01.12.2011 – Secrets of the SBA-loan winners – CRAIN’S NEW YORK BUSINESS

Secrets of the SBA-loan winners

They got how much? Meet some of New York’s biggest beneficiaries of multi-million-dollar loans guaranteed by the U.S. Small Business Administration.

By Benjamin J. Spencer
Published: January 12, 2011 – 1:00 pm

Phil Vallone, the co-owner of Vallo Transportation Ltd., could barely contain the relief in his voice. At times, he sounded like the latest sweepstakes winner. “We no longer have to be like gypsies, moving from place to place,” he said. “We have a home now. Watch out!”
After a months-long application process, Mr. Vallone and his sister were approved last year for $4.6 million in loans, including $2 million guaranteed by the U.S. Small Business Administration, to help their 30-year-old private school bus company purchase its own building and lot in Whitestone, Queens. Vallo, which contracts with the city as well as the Bronx High School of Science, will be able to house its buses, operations and management offices all in one place.
Vallo came in at No. 10 on the latest Crain’s list of the New York area’s largest Small Business Administration-guaranteed loan approvals. The Vallone family’s other bus company, Rolling V Transportation Services, received an SBA loan 20 years ago. Mr. Vallone said the process this time was “relatively similar—we had to jump through a lot of hoops.”
Despite the bureaucratic challenges, last year was the right time to revisit the program, he said, mostly because of historically low interest rates. Mr. Vallone also cited the SBA’s continued relaxation of New York City’s mortgage recording tax on their portion of loans over $500,000, which currently stands at a substantial 2.8% of the principle, according to the city.
Vallo’s success is evidence of a larger trend of increased small business lending, according to the SBA. Last September saw the enactment of the federal Small Business Jobs Act, which increased incentives and funds available to small firms around the country. From all evidence, both startups and existing companies in the New York area wasted no time taking advantage.
“It’s a good time to be a small business in the New York area,” said Pravina Raghavan, the director of the U.S. Small Business Administration’s New York district office.
The agency recently reported a 53% jump in lending for October and November in the lower counties of New York state, including the five boroughs. New incentives, such a Congressionally-approved, two-year refinancing period and increased funds for micro-lenders, spurred the trend, she said.
“If you look at New York, most of our businesses are small businesses,” Ms. Raghavan said. “And I want a business that gets a loan today to be in business 20 years from now.”
Ms. Raghavan counts industry giants like Apple, Staples, and FedEx among the SBA’s past success stories—all were recipients of loans from the agency in their formative years.
The services provided by this year’s biggest approvals are all over the map—from food to flooring, transportation to decoration (including a company called American Christmas Inc., a Mount Vernon, N.Y.-based holiday decoration and installation firm that created displays for Rockefeller Center and Saks Fifth Avenue, among other famous spots). One thing virtually all had in common, though: They were well-established.
Patrick MacKrell of the Empire State Certified Development Corp., the nonprofit organization that guarantees local loans through the SBA—including 21 of the Top 25 on the Crain’s list—said that the majority of applicants were looking to expand to take advantage of real estate opportunities in the city. A full 95% of the approvals, he said, were 504 loans, which cover mainly real estate and high-value-equipment purchases. That’s a stark contrast to the previous two years, when 504 lending volume dipped 20% and co-called 7(a) loans, mainly used to keep businesses afloat with working capital, skyrocketed 40%.
“People were dealing with immediate needs, not long-term needs,” Mr. MacKrell said. “[Now, 504 lending is] back at the 2007 level.”
In December 2010, Empire State Certified Development saw about 46 loans approved, Mr. MacKrell said. That’s the highest single-month total since March 2007. “Nobody wanted to be on the outside looking in,” he said of the December rush. “It was a race to get the incentives before they expired [at year’s end].”
Those incentives were a factor for Haim Kedmi, president of Manhattan sportswear store Transit, the No. 1 loan recipient on the Crain’s list. Roughly half of Mr. Kedmi’s $7.9 million total loan amount was guaranteed by the SBA and facilitated by Empire State Certified Development.
“I was expanding this year anyway,” he said of his decision to apply, noting that he made sure he had strong financial statements and solid outside advisers to navigate him through the system.
The result: The SBA loan helped Mr. Kedmi move the headquarters of Transit to lower Broadway, between Canal and Walker streets.
The move allowed him to keep his office in the same location as his retail operation, a big advantage for an owner-occupier.
Over his 20 years as an entrepreneur in the city, Mr. Kedmi has purchased and opened different sportswear companies in five locations throughout Manhattan. Still, this was his first time applying for SBA loans. “I was scared in the beginning,” he said of the substantial paperwork process. Now he’s an enthusiastic proponent. “If I could do it again, I would do it all over.”Brothers Joseph and Vito Panobianco say much the same thing. They hope to expand their Astoria Espresso & Cappucino Machine Corp. into the warehouse space they built not far from their headquarters in the Castle Hill area of the Bronx. Joseph Panobianco said that after 35 years in business selling espresso machines direct from Italy, it was time for his company to start manufacturing many of the products it sells.

