Small-business walk reveals troubles faced by N.J. company owners.Even entrepreneurs with good credit have faced tough challenges in obtaining small-business financing, according to a South Orange-based business owner.
ÂItÂs been extremely difficult,Â said Brian Boele, co-owner of the coffee shop Bonte Catering, during a small-business walk held in the Essex County township Friday morning. ÂWe put a substantial amount of our own money into this venture.Â
The small-business walk consisted of representatives from the U.S. Small Business Administration and constituent services staff members of Sen. Frank R. Lautenberg (D-Cliffside Park). Also in attendance were Douglas Newman, president of the township of South Orange Village; and Carole Anzalone-Newman, executive director of Main Street South Orange, a local organization promoting downtown revitalization.
Boele, who opened Bonte with his wife in January 2008, said they have been turned down for SBA loans from lenders such as JPMorgan Chase, Washington Mutual and, most recently, Provident Bank.
In opening their new business, the Boeles were one of the first franchisees to buy into a new franchise. But with the franchise operating less than two years, they didnÂt make the SBA-approved list of borrowers, Boele said.
The business owners instead borrowed on a number of credit cards, which raised their interest rates to 29 percent, because of their high debt-to-equity ratio, according to co-owner Elizabeth Boele. They later transferred all of the credit card balances to an American Express credit card, but then saw their credit limit slashed from $45,000 to $8,000, she said.
ÂI found SBA, in theory, represents a lot of opportunity for businesses,Â said Brian Boele, who also works as the captain of the local fire department. ÂBut it it wasnÂt for our good credit and my paycheck from my other job, we wouldnÂt be able to pay for this business.Â
The Boeles also did not qualify for the new AmericaÂs Recovery Capital, or ARC, loan program, which is offered by some SBA lenders, because the loan only applies to borrowers who have been delinquent on payments. ÂBut weÂve been paying on time,Â said Elizabeth Boele.
ÂYou see billions going to the banks, but itÂs not going down to the little guy,Â said Brian Boele.
ÂThe credit decision is all up to the lender,Â said Frank Burke, assistant district director of the New Jersey office of the SBA. ÂWe try to encourage lenders to keep up with new loans Â but to that extent, thatÂs all we can do in terms of advocacy.Â
He added that Âsome of the large lenders stopped making loans. They had made some loans that went bad, and some have not gotten back into lending for a long time.Â
However, he said the SBA could offer assistance in the form of helping a business owner to package a loan deal, as well as visiting the business owner to discuss one-on-one the details of the entrepreneurÂs situation.
The small-business walk in South Orange was the second of three such walks slated for this year. The first walk took place in Highland Park on Monday, while a third is scheduled for next week in Caldwell, according to a spokesman for Lautenberg.
E-mail Evelyn Lee at [email protected]e