Can't Get a Loan? Call Your Congressman
Getting frustrated in trying to get a loan from your bank? Try doing what small-business owners Frank Alfonso and Bill Cossoff did -- visit your congressman. After all, shouldn't elected officials, who keep talking about how small-business owners are the backbone of America, be going out of their way to help? It depends on who you talk to, as Alfonso told the Intuit Small Business Blog.
He and Cossoff run Big Papa's BBQ restaurants in Denver. When they wanted to open up a third branch in spring 2009, they purchased an old Burger King to renovate and secured lines of credit with their banks. They moved ahead with permits and licenses but when it was time to start the major renovations, their lines of credit dried up. "The banks were unwilling to move forward because of the economy," says Alfonso. "We tried going through the Small Business Administration for a loan but it was so dysfunctional. We talked to 50 banks and were rejected by all. Everyone wanted us to show profitability at a time when no business had any."
Alfonso and Cossoff were now looking at negative cash flow because of the expenses involved with a partial buildout. "In a last-ditch effort, we reached out to elected officials," says Alfonso.
They first contacted the U.S. congresswoman who represents the district where their first restaurant was, but got no call back. Then they reached out to U.S. Senator Michael Bennett. "He did see us but turned us over to his right-hand man, who gave us contacts we already had."
Alfonso lives in Lakewood, Colorado, which is the district for Democratic congressman Ed Perlmutter. "I sent him an email asking for face time. Within two weeks, we got a call from his office, saying we were invited to a private office meeting he was holding with constituents." Alfonso was not expecting a lot, but the experience was quite the opposite. Besides being cordial and interested, Perlmutter was also on the House Committee of Financial Services, and therefore had banking connections. "We laid out our story to him, showed our excitement and passion, and explained how we have been in business for years and are poised for growth," says Alfonso. "He said he would help us."
Two days after that meeting, Perlmutter had a pre-scheduled meeting with several bank executives to talk about federal legislation. After the executives told them that they were indeed lending money to businesses, Perlmutter challenged them to prove it by considering a loan for Alfonso and Cossoff. "In a month, we got a call from a major bank that he had talked to. We got the loan." The third Big Papa's BBQ opened up a few months later.
Perlmutter told the Denver Business Journal that specific appeals from businesses are rare for him to get. And he cautioned that he can't intervene in every case, especially those involving less-experienced business people. (He also said his action wasn't an abuse of power since he just asked the banks to take a look at Papa's BBQ, not to give them a loan.)
Alfonso says he was pleasantly surprised how a politician actually came through to help his small business. "Our politics are different, but he came through for us. For supporting such a small loan, he actually created a lot of jobs. Isn't that what Congress is supposed to be about?"
With elected officials saying they want to help local businesses in the rocky economy, it's worth it to give your elected officials on the city, state, and federal levels a call. But make sure you have the experience and a good business pitch for them to make calls on your behalf, says Alfonso. "If you have a track record as a business owner, that will give you the credibility you're looking for. And reach out to elected officials with a solid business plan, don't just go with your hat in hand."