SBA NEWS RELEASE

Release Date:  June 10, 2009

Contact: Kate Herrington, 802-828-4422, ext.221                                                                                                                               
SBPY 2009/13 E-mail Address: kathleen.herrington@sba.gov

MATT COTA SELECTED VT FINANCIAL SERVICES
CHAMPION OF THE YEAR

MONTPELIER - Matt Cota, Executive Director, Vermont Fuel Dealers Association, Montpelier, has been selected as the U.S. Small Business Administration’s (SBA) 2009 Financial Services Champion of the Year.  Nominated by Shane Sweet, President, New England Fuel Institute, Cota was selected for the award based on his support for legislative and regulatory initiatives to help Vermont’s small business fuel dealers during the unprecedented rise and fall of oil prices in 2008.

The Vermont Fuel Dealers Association (VDFA) is a non-profit trade association representing the interests of nearly 300 companies throughout Vermont, including heating, ventilation and air conditioning companies.  As  director of VFDA, Cota oversees all operations and provides members with legislative representation and guidance on industry-related issues.  “If people have a question about a certain policy or procedure, or they want something accomplished at the state or federal level, I’m usually the first call they make,” Cota said. 

Cota also oversees the Vermont Fuel Education Center (VFEC).  “You can’t drive a propane bobtail truck, and you can’t touch a piece of heating equipment in the state of Vermont without a certificate that shows you know what you’re doing,” said Cota.   VFDA is the leading provider of training for certified heating technicians in Vermont.

There is no such thing as a typical work day for Cota.  You may see him at the Statehouse talking to lawmakers about the impact of different policies on fuel dealers.  You might find him in Washington, D.C., lobbying for fuel dealers on a myriad of issues.  Or you may see him at his desk, writing the weekly VFDA Fuel Line Newsletter or designing the VFDA website.  “I wear many hats, but the main goal is to look out for the needs of over a hundred independent heating fuel dealers in the state of Vermont, most of them small, family-owned businesses with their name on the side of the truck,” Cota explained.

Looking out for the needs of Vermont fuel dealers is precisely what Cota was doing during the 2008 energy crisis.  “Under Matt’s direction, VFDA helped ensure the survival of small business fuel dealers who, in turn, conduct business to keep Vermonters warm during the winter,” said Shane Sweet, president & CEO, New England Fuel Institute.

The crisis reached its boiling point in July of 2008 when crude oil traded at a historic high of $147 a barrel.  According to Cota, the unprecedented price increase was due to “paper oil” traders, not supply and demand.  Cota said the market spiked because hedge funds and investments banks were making highly-leveraged bets on oil futures in deregulated markets.  In June of 2008, Cota testified before the Vermont Joint Fiscal Committee on excessive speculation, the rise in prices and its impact on small fuel dealers.  When the price of wholesale heating oil jumped from $2 to $4 a gallon the middle of summer, fuel dealers needed extra funds to purchase wholesale oil in order to retail it to their customers.  Access to credit became a big issue for many of them.  Their businesses were at stake, and so was the fuel needed by homeowners and businesses during the coming winter. 

Added to the problem was the fact that many fuel dealers no longer qualified for SBA-guaranteed loans and lines of credit because their gross sales were topping SBA’s $11.5 million cut-off.  According to Cota, a small retailer could easily top $11.5 million in gross sales because of the price increase.  While gross sales were higher, fuel dealers weren’t making any more money.  In fact, Cota said, the opposite was happening because of the increased borrowing costs that come with higher prices.  Many small business fuel dealers had already maxed out their funding sources and needed more to stay in business.

Cota joined with the New England Fuel Institute (NEFI) and asked  the Small Business Administration (SBA) to reclassify small businesses according to the number of employees rather than gross sales.  “The SBA listened to the argument and said ‘yes, that’s right,’ and they changed the rules,” said Cota.  “The SBA worked with us and provided access to the information we needed.” 

By late August, SBA had changed the definition of “small business” by removing its dollar parameters and reclassifying size standards to 50 or fewer employees.  Now fuel dealers could qualify for SBA’s 75% guarantee on a bank loan, leaving the bank at risk for only 25%. 

But some lenders declined to take the risk, so Cota joined his colleagues throughout the Northeast to request a meeting with then-Treasury Secretary Henry Paulson.  In Nov. 2008, Cota and others met with U.S. Department of Treasury officials in Washington, D.C. to request U.S. backing on the remaining 25% of an SBA-guaranteed loan.  

While Treasury officials listened to the fuel dealers’ concerns, the loan guarantees never materialized.  However, shortly after that meeting, the price of fuel oil began to quickly drop.  According to Cota, large institutional investors that drove up prices finally retreated and took their money out of oil futures.  “We didn’t know when it was going to happen, but we knew it would,” Cota said.  “The air popped out of the speculative bubble and prices went from $150 a barrel to under $40 in less than four months.”
How to avoid a repeat of the same scenario?  According to Cota, the commodities futures market must be re-regulated, and he believes it will happen.  “Most people now realize that our financial system is facing a crisis of historic proportions because Wall Street insiders have operated free from any meaningful regulatory oversight for years.  A free market is not a free-for-all.  A free market works only when the rules that keep things fair are enforced without fear or favor.” 

Cota is passionate about the heating oil industry and says it’s in his blood.  When people were still heating their homes with coal and wood, his grandparents, Ken and Helen Cota, decided to try something new.  They had heard about a safer, cleaner, more efficient fuel called “heating oil.”  In 1941, they started selling heating oil out of a converted gas station in Bellow’s Falls, VT.  Cota says that office was where he did his homework after school and where he spent summers working for the family business.  “I did just about everything, from painting the sides of oil tanks to tearing apart water heaters with a blow torch to working in the office,” Cota explained.   

Cota also spent ten years in California where he was the Bureau Chief for the NBC affiliate in Santa Barbara.  Now living in Plainfield with his wife and two young children, Cota said, “Sooner or later you realize, if you want your kids to know their grandparents, you need to move closer to them.”  Cota joined VFDA in April, 2007.  “I love to get up in the morning and go to work, but it’s second to getting up and kissing good morning to my children,” he said.

Matt Cota will be honored by the U.S. Small Business Administration at a ceremony and reception presented by Vermont Business Magazine.  The event will take place at Burlington’s Waterfront Park, June 10, 2009, 4:00 to 7:00 p.m.