By CRISTINA JANNEY
Hays Post
Two young entrepreneurs launched their new pet boarding business in Hays with the help of the E-Community Loan program.
Kylie Sander and Heather Holliman-Pope received $30,000 toward the $300,000 cost of their new Post Rock Pet Boarding facility on East 13th Street in Hays. The business opened in May.
Post Rock Pet Boarding has space for 45 to 60 pets for overnight or day boarding. The business also offers bathing, nail trims, ear cleaning and anal gland expression.
Sander and Holliman-Pope said the loan and the help of Grow Hays made getting their business off the ground much easier.
“I think they did a great job. (They had) just a lot of knowledge and a lot of information, and they were always there to answer questions, so I think it is a great resource base,” Holliman-Pope said.
Ellis County is one of 60 counties in the state to participate in the E-Community Loan program.
The program, administered by Grow Hays, helps entrepreneurs start or grow their businesses or purchase an existing business.
Ellis County has $100,000 available per year in low-interest loans. Grow Hays has eight loans worth $168,800 outstanding to local business currently. The loan amounts range from $4,800 to $45,000.
The program does not have enough capital to make an impact on a large business.
“This is the small guy who is wanting to grow or is wanting to start something, a new business, pursue a dream maybe. That’s who this is targeted to,” Doug Williams, Grow Hays interim director, said.
The E-Community Loan program is designed to provide gap financing, he said. Typically, a bank makes a loan for the bulk of the financing, and the E-Community Loan program makes up the rest, as down payment can be a problem for small businesses.
In Ellis County, some of the other businesses that have taken advantage of the program are Sake2Me Sushi & Seafood Grille, Hickok’s Steakhouse and Thirsty’s Brew Pub & Grill.
The loan can be applied to a variety of uses for for-profit businesses, including working capital; purchase of land, real estate, inventory or equipment; or purchase of an existing business. Funds can be used to renovate a building or storefront if it is for use for a specific business.
Grow Hays is working with a business owner right now to finish her basement to accommodate her business, Williams said.
The loan money that is repaid goes back into a regional account to be loaned to other businesses. The original funds for the statewide program came from tax credits.
Generally, a business will work with the Small Business Development Corporation at Fort Hays State University to develop a business plan and then complete the application for the E-Community Loan program.
These plans will include a projection for sales and amount of startup capital the business will need. Generally, applicants go to the bank to apply for a primary loan. Then Grow Hays becomes involved through the bank or the client for help with gap funding.
Grow Hays has a committee specifically designed to review the loan requests.
The interest rate on the loans run 3.5 to 5 percent.
“We typically try to stay right around the prime rate, which is a good rate typically for gap financing,” Williams said. “Most of the time they would not find that favorable of a rate with a bank or financial institution for the money they need to bridge the gap of what the bank is going to loan them and what they are going to come up with.”
The program benefits the entrepreneur because it forces them to go through the process of developing a business plan. It also makes available what essentially is a 100 percent loan, Williams said.
“Banks are typically not going to make a 100 percent loan, so we bridge the gap and provide that financing that they need to actually be able to purchase something or start something where they wouldn’t be able to otherwise because they didn’t have the funds,” he said.
Although Sander and Holliman-Pope put in some of their own money for a cash down payment, most of their startup capital came from the their bank loan and E-Community Loan.
The Post Rock Pet Boarding owners said they could have started the business without the loan, but it would have been much more difficult.
“We would have had a much smaller facility, and not been able to do as much as we wanted to,” Sander said.
Sander and Holliman-Pope said Post Rock Pet Boarding has been very busy this summer. They both said they would recommend the E-Community Loan program to other entrepreneurs trying to get their businesses off the ground.
Because of the nature of this type of financing, there is a higher rate of default. The program can ask a business to put up collateral for the loan. Grow Hays is not financially liable if a business defaults. The E-Community Loan program has the discretion to pursue collection or legal action, at their expense, and if funds are recovered, they are to be returned to the E-Community regional bank account, according to the NetWork Kansas website.
Williams said economic growth is the ultimate benefit from the E-Community Loan program.
“It allows people who may not otherwise be able to start that business, buy that business, grow that business to do that, provide jobs for people and provide economic growth in the region and in the state,” Williams said. “That is why the fund was put in place, and that is what it does.”