With Increase in SBA Loans in Minnesota, Borrowers Take First Step with Banks
Five years ago, Darrold and Marty Glanville used a $150,000 loan from the Small Business Administration to purchase a mill and other equipment to expand their North Branch, Minnesota, Sunrise Flour Mill business.
The couple started the business after retiring from manufacturing and teaching careers. By the time they asked for help from the SBA, the company already had restaurants buying the flours they made from heritage organic wheat.
Today, they sell various flours, doughs, and baking mixes in stores and online to consumers in every state. And the SBA recently recognized the Glanvilles as Minnesota Encore Entrepreneurs of the Year.
“It could be called something like ‘Stupid old people still own a business and work hard when they approach 80,'” Darrold Glanville said. “But we are very honored and very impressed with the SBA and the help it has given us.”
The SBA supported $1.25 billion in its traditional Minnesota loan programs in fiscal year 2021, according to Brian McDonald, district manager of the SBA’s Minnesota District Office.
This represented a 58% increase in dollar amount over the previous year, and the 2,358 loans supported or created 26,520 jobs in the state. For 2022 so far, the SBA’s loan amount in the state is up 9% from that baseline.
“SBA is a great tool for acquiring a business or growing a business,” McDonald said. “A lot of start-ups are using this, and it’s also debt financing, so you’re not giving up an equity stake in a company. For a variety of reasons, we’re seeing a boom for SBA.”
How SBA Loans Work
Traditional SBA loans don’t come directly from the agency, McDonald said. Instead, a small business owner or someone starting a business would go to one of more than 400 lenders across the state to apply.
The SBA’s 504 loan program provides long-term, fixed-rate financing for major capital assets that promote business growth and job creation, according to the agency’s website. They are available through Certified Development Companies, which the SBA certifies and regulates to promote local economic development.
The SBA’s 7(a) loan program is the best option when real estate is part of a business purchase. This loan can also be used for working capital, refinance business debt and purchase furniture, fixtures and supplies, according to the website. The agency’s microloan program offers up to $50,000 to help small businesses start or grow.
The microcredit program requires lenders to provide free counseling and education to their borrowers, McDonald said.
For other loan programs, free training is available from Score, which has more than 300 volunteer mentors in Minnesota, and small business development centers. Nine regional centers operate under an agreement between the SBA and the Minnesota Department of Jobs and Economic Development. The Women Business Centers — including WomenVenture in St. Paul and the Entrepreneur Fund’s Women’s Business Alliance program in Duluth — are the other SBA resource centers for education and access to capital in Minnesota.
“These are very good investments of taxpayers’ money in terms of return on investment, because the companies we follow, the companies that use these consulting and education programs end up growing their businesses faster, hiring more people. ’employees and repay more taxes because they increase their income,’ said McDonald.
In North Branch, the Glanvilles are considering applying for another SBA loan to pay for a larger Sunrise Flour expansion. “Our building has just about enough room for people to walk through a bit,” Marty Glanville said.
And the Glanvilles are hoping someone could use an SBA loan or other financing to partner with them as they consider taking a step back from the day-to-day running of the business.
“We have big ideas and big plans for the future,” said Darrold Glanville. “At our age, it’s time to do other things.”
Jen Bellefleur and Kelsey Lee-Karol, co-owners of New Gild Jewelers, opened their bespoke jewelry boutique in the Linden Hills neighborhood of Minneapolis in 2017 with an SBA-backed loan through WomenVenture, a newly appointed SBA lender 2022 SBA Minnesota Women’s Business Center. of the year.
At the start of the pandemic, New Gild obtained Paycheck Protection Program loans through the SBA. The company received a $10,000 Economic Disaster Loan Advance Grant from the SBA.
New Gild, which has five employees, used its $75,000 start-up loan to buy light fixtures and build its store, which opened with jewelry Bellefleur and Lee-Karol had made and pieces on consignment from local artists. .
“We would have run out of credit cards and wouldn’t have survived the long term without this loan,” Bellefleur said. “We might have had enough money to open the doors, but over the months, three to four months to follow, we would have been under.”
Kristen Denzer, founder and CEO of Tierra Encantada, used SBA loans to open five of her 10 Spanish immersion early learning centers. Tierra Enantada locations in Minnesota, Illinois and Virginia now serve more than 1,000 children each year. A six-figure SBA loan in 2013 funded the construction and equipment of its first center, in Eagan.
In an email interview, Denzer said she probably wouldn’t have opened her first center without the SBA, citing her lack of childcare experience and significant capital. A loan to buy a commercial building only required a 10% down payment with his SBA loan, compared to 25 to 40% with conventional financing.
It’s “a huge difference when you’re trying to save money for a down payment, especially with some of the larger scale buildings I’ve purchased for our child care centers,” Denzer said.
Denzer, which now uses conventional financing after reaching the SBA’s legal lending limit, is the SBA’s 2022 Minnesota Small Business of the Year.
“This recognition is especially meaningful because we were selected from among hundreds of thousands of small businesses in Minnesota,” Denzer said. “It’s a recognition not just for me, but for my team who have worked so hard alongside me over the years. It represents the impact we have as we work hard to bring our vision to life and center them in cities across the United States”
Todd Nelson is a freelance writer in Lake Elmo. His email is [email protected]