DCOA provides loans for small business owners
ALYSON WARD / Abilene Reporter-News
Video technology is constantly changing, and Vera Snook needed money to keep up with it.
Snook has owned Creative Photography and Video for 19 years, and a few months ago she realized she needed to purchase new equipment in order for her small business to remain competitive. She applied for a bank loan, but she was turned down because she was operating on a small scale and didn't need to borrow a huge sum.
"The banks said, 'If you need $20,000 or $25,000, come talk to us,' " Snook said - but no one was interested in supplying half that to a small video and photography business.
Snook found a brochure for the Development Corporation of Abilene's Micro-Loan Program, a program designed to obtain loans for local small business owners.
"I picked it up and thought, 'This could be what I need,' " she said.
Snook's business offers photography services, and in recent years she has worked with video. She bought new video equipment with the $11,000 she borrowed, an amount she will repay over three years.
"The new equipment gives me the capacity to do live editing," she said. "You have two cameras and can immediately pick the best shot."
Snook said the Micro-Loan program allowed her to improve her business and offer more to her clients - something she probably couldn't have done without the program's assistance.
"I knew I needed the equipment," she said. "It was a matter of knowing how to present my business. It was just perfect."
The Micro-Loan program, which started operating six months ago, is designed for precisely this purpose, said Todd Whisenhunt, City of Abilene regional business and education center general manager.
Banks are often unwilling to provide the small loans the owners of small businesses need, he said. Often there is little or no collateral, and the applicants are turned down and end up unable to start or improve their businesses.
But the DCOA's program helps business owners obtain small loans by providing up to a 90 percent guaranty on loans from $3,000 to $20,000. A minimum of 10 percent equity is required, and the money must be used to purchase supplies, inventory and equipment needed to start or improve a business - not to pay off debts or purchase real estate property.
Whisenhunt said the Micro-Loan is assisting three small business owners now.
"Most of them have been anywhere from the $11,000 to $20,000 range," he said. "Most of them at this point want to start something new."
Since people opening up businesses usually haven't built a credit history yet, Whisenhunt said, the program helps them "foster a banking relationship that has not been fostered in the past."
He said the Micro-Loan program benefits one of the fastest-growing groups in the work force.
"Small businesses employ a majority of the people," he said, not major corporations.
The program allows up to six years for the loans to be repaid.
"We definitely want to keep it as short a payout as possible without strapping them for cash," Whisenhunt said.
Max Sprinkle was one of the first people to apply for a loan through the program. A cabinet maker for the Abilene Independent School District, he decided to open a blade-sharpening business for carbide tools used in cabinet-making.
"I couldn't find anybody who sharpened blades to suit me," Sprinkle said.
A friend offered the back of his hardware store and suggested Sprinkle set up his own business. But Sprinkle needed money before he could set up anything.
"I didn't really want to go borrow any money, but I decided, 'What the heck - I'll try it,' " he said.
Since Sprinkle didn't want to borrow a large sum, he decided the Micro-Loan program might be his best chance. Through the program he learned about the process of applying for his loan and put together his proposal and projection to present to the bank.
Sprinkle was approved for an $11,300 loan, which he will pay back over four years.
"I guess it was about six weeks from start to finish," he said.
Sprinkle bought equipment immediately and has started sharpening blades "after hours and on weekends." He named his shop Texas Edge, and he said it's worked out so far.
"I want to turn it into a full-service sharpening shop," he said.
Sprinkle recently spent more money on a sharpening equipment for large paper cutting blades.
"It's picking up little by little," he said. "I think it'll work out."