CT Small Business Loans Target Diverse Owners, Distressed Cities

Crossing Connecticut CT

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An occasional look at Connecticut’s remarkable people, places and things

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An occasional look at Connecticut’s remarkable people, places and things CT Mirror

Inside a new commercial building, off Farmington Avenue in Berlin’s Kensington section, Beatriz Torres surveyed the scene as her plans for Studio 10 Hair & Nail Salon’s new location came to life. Along the back wall, shampoo bowls; a row of nail stations on the opposite wall; and an island of cabinets down the middle, where eight stylists will cut and color hair before large circular mirrors ringed with LED lights.

Torres was visiting the space earlier this week to “see how everything looks” and to pitch in with the installation. She grabbed a screwdriver and started attaching matte black hardware to freshly unwrapped cabinets, declaring, “We got our first handle on!”

The stylist-turned-business owner hopes that relocating Studio 10 from its current location, in a sleepier strip of storefronts about a mile away, to the new development adjacent to Berlin’s train station will raise the profile of the business — while allowing her to expand and upgrade the services she offers. 

In order to pull off the new look for her business, Torres sought a low-interest loan for $40,000 from the state’s Small Business Boost Fund. The program, launched last year, aims to provide low-interest loans of up to $500,000 to Connecticut businesses with 100 or fewer employees and annual revenues of less than $8 million. It’s targeting businesses located in economically disadvantaged areas, as well as businesses owned by veterans, women and people of color. Applicants need to have been in operation for at least a year before seeking funds through the program.

José Torres, Jamelyn Carrero, and Adam Rivera unpack cabinets for the future beauty salon at Studio 10.

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José Torres, Jamelyn Carrero, and Adam Rivera unpack cabinets for the future beauty salon at Studio 10. Shahrzad Rasekh / CT Mirror

The Department of Economic and Community Development, which oversees the program, reported so far about two-thirds of the 336 businesses approved for loans have “diverse ownership” — including at least one woman, person of color, veteran or member of the LGBTQ community. The department also said that businesses located in 12 of the state’s most distressed municipalities have received over $12 million of the $43 million distributed, or roughly 28%.

According to data reviewed by The Connecticut Mirror, over 200 of the owners approved for Boost Fund loans so far are white, including 84 of the 137 woman-owned businesses.

DECD Commissioner Alexandra Daum said she thinks the program is “doing a decent job” of reaching entrepreneurs who might not otherwise be able to obtain capital investment.

“They could just be first time entrepreneurs. They could be someone who had a bad credit score from something way in their past. So there’s a lot of reasons that someone might be a good candidate for Boost and someone that we’re trying to approach,” she said.

Still, she said, “I think there’s definitely room for improvement.” The program’s goal was to have more than half of its recipients meet the department’s definition of diverse ownership, but Daum acknowledged that’s a broad definition. “We’re exceeding the only hard and fast rule that we [set] but we’re not going to stop there or rest on our laurels,” Daum said. “I’d love to be doing better on all these categories, the sky’s the limit.”

The salon at Studio 10 will be fully furnished by Design X, a Connecticut-based furniture manufacturer.

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Studio 10 owner Beatriz Torres worked with Design X, a Connecticut-based furniture manufacturer, to furnish the new space in Berlin. Shahrzad Rasekh / CT Mirror

In order to reach business owners who might qualify, DECD ran a marketing campaign that included print, digital and radio advertisements. They also met with business groups and chambers of commerce around the state, and went door-to-door at businesses in 15 towns.

The Boost Fund is a revamped and updated version of Small Business Express, a grant and lending program the state administered for roughly a decade. For the new program, DECD outsourced administration of the loans to an outside agency, New York-based National Development Council. NDC then selected several community development financial institutions, or CDFIs, to provide advisory services to each loan recipient. 

The state put up half the program’s initial funding, $75 million, and another $75 million came from private partners including Citizens Bank, M&T Bank and First Republic Bank. DECD aims to have all $150 million distributed within five years. The funds will be replenished as businesses pay back their loans, DECD leaders said, allowing the program to continue beyond that initial five-year timeframe. 

Construction and unpacking efforts are still underway as the beauty salon at Studio 10 is set to open in 2024.

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Construction and unpacking efforts are still underway as the beauty salon at Studio 10 is set to open in 2024. Shahrzad Rasekh / CT Mirror

The program’s 4.5% interest rate was set last year before the U.S. central bank approved a series of hikes to the federal funds rate, which now stands at 5.33%. Boost Fund loans will remain at 4.5%. That’s low in today’s market, Daum said, “and it’s fixed, so there’s not a question mark as to whether it’s going to change over the course of the loan.”

Hayley Segar, founder of Milford-based swimwear company onewith, obtained a $200,000 loan from the Boost Fund, which she put toward restocking inventory after her brand went viral online. An adviser Segar works with at the Connecticut Small Business Development Center suggested she apply for the loan. “That $200,000 allowed us to top up on inventory in a big way,” Segar said.

For entrepreneurs like Segar, scaling a product business takes “a ton of time and a ton of money,” she said. “There’s no prepackaged way to do this, unless you’re a celebrity. You have to find every possible resource on your own — everything from shipping to fulfillment, R&D and production was done painstakingly step by step. Emphasis on painstakingly.”

Segar said the Boost Fund’s “fair terms” and low interest were critical in helping her keep up with customer demand and growth. 

For Torres, the loan represents Studio 10’s next chapter. She bought the business in January 2021, after working there as a stylist through the height of the pandemic.

“I was scared, but I decided to take the jump, and almost three years later, here we are,” Torres said.

She said she’s still stressed, not quite ready to be excited about moving.

“I just hope that it’ll be worth it in the long run — that that location where we’re going to be is going to get more foot traffic and we’re going to be able to expand even more.”

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