Learning the Ropes

By Melby, Todd | Independent Banker, April 1998 | Go to article overview

Learning the Ropes


Melby, Todd, Independent Banker


Colorado small business loan program ties practical training to start-up funding

As Sato Alvarez will tell you, when it comes to building a new furniture company, constructing cabinets is the easy part.

"It's hard to go to a bank and say, 'I don't have a job, but I want to open a business. Can you lend me money?"' says Alvarez, formerly a manager at an aerospace manufacturer in Pueblo, Colo.

Before quitting his day job, Alvarez checked himself into El Pueblo Inter-Development Corp.'s Business Development and Loan Fund Program. The nonprofit organization, known as EPIC, helps aspiring entrepreneurs acquire the funding and business skills to survive in the rough-and-tumble small business marketplace.

Just months after finishing the 15week program in 1995, Alvarez snared real estate and operating loans from Minnequa Bank of Pueblo, one of EPIC's biggest financial backers. Today, annual sales at Alvarez Cabinetry and Furniture Co. are soaring. After earning $120,000 in revenue during its first year in operation in 1996, the company's sales jumped to $205,000 last year.

Alvarez's success also brings a smile to Dick Seul's face. As chief operating officer and executive vice president at Minnequa Bank, Seul provided $25,000 toward EPIC's 1994 funding pool for start-up small business ventures. The Minnequa Bank contributed five times more than two regional megabanks.

Seul says he decided to back Alvarez's company-and get involved in the EPIC program-to help stem the alarmingly high failure rates of small businesses. But the program also helps Minnequa Bank offer an important customer service. "One of the most hated things that can happen [to a banker] is to have a customer with a business idea get turned down for a loan," he explains. "Now, we don't have to turn anybody down for a loan."

Instead, Minnequa Bank, which has $287 million in assets and six Pueblo-area locations, picks up the tab for the budding entrepreneurs' EPIC business training at Pueblo Community College. Though the training might seem like a barrier in the lending process to some, Alvarez thinks it's one of the best things that ever happened to him.

"It's a real must if you ask me," Alvarez says. "There are a lot of wolves out there that can get you if you don't know what's going on."

EPIC program loans to small businesses have ranged from $4,000 to $50,000. The program's loans, which come from a pool of participating banks, are earmarked for low and. moderate income people. So far, after two years running, the program has never had a borrower default on a loan, Seul says.

However, Seul adds, "The key to the whole program is the educational process." During the EPIC training, students learn the basics of launching their own businesses, including everything from developing a business plan to accounting and marketing. …

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