New La Luz Center loan program aims to boost Sonoma Valley’s small businesses

Cliff Casolla witnessed the transformation of old, rundown cars into beautiful pieces of art working at a Sears Point hot rod garage while in high school and college.

The Sonoma native went on to become a police officer in San Francisco. As a son of a classic car enthusiast who was surrounded by cars for much of his life, engine oil ran through his veins. After six years on the police force, he decided to give up his badge and return to the garage full time.

Casolla last month purchased the old Marshall’s Body Shop in Glen Ellen. The move, he said, would have not been possible without the support of local philanthropist Simon Blattner and La Luz Center, the Sonoma Valley nonprofit group.

Casolla, 29, received a $10,000 loan through a program La Luz recently launched to help small businesses remain viable in the valley. Blattner and his wife, Kimberly, who sits on the nonprofit’s board, provided $50,000 to get the revolving loan program off the ground.

They’re working with Exchange Bank to provide low-interest-rate loans to businesses that don’t have much of a credit history and likely would not qualify for a traditional bank loan, said Barbara Hughes, former executive director of the Community Foundation Sonoma County who has helped roll out the program. She said the money was established as a guarantee fund, so that if a business failed to pay back the loan, the bank would then be able to recover its loss.

“Getting that first loan is a challenge,” she said.

The goal is to make the region’s small businesses more “bankable,” said Simon Blattner, who served as the CEO of Rittenhouse Paper Co. before it was purchased by Nashua Corporation.

A good relationship established with lenders and a solid credit history can expand horizons for small businesses, Blattner said.

“Every business guy in the world who has grown a business has borrowed money,” he said.

Casolla said a traditional bank loan was not an option for him. He said the man he purchased the shop from was an “old school, off-the-books kind of guy” who didn’t keep extensive records. Casolla had to tap most of his savings to purchase the shop. That left him with little cash flow in case a piece of equipment broke and needed to be replaced.

“I didn’t have a safety net for my business,” he said.

But La Luz’s loan program gave him the security he needed, Casolla said. His is one of two businesses to so far receive a loan through new lending venture.

The effort is part of a broader push to revitalize the urban area north of the city of Sonoma, which is home to a diverse population, including many lower-income and Latino residents.

A decadeslong project to overhaul the Highway 12 corridor has resumed work, with sidewalk, lighting and roadway improvements under construction since spring.

The county has put up $1 million for a loan program that helps businesses upgrade their facades, and about half of the projects, comprising more than a dozen businesses, are in The Springs area north of Sonoma.

Also, a $27 million affordable housing project broke ground Friday in the area. It calls for a total of 60 units for families, with rents ranging from $390 to just over $1,000 a month.

Energy focused on The Springs

Juan Hernandez, executive director of La Luz Center, said the combined efforts amount to “a lot of movement and energy” focused right now on The Springs.

La Luz’s motive for making the loans, he said, was to make sure existing Latino-owned and mom-and-pop restaurants and stores won’t be pushed out as the area improves and outsiders begin to look at it as a place to invest in.

“We’re starting to see that with AirbnB, with people buying up these houses that use to be single-?family houses,” Hernandez said. La Luz is looking to help small businesses “so they don’t get run over,” he said.

“In the end, it brings more people into the businesses. It creates more jobs,” Hernandez said about the loan program.

Picazo Cafe and Deli saw an uptick in business and hired an extra server after it made numerous improvements when it received a $10,000 loan through the program, said Salvador Chavez, a La Luz board member who helped his father, Salvador, and his business partner, Aiki Terashima, apply for the loan. The money was used to replace the cafe tables, put in new plants outside and buy a draft-beer refrigerator and other needed equipment.

“For businesses like us that work on a small margin it means more volume, which means more profit,” said Chavez, who launched earlier this year his own import wine and spirit business, Puente-Internacional.

When a loan and interest are paid back, the money goes back into the pot to loan to other businesses.

“It’s a small fund. We’re hoping it will grow,” Hughes said.

New and existing businesses interested in a loan must make their case before the six-member microloan committee, which includes Hernandez, Hughes and Simon Blattner.

Businesses can borrow from $1,000 to $10,000 but must pay it back with interest, said Malinalli López, who oversees the program at La Luz. The interest rates vary from ?3 to 4 percent - less than what many banks charge, she said.

The loan terms are flexible, giving the businesses from one to three years to pay back the money, she said. They also don’t require the extensive records needed for bank loans, making it easier for mom-and-pops to qualify, said López, who helps applicants put together their business plans.

“Banks have all different kinds of requirements. For a true startup, it’s difficult,” López said, adding that new businesses may not have financial records and documents banks may want to see.

One-on-one coaching included

As part of the program, López, who used to work with the Napa-?Santa Rosa Small Business Development Center, also provides one-on-one business coaching. Businesses also will be able to take part in a series of classes that focus on such topics as finances, use of social media and communications, said Hughes. The classes cost $5.

Casolla, the Glen Ellen auto shop owner, said he had no prior experience dealing with business contracts. But Blattner and La Luz staff members have helped him navigate that process.

“It’s nerve-wracking,” he said. “Having the La Luz and Simon reassuring you is a tremendous help.”

You can reach Staff Writer Eloísa Ruano González at 521-5458 or ?eloisa.gonzalez@pressdemocrat.com. On Twitter @eloisanews.