Helping hand for small businesses

  • Mara Shepard, left, owner of Mara Separd Designer Jewelry, and Candy Shannon, center, help customer Tim Bunyad try to pick out a present at the Coddintown Mall store.

In January, with the economy in near freefall, customer calls to Luxury Products dropped from 200 a month to just one.

"Business stopped, literally stopped," said Chris Welch, CEO of the Santa Rosa-based designer of custom appliances.

The company turned to its cash reserves and credit lines but bankers then froze all its credit lines, Welch said, and some asked to be repaid right away.

Welch did what he had to.

"When cash flow stops, the first thing you do is lay off employees," he said.

Turned down for more credit at local banks, he looked to the U.S. Small Business Administration, which under the American Recovery and Reinvestment Act received $375 million and altered conditions of its key loan programs in a bid to restart small-business lending.

Luxury Products was approved for a $139,000 SBA loan. The money allowed the company to move forward until business revived — and Welch rehired the two employees he'd laid off, a marketing and Web site manager and an operations manager.

"It wasn't a massive loan, but it really was," he said. "It allowed us not to live on just our own internal cash, and it allowed us to expand ... to invest in the marketplace to add market share."

Since the federal stimulus act passed in February, the SBA has guaranteed 59 loans amounting to $25 million in Sonoma County, agency records show. Those loans have ranged in size from $7,500 to $1.6 million, and have gone to borrowers ranging from jewelers to wine bottlers.

California companies have received 3,892 SBA recovery loans valued at a total of $2.75 billion through the agency's two main loan programs, according to Mike Stamler, an SBA spokesman.

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