SBA Touts Small Business Success Stories of The Berkshires
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Steve Oakes has a really cool washing machine — well, actually four of them.
Then she got cancer and her perspective changed. For years she had it in her mind that one day she would be able to own the gym where she was a trainer but always saw it as an intimidating risk.
But after cancer, she realized the worst thing that would happen with a business is that it would fail, not kill her.
So she went all in for it. It took some 10 months to finally work out a deal but eventually, she purchased Lenox Fitness Center and Spa — now called Lenox Fit — and transformed it into what she envisioned.
Her plan was to have a physical therapy business rent out the spa area and that happened in one year — not the three she expected. All of the equipment has been revamped. There are more and more businesses and trainers leasing space.
But the biggest turning point isn't what immediately strikes the eye, but what doesn't. It was estimated that she needed $70,000 worth of investment in the air system. But she worked with more contractors and ultimately decided to do an insulation project instead. That freed up money for her to pave the parking lot.
Those two projects were a large part of Merritt being able to grow her income exponentially. But they wouldn't have been possible without the help of the U.S. Small Business Administration.
"I didn't have the capital needed to put down," Merritt said.
The federal agency provides loans to small businesses to help them grown. Wendell Davis, the Region I New England administrator, said that capital component is what ultimately sinks many businesses as the owners just try to squeak by without putting in needed investment.
"A lot of small businesses start without that capital piece, or they wait too long. They try to do it with sweat equity and a credit card here or a credit card there," Davis said.
Now three years later, Merritt is seeing the fruits of that early labor and has invested another $20,000 more of her own capital — without using a loan — to further upgrade the historic farmhouse in which her business is located. And she's got plenty of plans for future growth.
Jefferson Diller and his wife, Klara Austin, started their business out of their apartment in 2007. Klara's Gourmet Cookies started to catch on and they moved into a house in a commercial zone. They started adding employees, and are now up to three full-timers and a part-timer. But the demand from stores in every state continues to grow.
"We work 13-14 hours a day at this point, which we hope we will moderate," Diller said of him and his wife.
They're running out of space, but not for long. They found a building on Water Street in Lee and with the help of a U.S. Small Business Administration loan are building it out to double capacity. And with that, they'll be adding two more people.
Massachusetts Director Robert Nelson said the SBA gives out millions of dollars worth of loans. There are lenders throughout the state that offer the assistance. An SBA 504 loan lowers the amount down a small business will have to put in order to secure funding and some SBA-backed loans guarantee banks 75 to 85 percent of the borrowed amount.
"Last year in Massachusetts, we helped about 2,800 small businesses get about $800,000 million in capital support. The smallest loan was for $1,000 and the largest was $5 million. Most of our loans in Massachusetts are under $150,000. We are really successful with low-dollar loans," Nelson said.
There are 150 lenders across the state equipped to offer those loans. Melissa Tremblay, vice president of commercial lending for Adams Community Bank, worked with Diller and Austin on their loan. She said the bank financed the entire project up front after the couple spent two years looking for a location.
Tremblay said Adams Community Bank alone has five loans through the SBA's guarantee program and two through the 504 program this year.
Davis said the idea isn't to become a lender, but rather to help banks expand their offerings to clients who may not traditionally be eligible.
"We're not here to replace banks. We are here to help banks sleep at night. A lot of startups don't meet all of the criteria a bank needs so we're here to expand that reach for the banks to reach out to," Davis said.
Right here in the Berkshires, the Massachusetts Small Business Development Center Network serves as the way to connect small businesses to such loans and provide other resources.
"It is access to capital. It is counseling, technical assistance, but it is also government-contractual assistance in trying to help small businesses be more successful in selling to the federal government," Nelson said.
Keith Girouard and Jayne Monteleone-Bellora both work out of the Dunham Mall office in Pittsfield and connect the right players. Such was the case with Steve Oakes when he sought to open Green Apple Linens on West Housatonic Street.
"It was the grimiest, dilapidated, beat-up, falling-down building in Pittsfield. But what it has going for it was high ceilings, wide open space, a parking lot, a place to pull a truck in. We just kept going down the list and the price was very good," Oakes said.
It was the old Tire Warehouse, which moved to a nicer location on Merrill Road. Oakes had originally wanted to open such a business from the basement of a building he already owns on North Street but that wasn't feasible.
He bought the building, with help from Mill Town Capital and an SBA loan, and cleaned up the inside, put in a new gas line, power, and water line to the street, and purchased state-of-the-art laundry machines. He had just one customer, but one worth bragging about: Canyon Ranch.
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By the end of the year, Klara's Gourmet Cookies will be baked in the new location and there will be a whole lot more for sale.
Oakes said he has very efficient technology that includes beads being used to reduce the amount of chemicals, computer-controlled measuring of water content, and a $70,000 ironer to cut down manpower needed for folding from four to one. The chemicals are all computer-controlled and mixed through pre-set recipes and the beads use a static charge to reduce the amount of detergent and water needed.
"There is still detergent involved but it is about half. There is still some tumbling but it is more of making sure the beads get access to every surface," Oakes said.
Because of the increased efficiency, Oakes said he can do the laundry for hotels at a lower cost. He plans on expanding in the future, too, as more hotels close their in-house laundries and contract that work elsewhere.
The three business were all stops from U.S. Small Business Administration officials on Wednesday, the day before a business summit on loan programs at the Berkshire Athenaeum. Davis said federal officials from all over will be meeting in the Berkshires to particularly promote rural development and programs helping small businesses more easily get federal contracts.
"This is one of a series and we are continually scheduling more of them," Davis said, with Nelson adding that it will be the second one in Massachusetts.
Tags: business development, loan progams, SBA, small business,
