Business grant owner small woman

If there is one word that describes Karla Brown, it's "determined." In 1990, Brown found herself divorced, with a young daughter, a mountain of debt, and horrendous credit. Then complications from major surgery cost her her full-time job as a secretary.

Such adversity might have crushed anyone else, but to Brown, of Dorchester, Mass., it was pure motivation. By 1993, Brown, then 30, had found and left a part-time job, taking $70 from her last paycheck to start her own business.

Now, four years later, Brown is the proud owner of Ashmont Flowers Plus, a small Dorchester shop only minutes from the heart of Boston. Tn 1996 it racked up $100,000 in sales.

How did she do it? With plenty of perseverance--and a t19,000 "microloan" from the U.S. Small Business Administration. Says Brown: "If I can start my own business with $70 and the SBA, so can anyone."

The Microloan Program was begun in 1992 as a five-year pilot program (it is up for renewal this year). Its mission is to help people realize an American dream--to own a business and be self-sufficient.

"These loans are grass-roots capital meant to encourage economic activity at a level of society that hasn't normally been involved in entrepreneurial activity," explains Mike Stamler, an SBA spokesman in Washington, D.C.

Microloans range from $100 to $25,000, with the average loan of $10,000 paid back over about four years at an interest rate of 10.8 percent. So far, 42 percent of microloans have been granted to women and 39 percent to minorities.

Although microloans are targeted at those who might not qualify for traditional bank loans, Stamler emphasizes that the program is for everyone. Workers displaced by plant shutdowns and layoffs have used the loans to start their own businesses, and in some cases the loans have provided a way to get off welfare. Recipients include a woman who borrowed $450 to set up a hair salon in her home and a man who borrowed $25 000 to start a company providing occupational- and physical-therapy personnel to health-care facilities.

The Microloan Program is administered by 101 nonprofit organizations chosen by the SBA in 49 states, the District of Columbia, and Puerto Rico. (No agency has been selected in Wyoming.)

Says Stamler, "The only requirements are that the loans must be given to small businesses"--usually ones with $5 million or less in annual revenues--and that the money must be used for enterprises that are legal. Additional loan requirements and procedures are left up to the organizations that administer the loans.

Brown's story is illustrative of how the microloan Program works. While recover-ing from surgery in 1990, she decided she wanted to work for herself Unsure of what type of business she wanted to own, she accepted a part-time job to supplement her disability pay. By August 1993, she was ready to start her own enterprise.

"I went to the local [wholesale florist], bought two buckets of flowers, and took them to the subway station" in Dorchester, Brown recalls. "People laughed at me standing outside selling flowers; they thought I was crazy."

But soon they started buying. Men bought $2 roses on their way home from work, and the 50-cent carnations appealed to a variety of passers-by. In less than a month, Brown was earning enough to buy a steady inventory. Family and friends chipped in to help her pay living expenses.

Change And Growth

Two months later, the Massachusetts Bay Transit Authority sold the commercial rights to the subway station to a private corporation. Suddenly, Brown had to pay $250 a month in rent to the new owner for the space outside the station.

Desperate to make ends meet, she visited subway stations throughout Boston and saw that vendors operating outside them had-wooden stands holding up to 40 buckets of flowers. Within days, she found someone to build her a stand, and she got credit from her wholesale florist so she could stock a larger inventory. "I thought this was going to fix everything," she says.

When her rent was increased to $550 a month, Brown moved her business into her home and began marketing to the community. But after two years of running a home-based business, she longed for a downtown location that would boost her visibility and her business.

Through a business acquaintance, Brown learned of the Jewish Vocational Service (JVS), a nonprofit, nonsectarian agency in the Roxbury section of Boston that is one of the organizations administering the Microloan Program.

To get a microloan, Brown was required by JVS to write a business plan that met the agency's loan standards. Unaware of the process, she applied for and received a $2,000 grant from Nuestra Comunidad, a Boston-based community-development corporation that provides technical assistance to small businesses.

But Nuestra Comunidad used the money to hire a consulting firm that gave Brown some helpful advice but not a viable business plan. By this time, Brown had reserved a store on Dorchester's historic Codman Square, a cluster of buildings in a revitalized section of town. With her grand opening just two weeks away, Brown had no business plan and no loan.

Panic-stricken, she returned to Nuestra Comunidad, where Manuel Martinez, the organization's director of economic development, worked all night to help her produce a plan that met JVS's requirements. The following day, she applied to JVS for a microloan.

Because her business was scheduled to open before the loan could be granted, however, Brown asked for and got a $6,800 advance from the Codman Square Neighborhood Development Corp. The advance enabled her to open the store on time, and she repaid the advance when she received her $19,000 microloan.

Today Brown employs two part-time workers at the store, which specializes in exotic flowers. Many of her customers used to buy from her at the subway station. Brown has also contracted to provide flowers to several Codman Square businesses, and she is marketing to area churches.

Now, thanks largely to her SBA microloan, Brown is thinking of growth--perhaps even returning to her entrepreneurial roots: "I might expand by putting a pushcart at the subway station.

By More Information

To find the U.S. Small Business Administration microloan lender closest to you, call 1-800-8-ASKSBA (1-800-8275722). Or look in the blue pages of your phone book for your local SBA office. You can also visit the SBA's World Wide Web site at http://www.sbaonline.sba.gov.