Small loans for small businesses

If they knew then what they know now, business partners Clayton Willis and Brent Eskew might have looked for outside funding before launching Stage Ninja LLC.

Instead, they spent their own money researching and developing their retractable cable systems for audio equipment, then applied for loans to help the company grow.

“We would have been much better off going in with an idea and a business plan,” said Willis, 40. “We ran into wall after wall.”

So they settled for a more circuitous route. Stage Ninja began marketing its custom stage and studio gear in 2007, two years after Eskew built the first prototype. It took another few years to break even.

Then in July 2011, the Roncalli High School buddies got a boost in the form of a $4,000 loan from the not-for-profit Business Ownership Initiative of Indiana, which was testing microloans at the time. The money helped Stage Ninja build its inventory and improve cash flow. Sales increased as a result, and the partners repaid the note last month.

Now BOI is ramping up is microloan program and Stage Ninja is its first customer, borrowing another $10,000 to continue its growth.

Willis declined to share the private company's financial results, but he said sales so far in 2012 are higher than they were this time last year, which was a record setter.

“It’s a pretty exciting time for us,” he said.

He is grateful for the money and the support from BOI, which also provides one-on-one business counseling, but Willis admits that even $10,000 is far less than the company needs.

“From the numbers we’ve run, we think we could take on a $200,000 loan and really reach our potential,” he said. “But we just could not seem to find that.”

BOI is funding the microloan program with $150,000 in grants from the Glick Fund and Indiana Housing and Community Development Authority’s Business Expansion and Entrepreneur Development fund.

Executive Director Julie Grice hopes that’s just the beginning.

“"The more loans we issue, the more we are able to prove there is a real need in the community,” she said in a statement released this week announcing the Stage Ninja loan.

Ultimately, her goal is to increase the funding pool so BOI can raise lending limits closer to $100,000, giving startups and small ventures access to much-needed capital.

“It’s just not in a bank’s interest to do a lot of lending in space under six figures,” she told IBJ in May.

There's little doubt that finding financing is one of the biggest challenges small businesses face. So how much is enough? Can $10,000 make a difference to a fledgling firm?