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SBA Loan Improves Business Balance Sheet and Cash Flow

Photo of Margy Taylor, owner of Clay and Cotton

     Clay & Cotton, an independent apparel and home boutique, received an SBA 504 loan to provide long-term, fixed financing to purchase a new building. The business was relocating a second store to a “live-work” planned community known as Norton Commons on the eastern edge of Louisville, KY. The original store has been located for 10 years in an eclectic area of central Louisville known as The Highlands, where many other small, independent businesses are located.

     This venture, including the SBA 504 loan, involved extensive discussion about how to structure the financing and shows collaboration between First National Bank of Carrollton, KY, a small community bank, which provided 50% of the SBA project funds, an SBA Certified Development Company (CDC), and SBA.

     It all started with a random conversation with Ralph Ross, SBA Kentucky District Director, and Margaret “Margy” Taylor, owner of Clay & Cotton, at a small business function in 2012. During the course of the conversation, Mr. Ross told Margy Taylor about the 504 loan program and connected her to several CDCs in Louisville. Bill Fensterer at Capital Access Corporation CDC helped her find an SBA lender interested in doing the project. “Bill Fensterer at Capital Access Corp was wonderful,” said Ms. Taylor. “If not for him, I wouldn’t have gotten the deal done.” Fensterer added, “The bank was not experienced with the 504 loan program, but the project went smoothly."

Brief description of the business:  Ms. Taylor’s stores are named Clay & Cotton because she started the business with two lines of products, one made of clay, the other made of cotton. Products now offered in the store are much more diverse, with over 75 lines, including “apparel, area rugs, bedding, pillows, stationery, candles, glassware, jewelry, pet products, CDs, and whatever we find at market that fits our colorful, joyful mixture,” according to the company website. About half of the company revenue is clothing. Ms. Taylor states that the company strategy is to “make the rituals of life more beautiful.” The customers are as unique as the product offering and the store layout, and store employees go out of their way to make customers feel comfortable and relaxed.

     Margy Taylor did not plan to have a career in the retail business. She received an Undergraduate Degree in Economics from Brown University, then a Master’s Degree in Education from the University of Cincinnati, followed by a PhD in Educational Leadership and Organizational Development from the University of Louisville. She states that her education prepared her for the rigors of owning a small business.  Her PhD topic was on risk taking and innovation, so starting a retail store seemed like a logical next step to her career. When not involved in operating her business, Ms. Taylor still is involved in academics, and she teaches Strategic Planning and Organizational Leadership at Spalding University in Louisville.

Number of employees:  Five employees; three jobs were created by an SBA 504 loan.

Staying power:  Clay & Cotton has been operating continuously since 2004 and has seen significant growth year after year. Few independent retail stores last this long, particularly in an economy as challenging as the one from 2008 – 2011.

Response to adversity or problems:  A few years ago, Ms. Taylor went through a divorce. Suddenly, Margy was a single woman again, not a two-income family, and she had to overcome challenging business obstacles, including a major flood in her Highlands store, along with the Great Recession and its impact on the economy. After exploring the SBA 504 program as an option to finance another business expansion, Ms. Taylor realized that she could sell her residence near the Highlands store, move a second store located in rented space in a shopping development near Norton Commons, and live above the new store.  Owning the building at Norton Commons immediately improved the business assets, eliminated a rent payment and increased store square footage dramatically. Cash flow improvements financed the inventory requirements to fill the extra square footage for the new location.

Community Involvement:  Clay & Cotton supports Wellspring, a mental health recovery nonprofit in Louisville, as well as Kentucky Refugee Ministries and the Food Literacy Project, and Margy Taylor donates proceeds from several Trunk Show sales each year to other worthy causes. She also is personally involved with a local network for entrepreneurial women, mentors women business owners and does animal rescue work.


Company Name: 
Clay & Cotton
Louisville, KY