Business owner Even with good credit, SBA loans hard to find

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.

“It’s been extremely difficult,” said Brian Boele, co-owner of the coffee shop Bonte Catering, during a small-business walk held in the Essex County township Friday morning. “We put a substantial amount of our own money into this venture.”

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 didn’t 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.

“I found SBA, in theory, represents a lot of opportunity for businesses,” said Brian Boele, who also works as the captain of the local fire department. “But it it wasn’t for our good credit and my paycheck from my other job, we wouldn’t be able to pay for this business.”

The Boeles also did not qualify for the new America’s 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. “But we’ve been paying on time,” said Elizabeth Boele.

“You see billions going to the banks, but it’s not going down to the little guy,” said Brian Boele.

“The credit decision is all up to the lender,” said Frank Burke, assistant district director of the New Jersey office of the SBA. “We try to encourage lenders to keep up with new loans … but to that extent, that’s all we can do in terms of advocacy.”

He added that “some 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.”

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 entrepreneur’s 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]