Our story begins early in the summer when I blogged about a magical “pot of gold” at the end of the recessionary rainbow – a recently passed SBA legislation that would make our debt financing cheaper and easier. I chose a banker that seemed not only competent but supportive of our concept. This is fairly rare in commercial banking where “new” ideas are associated with wild risk. “All new food businesses should be franchises of proven concepts,” says Mr. Bank.
Now, I am not an enthusiastic fan of Chase bank. Aside from preferring to support local businesses, their deep passion for outsourcing each link of their vast global business has left me on the verge of violence far too many times. However, I did remember that the heritage Bank One guys I had worked with in credit were genuinely awesome and proud, old-school Texans. As with everything, Texas had it’s own culture.
With this in mind, we submitted our SBA loan application through Chase. My progressive banker was sure that we would have no trouble getting approved given our rock-star business plan, meticulously foretasted financials and 50% capital investment. Through the throngs of paperwork that we faithfully provided, we were assured that it was only a matter of time before we were handed a check at a fair interest ate. The time passed slowly but we were kept thoroughly entertained by our lease negotiations and drafting plans (read that story).. Unfortunately, as that time passed, my chosen banker was promoted to a management position in San Antonio. I was punished for my ability to pick a good banker!
Our applications was left in the care of a young woman who, although perfectly capable and bright, clearly lacked the voice of a seasoned lender. If you’ve ever worked in credit, you quickly learn that age and experience are everything. As with steak fries, bankers must be well seasoned.
Our new banker, we’ll call her Ms. Banks, was swamped with her newly inherited portfolio and in addition to having trouble returning my calls in a timely manner, seemed to have trouble getting her own calls returned from the underwriting team. I called her endlessly asking for updates. The process was going on two months and still no decision?
When Ms. Banks did finally get one of the underwriters to return her call she responded to me with a few basic questions that clearly demonstrated they were looking at the file for the first time. Great. At this time, keep in mind that I’m in the middle of a motorcycle trip across the country. I’m in and out of service, riding through the back roads of Virginia mountains and anxiously awaiting the call that will tell me an approved loan awaits me in Houston. I’m thinking about our budget, all the the kitchen equipment I will buy. I am seeing Hobarts and dough sheeters in my head. I am happy.
Two days after I arrive back in Houston I propose an ultimatum to Ms. banks. Please tell your underwriter that I expect an answer by the end of the week or we will take our business elsewhere. Here response is surprisingly swift: we can take our business elsewhere. She was apologetic, yet unable to explain the reasoning behind their decision. A few standard metrics were thrown out, but she could not tell me how they were calculated, especially when I explained to her that I had calculated them out already and under stated conditions, we met all the requirements. I knew that she had simply been unable to get anyone to look at the file, but I wanted it admitted. I was angry and yet felt sorry for her at the same time. I had flashbacks to banking moments when I struggled to explain key information to senior bankers and they stared past me with blank faces that told me what we all already knew: credit is not about calculations and metrics, it’s about who you play golf with. No matter how many “little people” pointed out flaws in the system, no one was going to make them change…hence the financial crisis – but that’s a whole other story, even a whole other blog.
So it went that a company that once trusted me with multi-million dollar deals could not trust me to small business loan that amounted to little more than pocket change in their portfolio. That is fine. I’m just happy I took that stapler.

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