said.
“That loan made a difference for Mary Jo and our community,” Heitkamp said.
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Paving the way
Edward Ashby, the CEO of Surrey Bancorp in Mount Airy, N.C., recounted his favorite loan story during March testimony before the House Small Business Committee. He told lawmakers how the SBA helped launch a women-owned company focused on highway construction.
While Ashby didn’t disclose the company's name, he said that since 2004 Surrey has provided it with 23 SBA loans. The company, which started with four employees and two trucks, today has 90 employees, $12 million in annual revenue and a fleet of more than 100 vehicles and other equipment.
While Ashby didn’t disclose the company's name, he said that since 2004 Surrey has provided it with 23 SBA loans. The company, which started with four employees and two trucks, today has 90 employees, $12 million in annual revenue and a fleet of more than 100 vehicles and other equipment.
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Heating up
Tom Pretty, who heads SBA lending at TD Bank, has several borrowers that have impressed him. He points to one customer who used an SBA loan to open a fast-food operation that has swelled to 10 locations.
But Pretty really crows when he remembers helping a businessman open up an HVAC company. “He has taken it to the next level” since being financed, Pretty said, adding that the business is "hiring people and creating jobs."
But Pretty really crows when he remembers helping a businessman open up an HVAC company. “He has taken it to the next level” since being financed, Pretty said, adding that the business is "hiring people and creating jobs."
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Recycled goods
Encore Container stands out as a major success story for Rich Bradshaw, president of specialized lending at United Community Banks in Blairsville, Ga. The Greenville, S.C., firm, which manufactures and reconditions industrial containers, used an SBA loan from United in 2014 to buy a plastic injection machine.
The loan’s structure — the 7(a) program lets borrowers spread payments tied to big-ticket manufacturing equipment over a much longer period than conventional loans, thus boosting cash flow — powered Encore’s growth. Employment has doubled since the deal closed in late 2014, reaching 120 workers today.
“That’s why the program exists,” Bradshaw said.
The loan’s structure — the 7(a) program lets borrowers spread payments tied to big-ticket manufacturing equipment over a much longer period than conventional loans, thus boosting cash flow — powered Encore’s growth. Employment has doubled since the deal closed in late 2014, reaching 120 workers today.
“That’s why the program exists,” Bradshaw said.
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Sweet success
New City Microcreamery in Hudson, Mass., opened in 2015 to address long waits at Rail Trail Flatbread Company, an affiliated restaurant. A storefront across the street was converted into a trendy ice cream parlor, with a speakeasy-style cocktail bar, to give Rail Trail Flatbread Company diners somewhere to go while waiting for their table.
New City’s owners turned to Avidia Bank, which maintains its headquarters next door, for a $365,000 loan. Given the startup and specialty nature of the business, Avidia steered New City to the SBA’s 7(a) program. Two years later, New City employs several dozen people and has emerged as a centerpiece of Hudson’s revitalized downtown district.
New City’s owners turned to Avidia Bank, which maintains its headquarters next door, for a $365,000 loan. Given the startup and specialty nature of the business, Avidia steered New City to the SBA’s 7(a) program. Two years later, New City employs several dozen people and has emerged as a centerpiece of Hudson’s revitalized downtown district.
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Taking care of caregivers
Ann Marie Mehlum, a director at the online lender SmartBiz Loans, has longstanding ties to SBA lending. Mehlum, once a high-ranking SBA executive, has been involved with scores of loans, but one of her all-time favorites was a deal to help three women buy a nursing home. An SBA loan allowed the trio to turn a decrepit facility into a “first-class, state-of-the-art” operation for people suffering from dementia, she said.
“They wanted to provide elder care better than they had seen in any of the facilities where they had worked,” she added. “They didn’t have what was needed to conventionally underwrite that loan. … It’s amazing what they have done, and they couldn’t have done it without SBA.”
“They wanted to provide elder care better than they had seen in any of the facilities where they had worked,” she added. “They didn’t have what was needed to conventionally underwrite that loan. … It’s amazing what they have done, and they couldn’t have done it without SBA.”
