Sign up for email updates from SBAReceive helpful business tips and upcoming events in your area.


Nebraska District Office
10675 Bedford Ave. Suite 100
Omaha, NE 68134
United States
Phone: 402-221-4691
Fax: 402-221-3680
Hours of Operation:
Monday through Friday from 8:00 AM to 4:30 PM
New Venture Brokers

Omaha's New Venture Brokers gets SBA 7(a) loan help

Florence Company Helps with Import Deals to Keep Nebraska Business Going

If you're a company in Nebraska importing key components of your small manufacturing business, there's a bunch of things that can mess up your supply chain, costing you money and perhaps even employees their jobs.  Fortunately, thanks to a loan from the SBA, there's a small business in North Omaha which takes special care to smooth out those kinks in the chain.

New Venture Brokers, off 30th Street in Omaha's historic Florence neighborhood, is a woman-owned business which supports inbound shipments for around 80 different firms across the Cornhusker State each month.  And from the moment you walk in their modest storefront, you know this is a different kind of business--for one, as they answer the phones and track shipments, there are a couple of pet cats roaming around the modest office furniture.

"We handle all the documentation to clear customs in the port of Omaha," explained co-owner Jill Lorsch, "but we can do the job for any firm in any location in the country."  Some are big firms; many, Lorsch said, are "little guys who maybe do a shipment a month." Along with the firm's three co-owners, they also depend on another full-time employee and a part-timer to help with the paperwork.

 

Doing a little extra to help Nebraska businesses

Among their clients is Great Finds, a business in Holmesville, southeast of Beatrice, which offers whimsical and colorful home decorations for the holidays and year-round.  In getting their products to about 75 craft shows across the country each year, Great Finds sends designs to 30 factories in China to produce prototypes for importing back to this country; the company's owners spend up to 100 days in China ensuring the prototypes match their design's quality.
 
Then there's Automatic Equipment Manufacturing in Pender, an SBA certified HUBZone participant and serves as the towing products division of Blue Ox, a huge fabricator of steering, towing, hitching and braking systems.  The company imports raw material parts from Taiwan and China to manufacture loaders, lifts, motorcycle and sport carriers, towbars and much more to a network of retailers throughout the country and around the world.
 
New Venture Brokers also works with area department stores Gordman's and Nebraska Furniture Mart.
 
"Our clients do the importing, we just handle the documents," Lorsch said.
 
That means this small firm assumes all debt for an import shipment, including the duties, or tax charged by the government on imports.  Lorsch said her company "babysits" the freight through each step of the complicated process, often finding a "forwarder," an agent arranging cargo movements to an international destination, and ensuring the shipments make it on a steamship for the trip to this country.  But the job doesn't end there.
 
"You only have so much time to pay the duties and costs for customers on their behalf," Lorsch said.  "Under no circumstances can you miss that." And because New Venture Brokers tracks their customer's inbound shipments so carefully, they end up saving their client's thousands of dollars in storage fees.
 
But assuming the cost of the shipment and import duties until their clients pay their invoice can be scary.  There are freight costs, trucking fees, courier charges—and import duties add up quickly.
 
"If I showed you our receivables," co-owner Pam Feyerherm said, trailing off. "... it's a lot."
 
"We do quite a bit of alcohol importing," said co-owner Traci Woolsoncroft.  "The internal revenue tax could be as much as $25,000 on one shipment.  Even though a normal importer will pay just duty fees.  We have a lot of money going in and out every month."
 

Turning to the SBA to help with cash flow

Realizing that the brokerage business needed a line of credit to handle those bumps in its cash flow, New Venture turned to First State Bank and Tom Clabaugh, vice president for commercial lending at First State Bank.
 
"Our banker was one who could read between the lines of our application," Lorsch said.  "He trusted us from the get-go and was on board in the first 30 minutes of meeting us.  He was bound and determined to make this deal happen."
 
As a result, New Venture Brokers was approved for a line of credit under the SBA's 7(a) program in Sept. 2009.  First State Bank remains a strong supporter of small business in Nebraska, shepherding more than 17 loan approvals through the SBA process since.
 
Clabaugh credited Amy McCabe, assistant operations manager, with helping New Venture Brokers set up their depository needs with a “remote deposit capture,” to allow the owners to scan their checks into their account, saving them a trip from Florence through traffic to suburban Ralston.
 
"You run into so many bankers, sometimes you find the personal angle is all gone," Lorsch said, "but this bank and Tom Clabaugh really did care what we had to say."
 
No matter the size of the company, New Venture Brokers is proud of the personal touch and dedication they've offered since the company started in 2000 out of a huge red barn off 156th and State in the city.  And those cats?  They moved from the barn along with the company to its present location six years ago, as the company's import business purrs right along.
Todd Carpenter and Amy Kleeb at the construction site in Central City.

Thanks to 504 deal, new eatery comes to Central City

 

It's an old-fashioned downtown, with a few eateries crowded along with some storefronts and clapboard houses as U.S. Route 30 winds through this town of about 3,000 people.  But for hungry folks in Central City, a town about 25 miles north of Grand Island, they're about to get a choice in dining few in the wider area enjoy.

