Businesses have varied SBA loan experiences

Shannon Debner readily admits that she does not like borrowing money.

"I would rather just pay my bill than make payments each month," said Debner, vice president and co-owner of DPI Quality Custom Finishes with her husband, Mark.

That said, the couple applied for a Small Business Administration disaster loan in July 2008 after the rampaging Cedar River in June 2008 flooded their office and shop at 220 Sixth St. NW. The flood wiped out the business plan the couple had prepared when they expanded their enterprise just six months earlier.

"We took a loan out from our lender in January 2008 to purchase the entity (Chew's Painting and Staining) that had been in the building on Sixth Street NW. We did not buy the building," Shannon Debner said. "That was the biggest loan that I had ever taken out."

Initially operating out of their home after the flood, the Debners were committed to finding a new location, continuing a business that provides paint finishing and staining for residential and commercial customers, and improving the technology in their office and shop.

"We feed more than 20 families, so what were our employees going to do if we had decided we were done and gave up," she said. "I filled out all the paperwork for the SBA disaster loan and it took three months to receive all of the funding. That was something I was not prepared for at all."

Mark Debner, who launched Debner Painting in 2000 with his own financing, also found the process to be fairly cumbersome.

"Unless you are backed into a corner, I would not recommend getting an SBA disaster loan," Mark Debner said. "I don't like how everything is tied together and there's a lien placed against personal residence. The whole process was really a bear and there were so many hoops to jump through."

The Debners were forced to move again after a sewer backup damaged a building they were leasing in northwest Cedar Rapids. The move to 1402 18th St. NW was the third time DPI Quality Custom Finishes had to relocate between June 2008 and January 2009.

In January 2011, the Debners received a conventional SBA guaranteed loan for $250,000. After a good year in 2008, the struggling economy and fewer new home painting contracts make 2009 and 2010 tough years.

Shannon Debner said grants from a number of sources helped the couple pay the bills when business slowed after the 2008 flood. This year, Mark Debner has seen an increase in the size of the homes he has bid for painting contracts and DPI Quality Custom Finishes continues to diversify its services for commercial clients.

Diversification also could describe the entrepreneurial strategy of Jack Piper and James Adrian, who launched the Atlas World Grill, 127 Iowa Ave. in  Iowa City, with a $120,000 investment in 2000, including a $50,000 "micro" loan. The restaurant has tripled in size since the day it opened with addition of more dining space and a wine cellar in the basement and an outdoor patio for summer dining.

"The building had previously housed a Pizza Hut," Piper said. "We removed drywall and uncovered the natural stone walls in the basement.

"My father built the bar as well as what appears to be a fireplace mantel. It holds the air intake filters for the heating and cooling system.

"We wanted to create a warm and inviting atmosphere for our guests. The upstairs area can be a little loud at night and the basement offers a quieter, more intimate environment.

"We took our $120,000 investment and turned it into $1 million in sales. The SBA was really happy with that, so we became their 'poster child' that year for a successful business."

Adrian and Piper enjoy eating good barbecue wherever they travel, so it comes as no surprise that their next culinary venture was Jimmy Jack's Rib Shack, launched in 2005 at 1940 Lower Muscatine Rd. near Sycamore Mall.

"At that point, we leveraged money that we had saved from the success of Atlas as well as another SBA loan and did the whole buildout at Jimmy Jack's," Piper said. "We take all of our skills from working in artisan restaurants and create designer restaurants. Whatever we're going to sell, it's something you're not going to be able to make at home.

"With Jimmy Jack's, we thought we could come up with a better product than anyone else. We essentially transformed a 'Long John Silver's' type of building into a rib shack."

About four months ago, Adrian and Piper were joined by a third partner, Brady McDonald, to transform the former G.A. Malone's at 120 Iowa Ave. into Basta Pizzeria Ristorante. McDonald, who had been a chef at the Atlas, is the executive chef at Basta, which offers Napoli-style pizza baked in a wood fire oven as well as a menu of Italian cuisine, inspired by tradition and local Iowa ingredients.

After 10 years of making payments on two SBA loans, Piper was disappointed to learn that he could not get conventional bank financing.

"I understand that the banks are receiving increased scrutiny from regulators, but I still felt that we did not need a third party like the SBA," Piper said. "I'm not opposed to SBA financing, because we wouldn't have what we have today without it. I just think there's a point where you should have a relationship with a lender that the SBA guarantee is not required."

Qualifying for a conventional bank loan wasn't a problem for Joe Blanck when he and a partner bought Kingery Manufacturing Services in Solon.

"The banks that I talked with on conventional financing wanted me to put up between 30 percent and 40 percent of the purchase price, which was a lot of money," said Blanck, president of the machined metal parts supplier.

"An SBA loan gets that down to 20 percent, which to me was the No. 1 overriding factor in going for SBA financing. The amount of cash that a borrower has to provide up front becomes a little heavy."

Blanck said the paperwork for an SBA loan was submitted to F&M Bank in mid-February and the loan closed at the end of April. He said having the required documentation ready was a key factor in shortening the process to several months.

"You need to have all your information gathered and very clear," Blanck said. "We spent a lot of time gathering information up front before we submitted our application to the bank.

"You really need to have your ducks in a row."