Boosting Small Biz With Small Loans
Opening a new business in these tough economic times is anything but child's play - a fact well known to the new owners of an indoor playground in Studio City, Calif.
"We believe in our business and know, or choose to believe that kids are the last think parents stop spending money on," said one of the owners, Juliet Boydstun.
They're counting on customers, but when it came to financing their operation, they couldn't count on a traditional bank loan, CBS News correspondent Sandra Hughes reports.
So, like many small business owners, they're looking for funds elsewhere. A local non-profit helped them get a micro loan, a loan of less than $35,000, along with other funding.
It came with some strings attached.
"It's not like a bank. You have to have a very concise business plan. You have to account for every cent," said Lucinda Lent, who opened the play area with Boydstun.
At the Valley Economic Development Center, when the ladies got their loans, Director Roberto Barragan says demand has skyrocketed.
"We've been doing a loan a day. That is four times the rate that we usually are at this time of year," Barragan said.
The center acts as a go-between. Identifying a qualified business that needs money, then finding a bank with liquidity willing to make the loan. The Small Business Administration guarantees that at least part of the loan will be repaid.
Then there are the smaller banks that avoided making risky home mortgage loans, so they have the money to lend. To identify one of these banks out of the 8,500 institutions in the U.S., go to the Small Business Administration.
"When we got that phone call that said 'You've been approved,' I called my family members immediately and said 'We got it!' and we were shocked," said Iristi Contos, who, along with her family, who got $1.7 million in an SBA loan from Excel National Bank to expand the restaurants they've owned for 45 years.
It was a welcome surprise after they'd been turned down by their longtime bank, despite good credit.
Read more about the story on Couric & Co. blog.
"We have to be as risk-taking as we have always been as small-business owners and search for those loans and expand as much as possible because this is actually our time to shine," Contos said.
Despite the stormy financial outlook, well-qualified and tenacious businesses can find the money they need to flourish.