That's because restaurant developer Todd Carpenter is building a new Subway/Taco Del Mar franchise here; in the process, he'll create another six to eight jobs.

"By having this new concept branded with the Subway store, by doubling our parking lot, adding a drive through, adding seating, hopefully we will increase business," Carpenter said.

Stepping up to help franchise grow

While the Taco Del Mar brand got its start a couple of decades ago in the Pacific Northwest, the franchise grew too fast and went bankrupt last year.  The founders of Subway stepped in, purchased the business, and opened up a new development opportunity.

Carpenter's territory includes about 80 percent of the counties in Nebraska and South Dakota, and over the past 20 years he's led the development of 158 Subway franchises in his area.  While working for his first partner shortly after graduating high school in Gehring, he noticed the growth of Subway shops in Colorado and was eager to bring the restaurants to this state.  Two years later, after taking his college savings, some cash from his grandfather, and a bank loan, Carpenter and his partner opened their first franchise in late 1989.

But Carpenter does more than negotiate the franchise agreements and lease for the restaurants and hand the keys over. He offers on-going support and operational guidance to make certain the franchisee succeeds in the marketplace.  That's why he's sure the new joint restaurant concept will succeed.

"Taco Del Mar stores had failed in other parts of the state," Carpenter admitted, "They lacked buying power to support the brand and cost of doing business was prohibitive.  People liked the food and the customers were passionate, eating there sometimes two or three times a week, but the cost of goods were too high."  That's where Subway's buying power will let the venture compete with other brands in the crowded fast food category.

Carpenter partnered with a local couple, Jake and Amy Kleeb, who will own 50 percent of the Central City restaurant, and Amy will serve as the operating partner.

But to finance the land purchase and build the new restaurant with his partners, Carpenter sat down with Dustin Meyer at Archer Cooperative Credit Union, a small lender with four rural central Nebraska locations.  The credit union had never made an SBA loan before, but Meyer would turn to the 504 program to close the deal.

"We do a lot of commercial deals in Central City, mostly agriculture entities," Meyer said.  "We're a $54 million credit union, and 70 to 80 percent of our business is commercial because of the farming industry."

Nebraska District Office available to help with deal

Meyer would need help navigating the process of the 504 loan guarantee, and Mike Marsh, a lender relations specialist with the Nebraska District Office, made a face-to-face visit to Archer in April.  The bank offered 50 percent of the loan; the SBA, through Lincoln-based NEDCO, a Certified Development Corporation (CDC), would provide another 40 percent through the bond market; Carpenter's development company would handle 10 percent in a down payment.  Most important for Archer's bottom line--the credit union would have the first lien position on the property, significantly reducing its risk.

"Mike was happy to come out and tell us how it all worked," Meyer added.  "We got this big list of stuff to do, background research on all of the partners, both personally and financially.  But Mike at the SBA, and Jason (Herlitzke, vice-president of lending at the CDC) were very helpful.  Would the deal have happened without the SBA's help?  Not nearly as quickly.  It would have been a lot more legwork if he hadn't come out to talk with us--and there's a possibility we wouldn't have done  the deal because we didn't know how simple it could be working with the SBA and NEDCO."

As a result, the Subway/Taco Del Mar franchise was approved for $156,000 for the portion of SBA-guaranteed funds.

"I think using the SBA is a very good starting point for growth for our credit union," Meyer said.  "I want more commercial entities aware of what we offer.  If we can get it out there that we use the SBA guarantee, I'm sure we will have more businesses applying for them and using this opportunity."

And the structure of the SBA's 504 financing was crucial for the developer.

"With traditional bank financing," Carpenter said, "we couldn't have come up with the 30 to 35 percent down to acquire the land and build the building.  With the low interest rate, the cash flow for the business makes good economic sense."

SBA helps improve U.S. 30 corridor

Meyer added the Subway/Taco Del Mar restaurant will be a great addition to the community.

"The lot they bought was in between two existing restaurants, replacing an old house from 1910 that was falling in on itself," the lender said.  "There's been some money from the city for beautification of the highway frontage.  It's looking a lot better now."

And, he added, the only other places for people craving Mexican food are a long drive off in Grand Island or almost an hour away in Columbus.

"What I'm passionate about as a developer is providing great opportunities for these franchisees to build their future," Carpenter said.  "Like Amy, for example.  She started out as a store manager, and she borrowed money, dug into her savings and got into ownership. As I've helped Subway grow, and helped people who leveraged their savings, it's been a blessing that the government has continued to help small business people expand.  SBA programs are wonderful in that sense."

Success_Story_Fat_Brain_Toys_Office

Adventure begins with Elkhorn toy company thanks to SBA financing

It's a day spent hosting some 60 children for a photo shoot for their newest catalog.  Kids play with blocks, puzzles and even high-tech spy toys as the camera snaps.  Outside, it's a nondescript location in an Elkhorn strip mall nestled between a physical therapy practice and an orthodontic office.  Inside, it's where a thousand adventures are hatched.

And it fits that a 10-year-old suggested the idea of the company.

Couldn't find the toy online?  How about we start our own web site to sell it?

