As part of our ongoing series on small business funding, I sat down with Dave Price, whose firm, Bennett Design and Landscape, is a nationally recognized landscape architecture firm and a fixture in the Atlanta landscape design scene. He shared with me his personal observations and described his experience applying for an SBA loan.
Your story is a classic start-from-scratch American small business story. Can you share a little bit about how you went from not having a business to a $5 million business with 13 employees a few years later?
My partner and I both had full time jobs. He was a landscape architect and we thought why not make some money on the side designing and installing small landscape projects for homeowners? We soon realized that once we earned our customer’s trust on the small jobs it quickly went to, “I need a new driveway or retaining wall.” Within a year we thought we had enough business for one of us full time and a small office in the basement. A year and a half later we had an office manager, and a couple of employees and we were both working in the business full time.
Whenever owners of small or start-up businesses ask around about financing they are often advised to look into an SBA loan. When you started thinking about getting an SBA loan, how did you research the process and how did you get started?
Around that time we already had a $60,000 working capital line of credit and an additional $15,000 line of credit secured by our building, plus a HELOC on my home. We knew nothing about SBA loans. We already had depository and lending relationships with a couple of Tier 1 banks so we started there. They explained the process to us, looked at our P&Ls and Balance Sheet and gave us packets outlining the process step-by-step.
With your existing lines of credit, you had already been through the underwriting process before. What was different about applying for an SBA loan?
The level of paperwork involved. We learned it wasn’t just a lot of paperwork for us; it was a lot of paperwork for the bank too. We also had a misconception. We thought, here was the SBA with a pile of government money to help small businesses to grow the economy. We found out that the banks are really lending their own money and the government was just acting more like the FDIC, as a back up.
The bank was much pickier than for a standard line of credit. The SBA wanted to know specifically how you were going to use the money and how it was going to impact your business. In the end, both banks told us this is going to be a mess. It’s going take a lot of your time and your chances of getting approved for the loan are maybe 30%. We were bankable but weren’t nicely fitting into the criteria. They explained that we were not a minority or female owned business. We weren’t doing work for the government.
To come – Part 2: That’s not the end of the story though. You tried again!
This post is part of a series on funding small and medium sized businesses; first-hand accounts from people who have been through it from knocking down SBA loan hurtles, to how venture capitalists and private equity partners think, to what’s new in getting an old school line of credit.
Dave Price started his landscaping design and architecture firm in Atlanta with a $100 investment. Fourteen years and several local and national awards later, Bennett Design & Landscape’s designs have been featured in Southern Living and Atlanta Homes & Lifestyles.
Sandra Chesnutt is a Marketing Senior Manager with Ftrans. Ftrans combines outsourced accounts receivable management with fast and affordable access to funding – providing small and medium businesses the cash they need to grow and take advantage of market opportunities.