The no-cost consulting helps people like Truong identify and overcome the challenges they'll face. He also gets advice in setting up accounting systems, marketing plans, Web development and strategic planning. There are seminars in tax planning and financial management, among other topics.
"Typically, people who come to me have a business plan, and they may have an idea of cash flows," Thielman said. "I try to build on that. In many cases, as it was with David, a bank is going to look at his situation and say it's too small of a business to be involved with. At that point, we start to look for a microlender."
Southwest Initiative Foundation
Thielman connected Truong with the Southwest Initiative Foundation (SWIF).
"St. Cloud State has access to a small microloan fund, but it's capped at $5,000, whereas we can go far beyond that. Our limits are $50,000 in loans," said Berny Berger, microenterprise program coordinator for SWIF. "It's all about economic development. There's a social and economic purpose here because our clients are trying to build equity for themselves and better their own situation. Almost every business starts as a microbusiness. But over the years, they can grow, and then maybe they're employing 15 or 20 people. That's a great return on our investment."
A typical SWIF microloan, which can be for manufacturing, service, retail, child care and value-added agriculture businesses, is for about $11,000.
Truong needed something along those lines, although he was able to raise a majority of the funding to start Ultra Spa Nails on his own. In addition to Berger, Truong also worked with SWIF Program Officer Kurt Thompson to set up a Kiva lending program, a crowdfunding option similar to Kickstarter, that could produce another $2,500.
SWIF borrowers pay a fixed 7.5 percent interest rate and have up to 10 years to repay amounts for real estate, six years for equipment. They also must make monthly and annual financial reports. In return, SWIF provides free technical assistance for the life of their loan. Berger said loan loss has been less than 5 percent. The SWIF Microenterprise Loan Program, which also is available for expanding small businesses, is supported by the U.S. Small Business Administration and the U.S. Department of Agriculture.
"Our job is to fill a void, to serve an otherwise unbankable market and help these people find what they need to pursue their passion," Thompson said.
Capacity for more
According to Kirchoff and Thielman, the fastest-growing segment of small business are those owned by minorities and immigrants. St. Cloud continues to become more diverse, and the CMSBDC is taking steps to bridge the gap. This year, it will hire a bilingual consultant to work with the Latino community.
"Let's face it, 80 percent of small businesses fail in the first five years," Kirchoff said. "It's not easy, but 80 percent of those businesses that make it five years are ones that worked with technical assistance providers. That's because we're not a cheerleading squad. We ask the tough questions."
The CMSBDC has worked with SWIF on about five projects in the past two years, and both organizations say there is capacity for much more.
As for Truong, he knows the path to prosperity isn't smooth. But he's being coached and prepared for the times that are rough and the promotions that don't work.
"Financially, they helped me get to the next level," Truong said. "There was a salon for sale in St. Cloud for about $10,000 when I was thinking of doing this, but I'm glad I went this route because I'm much more proud of what I've been able to do. It's much more appealing. I didn't expect my first business to be like this."
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