Microloan from EDIC of Lynn, Part of a Financing Strategy that Launched Luna Sweets

Microloan from EDIC of Lynn, Part of a Financing Strategy that Launched Luna Sweets 

Patty Francis

Over the past 5 years (FY13-FY18) Massachusetts has continually ranked as a top office out of 68 SBA district offices across the United States for small loans under $50,000.  This key indicator, along with other lending data tells us that women, low-income, veteran, and minority entrepreneurs are actively launching small businesses in the Commonwealth – borrowing on average, about $13K to get started.   

Entrepreneurs like Patty Francis, Owner of Luna Sweets are ditching the corporate world for a chance to go after their dream of business ownership.  As a retail banker for years, Francis saved up the seed capital she needed while starting the business on the side. 

When she felt ready, she sought out assistance and uncovered a wealth of resources that helped guide her every step of the way.  Francis found out about her local economic development agency and small business development center which connected her with the capital and counseling she needed to confidently launch on her entrepreneurial journey.
 

CAPITAL: Economic Development & Industrial Corporation of Lynn
While working as a banker, her manager and mentor kept encouraging her to take the next step.  One day, he forwarded Francis an email about EDIC Lynn small business loan programs and she started gathering information by scheduling a visit to find out more.

Patty met with EDIC Lynn Project Manager, Mary Jane Smalley – who assessed her plan and helped her understand what it took to get a loan.  “We meet with each applicant, explain the process and put them in touch with SCORE if necessary,” said Smalley.

Established in 1977, EDIC Lynn supports the local economy by helping existing and new businesses located in the City of Lynn to expand and launch.   “The majority of our applicants are not able to secure a loan through a traditional lender…” said Smalley. “We meet and work with many potential loan applicants… Once the paperwork is submitted, it is reviewed by staff and a loan board meeting is scheduled.  The turnaround time could be up to 30 days.”

When Francis understood the requirements of the loan application, which included a business plan and financial projections – it became overwhelming for her as a new entrepreneur.  That’s when Francis knew she needed one-on-one counseling and made an appointment with Awilda Irizarry.

 

COUNSELING: Salem State University Enterprise Center
Francis actually first heard about The Enterprise Center and the resources offered by the Massachusetts Small Business Development Center as a student while attending Salem State University. 

 “When my sister and I started, I had no clue about business… I didn’t know where to start or where to go,” said Francis.  “I just knew I wanted to do it legit from the beginning and that’s when I went over to the Enterprise Center to get some guidance.” 

Awilda

In 2013, Patty met Awilda Irizarry, Senior Business Advisor – who became her counselor and guided her throughout the process right when she first started.  Patty recalls Awilda taking her through a business plan development process and getting directions to reach each milestone.  Awilda gave her homework to do, and prompts in bullet points to help complete her business plan at her own pace.

After a year into deeper development of her business, baking a cake per month – Francis also started attending workshops on business topics such as marketing, at the Enterprise Center to compliment the counseling she was receiving.  Francis was customizing her own business education on topics she needed help with, in order to become as astute as possible – while operating her business.
 

Summary
During the business planning process with Awilda – Patty uncovered unexpected costs that often come with starting a business; the cost of renovating her cake studio and outfitting it with new baking equipment went $15K over budget and was delayed by 10 months.  The new location needed electrical lines run into the unit, and new equipment such as a refrigerator and an oven also needed to be installed.  

Because Francis went over budget, she had to find other sources of capital to finance her equipment.  She found an online restaurant supply retailer, which helped extend her a line of credit and allowed her to pay off her equipment over time.  

Patty’s overall financing strategy now consisted of: a personal capital injection, an SBA microloan and a retailer line of credit.  Although Francis ran into budget issues, it did not deter her from finding an additional source of financing to get to her goal.

In the future, Francis aspires to be more independent as a business owner.  Francis wants to build the business big enough to run on its own, so she can focus on teaching cake-making.  Patty has learned that one of the areas of the cake-making business that is very rewarding and profitable, is when you can step away and share your industry secrets with others at workshops, conferences and industry expos.  Patty hopes to focus on teaching her self-taught techniques and becoming an influencer within the cake-making community to expand her brand.

On July 25th, 2018 - Luna Sweets held a grand opening event in her new space in Lynn at the Lydia Pinkham Building.  >>Read More from The Daily Item "LYNN CAKE BAKER SETTLES INTO NEW SPACE IN THE LYDIA PINKHAM BUILDING"

Luna Sweets Grand Opening (Picture Courtesy of Luna Sweets, Patty Francis)

(In the picture are: Joseph Scianatico, Salem Five; Patty's parents Miguel and Mary Francis; Sergio Espinoza, North Shore Latino Business Association; Frances Espinoza, North Shore Latino Business Association; Emilia Luna Valdez; Patty Francis; Lynn Mayor Thomas McGee;  Lynn City Councilor Hong Net; and James Cowdell, Executive Director of EDIC Lynn.  Photo Courtesy of: Luna Sweets, Patty Francis)

 


How to Apply for a Microloan
The SBA Microloan Program gives small business borrowers greater access to loans, providing small businesses with loans up to $50,000, as well as business-based training and technical assistance.

Microloan applications are filed through a variety of intermediary lenders throughout the United States that are approved by the SBA.  Local microfinance lenders in Massachusetts include:

The average SBA microloan is about $13,000 and underwriting criteria are dictated by each Intermediary Lender.   However, location can be a factor as intermediaries are not located everywhere and may only provide loans to small businesses in their approved operational area.

Additionally, in most cases the business owner must be able to provide collateral and a personal guarantee to secure a loan. SBA makes funds available through specially designated intermediary lenders, all of them nonprofit community-based organizations with experience in lending as well as management and technical assistance.  Microloans must be repaid in six years and can be used for:

  • Working capital
  • Buying inventory or supplies
  • Buying furniture or fixtures
  • Buying machinery or equipment

 

The SBA Massachusetts District Office can provide more information about how to apply for any of the SBA’s lending programs.  For more information, contact Carlos.Hernandez@sba.gov  

 

Company Name: 
Luna Sweets
Location: 
Lynn, Massachusetts