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San Rafael-based Equator Coffees & Teas has been named California’s Small Business of the Year, the first LGBT (lesbian, gay, bisexual, transgender) company to win the award from the U.S. Small Business Administration.

The 21-year-old artisan coffee roaster has not only built a wholesale business that includes nearly 30 accounts in Sonoma County, but is also increasing the number of its Bay Area retail outlets.

“The only way to continue to grow the brand is through retail,” said Helen Russell, who with Brooke McDonnell, co-founded Equator in a Marin County garage in 1995.

Exposing new consumers to Equator coffees at the retail shops helps to grow the wholesale business, which Russell said remains “the golden goose.”

The company employs 90 workers, sells to 350 wholesale customers and operates three retail shops, two in Mill Valley and one in San Francisco. By year’s end, Equator plans to open three more outlets, one each in Larkspur, San Francisco and Oakland.

Its coffees are served at Thomas Keller’s French Laundry restaurant in Yountville, 200 “micro kitchens” at Google’s South Bay campus and in Sonoma County at Sonoma State University’s Green Music Center, various restaurants and markets, and such employers as Amy’s Kitchen and Cowgirl Creamery.

Equator’s revenues grew by $3 million last year to $12 million, Russell said, and are expected this year to total $15 million.

“They are an iconic business that LGBT businesses throughout the country can point to as a success,” said Mark Quinn, the director for the SBA district that extends from Santa Cruz to the Oregon border.

The company not only takes a “craft approach” to making coffee, Quinn said, but also offers “such an example of sustainable and responsible business practice.”

Equator recently received approval to become a benefit corporation or, B Corporation, a for-profit entity that also includes social and environmental benefits among its goals.

For the company, such efforts include paying higher-than-market prices for coffee beans, offering micro-loans to overseas farmers, and paying 100 percent of the health insurance premium for any employee who works more than 30 hours a week.

The company faced a major challenge in 2012 when La Boulange cafes announced it would sell its 23 locations to Starbucks. The sale meant Equator lost an account that annually purchased $1 million worth of coffee.

In response, Russell and McDonnell opened their own retail shops as a way to grow revenues.

Over the years Equator has benefited from SBA financing, including a $1.1 million SBA-backed loan that enabled the 2003 purchase of its San Rafael roasting facility, Russell said. She also hopes to use SBA lending programs next year to buy a larger coffee roaster.

“The government understands that small business is the economic engine of this country,” she said.

Russell, who said McDonnell and she are “partners in life and in business,” noted that Equator has been certified as an LGBT company by the National Gay and Lesbian Chamber of Commerce. The business last year was named number six on the San Francisco Business Time’s list of the Bay Area’s top 25 LGBT businesses.

Russell and McDonnell will join SBA winners from other states at a private ceremony May 2 in Washington as part of National Small Business Week.

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