SANTA CRUZ -- Ben and Sarah Sims got a $150,000 loan from Lighthouse Bank to remodel and open a new eatery, Bantam, on the Westside, hiring contractor Pete Testorff and creating restaurant jobs for 15 people.
Pamela Whittington got a loan for more than $500,000 from Wells Fargo to buy Vapor Cleaners and merge it with her business, Classic Cleaners, thus avoiding laying off any of her 28 employees.
Tryg Thorensen got a construction loan from Santa Cruz County Bank for $1.25 million to expand beds from 14 to 21 at De Un Amor, a residential care facility for the elderly in Corralitos he's run for 18 years.
Manuel Rodrigues, who owns five Ace Hardware stores with his brother Carlos and employs 52 people, refinanced and consolidated loans at Santa Cruz County Bank, and hired three more employees for the Watsonville location.
These four local businesses are among 49 that obtained loans guaranteed by the U.S. Small Business Administration in fiscal 2012, which ended Sept. 30.
Santa Cruz County Bank has been a top SBA 7a and 504 lender in Santa Cruz County for the past seven years. The 7a loans are the most used type of small business loan while 504 loans are for long-term financing for land and buildings.
Locally, SBA loans peaked in fiscal 2006, when 93 loans were extended totaling $25 million.
As the recession took hold, SBA loans dropped in fiscal 2009 to 56 loans totaling $12 million. The numbers rebounded in 2010 to 68 loans for $17 million and 59 loans for $22 million last year, then dipped again.
"Have a sound business plan with reasonable projections prepared with the help of the Small Business Development Center," advised Teresa Thomae, who oversees the Central Coast Small Business Development Center at Cabrillo College in Aptos. "The plan will identify how much you need to borrow and match the use of funds with the sales forecasted in the plan."
For a startup sole proprietor, she recommended a credit score of 720.
Ben Sims, formerly chef at Avanti, said Lighthouse Bank was the only lender willing to take a chance on Bantam, specializing in pizza made in a wood-fired stove from Mugnani of Watsonville.
"They knew me, they knew my wife. That went a long way with them," Sims said.
The bank's status as a preferred lender with the SBA was a plus.
"If they (Lighthouse staff) approve it, it's approved," Sims said.
After the county bought the shopping center where Whittington operated her wet cleaning plant, she couldn't lease and complete construction before her move-out date. Buying Vapor Cleaners, founded a century ago, gave her the right space if she could finance the deal.
She thanked staff at Wells Fargo, saying, "They went to bat for me."
She also appreciated the SBA review, which she felt validated her decision and led to the seller reducing the asking price a bit.
Her advice to business owners: Get your paperwork ready 60 days in advance and watch out for the Christmas shutdown.
Thorensen wanted to expand because of the demand for elderly care, particularly people with dementia, and low interest rates,
"Santa Cruz County Bank had the best deal," he said.
"It took me eight years to get the building permit," he added.
He hopes contractor Saide Farhat will finish the job by next summer.
Thorensen has 10 employees and with seven more beds, he plans to hire two more employees and improve wages.
"The staff is the key to success in this business," he said.
"The past 4½ years have been really interesting times," said Rodrigues, who bought his first hardware store in Watsonville in 1987. "Having a local bank that you can talk with somebody, it made a huge difference," he added.
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During the fiscal year ending Sept. 30, lenders made 49 SBA loans in Santa Cruz County totaling $15.1 million, down from 59 loans for $22.4 million in fiscal 2011.
Lender Loans Total
Santa Cruz County Bank 8 $3.77 million
Wells Fargo 4 $2.8 million
EDF Resource Capital 4 $1.51 million
Santa Cruz Community Credit Union 13 $1.48 million
Lighthouse Bank 4 $860,000
Pacific Enterprise Bank 1 $750,000
CDC Small Business Financial Corp. 1 $645,000
Heritage Bank 1 $580,000
JP Morgan Chase 3 $534,600
Valley Community Bank 1 $500,000
Mortgage Capital Development Corp. 1 $ 471,000
Monterey County Bank 3 $385,000
Capital Access Group 1 $362,000
Pacific City Bank 1 $225,000
Plumas Bank 1 $150,000
Borrego Springs Bank 1 $50,000
Compass Bank 1 $25,000
SOURCE: U.S. Small Business Administration San Francisco office