Fat Brain Toys develops and sells games and toys with the idea of challenging kids as they play. The company enjoys a brick-and-mortar store at Omaha's Village Pointe South and a print catalog complementing the business' online presence, through which it receives most of its orders.

Office desks at the Elkhorn HQ are divided by walls of decorative blocks, giving the place a feel of a boy’s fort, which fits, since the founder and owner of the company used to build those--and the occasional raft--as a youngster growing up along the languid Elkhorn River in tiny Scribner.

Mark Carson brims of quiet energy with an entrepreneur’s excitement.  Seems he was destined to start and run his own business; his father owned the local car wash and laundry in town and his curious brother was always sending away for mail-order stuff to see what he'd get, and eventually started a company out of college selling mail order goods.  And maybe Carson was destined to start a toy company--his mother was a kindergarten teacher, after all.

About eight years ago, Carson's son, Adam, got a magnetic building toy set for his birthday. Armed with some birthday cash, Adam hopped on the internet to find a larger set but soon was frustrated in his search.  So he turned to his father, a web developer by trade, with an idea.  Why don't we create a place where we can sell this toy?

"We didn’t have a plan or a mission," Carson said.  "With the first holiday season we treated this as a family hobby, maybe sell a few things, learn about the business, and who knows where it would lead."

They had a name, which Carson said came out of looking for a "clever, left-handed way of saying smart toys."  Now they needed a plan. A few months later, Carson and his wife, Karen, went off to a toy fair in New York, where he was immediately struck by the clear difference in specialty toys and mass produced toys.

"The latter is so ever present," Carson said, "so if I go to most stores I shop at, I’m not seeing other options.  You have to look harder to find them.  So I thought, let’s build an online site and make them more accessible.  Really good toys are hard to find."

So Fat Brain began by shipping toys out of the family basement, and after moving the operation several times, found the warehouse in Elkhorn where they're located today. 

Needing to finance inventory, SBA helped provide Fat Brain Toys with a deal to grow

Seeking a season line of credit for inventory purchases in time for the annual holiday season, Fat Brain Toys was approved in Oct. 2005 for SBA-backed financing through Pinnacle Bank.

"To help grow the business, it’s all tied to inventory," Carson said.  "We have to have enough of every product for every niche."

Since the loan approval, full-time staff has more than doubled from eight to 20, and part-time employees from 12 to 20. 

In 2006, they spun off a developmental company, Fat Brain Toy Co., to develop their own line of educational toys now sold at gift shops at the Smithsonian in Washington, D.C., and the Metropolitan Museum of Art in New York, as well as high-end children’s toy retailers.

"So as our business grows and product line grows, our mission to get to a broad selection of toys," Carson added.  "Our magic number is 6000 products."

Carson opened the retail store three years ago, fulfilling the ardent wishes of parents who wanted a place where they could touch and see more than 1,500 toys and games up close.  "We focused on building a clean, parent-friendly store rather than a kid-friendly destination," Carson explained.

And last summer, Fat Brain Toys rolled off a bright, picture-filled direct mail catalog with hopes of exciting the faces of thousands of potential young customers.  But their marketing efforts haven't stopped there.\

Breaking out into the big time

In July, Fat Brain Toys was named by the social-media site Facebook one of five winners of the Big Break for Small Business contest; the level of support by their fans during two weeks of online voting gave them the second-most votes in the country.  The prize: a two-day social media makeover and $20,000 for their social media marketing budget.

The company also hosts game nights, even working with different schools in the area to align educational goals with Fat Brain's toys.

"We bring our staff in with our products to show the kids," Carson said.  "It's not only a way to show what we sell and to demonstrate how to play the games but it's for the benefit of family interaction for all ages.  Increasingly game manufacturers target a very narrow age but you end up losing the interest of parents. So we broaden the night to all ages." Last winter, they hosted eight and plan several for this school year.

Carson admits that he's concerned independent toy stores are on a decline because of economic forces.  In fact, one notable nationwide chain which specialized in smart toys went under a few years ago.

"From 2005 to 2007, we were seeing 60 percent growth year-to-year," Carson said.  "But that was when we partnered with (online retailer) Amazon in their toy category.  By 2007, 2008, they were making up a large percentage of sales, but as so many other merchants piled in as well, it all became a big price war."

So in the company's last two years, they've backed away from that channel, focusing on higher margin orders through its own site.

"We're up 10 percent for the year, and we see that accelerating despite a tough retail environment," he added.  "We’re seeing success and we're finding a receptive audience.  There’s still a market out there."

And that magnetic building toy set Carson's son wanted to find online?  Fat Brain Toys is now one of the largest online retailers of it in the world.

Attached files: Fat Brain Toys office.jpg

Encore Entrepreneurs

An Introduction to Starting Your Own Business

LAUNCH COURSE

Need Help Writing a Business Plan? Our step-by-step tool makes it easy.  Start Your plan.

Get Local Assistance Right in Your Area

Counseling, mentoring, and training from an SBA District Office, SCORE Chapter, Small Biz Development Center or Women’s Biz Center in your area.

FIND RESOURCES