The brothers first applied for a loan four years ago to build a new warehouse, but Mr. Panobianco said the banks he spoke with wouldn’t budge—until he obtained the help of the Bronx chapter of the SBA. “The banks want so much more now,” he said. “Five years ago, we’d be closed and sealed [on the deal] and set up. But they want to know how many toes your great-grandchildren are going to have.”
[Download the full Excel list of the largest SBA-guaranteed loans in the New York area.]


01.11.2011 – City Officials Brace for Blizzard, the Sequel – CRAIN’S NEW YORK BUSINESS

City officials brace for blizzard, the sequel

Less than two weeks after a massive snow storm dumped 20 inches of powder on New York City and paralyzed most transportation, city officials are assuring residents that Tuesday night’s storm won’t be a repeat performance.

By Benjamin J. Spencer

Photo by Buck Ennis
The National Weather Service has forecast that Tuesday night’s winter storm may dump as much as 14 inches of fresh snow on the New York metro area by 4 p.m. Wednesday.
Published: January 11, 2011 – 3:48 pm
City transit officials said they were working hard to prevent stranded trains and buses in the metro area as another snow storm bears down on the East Coast, but they also counseled residents to be patient.“It will be a long night,” said Jay Walder, chief executive of the Metropolitan Transportation Authority. He noted that morning express train service will likely face disruptions because several rescue, de-icer, blower and scraper trains will be stationed on available underground tracks.

The National Weather Service has forecast that Tuesday night’s winter storm may dump as much as 14 inches of fresh snow on the New York metro area by 4 p.m. Wednesday.

“It’s a tough storm because it’s coming in late,” said Helena Williams, president of the Long Island Rail Road.

The commissioners share one goal: avoiding stuck trains and suspending as few services as possible. But NYC Transit President Thomas Prendergast said a lot depends on the type of storm this front brings. Blowing or drifting snow and a heavy rate of accumulation on the third rail could affect trains’ ability to move along the electrified tracks and doom efforts to move stranded passengers with rescue trains, he said.

“In the 13-inch range, you may have to have suspensions,” he said.

Mr. Walder said that for this storm, the other agencies of MTA are setting up so-called “Incident Command Centers” where emergency storm efforts will be coordinated.

These command centers are put up specifically in the event of an extreme event or emergency, and will be “a focal point for every operating department” in the MTA, said spokesman Salvatore Arena.

The strategy is borrowed from a procedure LIRR has followed for about a year, Mr. Arena said. LIRR typically commandeers their agency president’s conference room for their center, but he doesn’t know exactly where the other agencies will set up theirs.

The MTA has also borrowed another LIRR program by installing a designated “customer advocate” in every agency’s Incident Command Center, said Mr. Prendergast.

“The advocate is not going to have direct communication with passengers on the train. They’re not miracle workers,” Mr. Arena said
Rather, the advocate’s job will be to coordinate efforts focused on stranded riders: providing supplies or food, attempting to reach passengers through outside workers, and making sure people are not attempting to exit the train into an unsafe situation.

“They didn’t have that in a formal way before,” Mr. Arena said.

For the Long Island Rail Road, Ms. Williams said diesel engines will be standing by to assist stuck trains, and the rail road will also station 50 workers at the busy Jamaica, Queens, interchange. Overall, 600 LIRR employees are slated to work through the storm. “We’ve had a great response from employees for this one,” Ms. Williams said.

Also on Tuesday, Mayor Michael Bloomberg announced that the city would inform parents of school closures by 5 a.m. Wednesday through the 311 hotline and on city websites. He cautioned of a difficult commute on Wednesday and told residents, “Do not drive if you can help it.”

In the wake of the post-Christmas blizzard that dumped upward of 20 inches on the city and paralyzed most transportation, Mr. Bloomberg on Monday laid out a 15-point plan for handling future snowstorms. The plan included several new measures designed to prevent many of the communication and emergency system problems that hampered efforts during the last storm. Mr. Bloomberg dismissed any notion that the city may have resisted buying necessary equipment because of budget cuts.

He also countered charges of a lack of empathy and availability during the storm. “When things go wrong, you can never have enough empathy,” he said. “We didn’t do as good a job as we should have.”

In response to complaints about his being on vacation, he responded: “The mayor is in charge, and the mayor is in charge all the time,” he said. “I am not in every conference call, and I shouldn’t be.”

When pressed to detail what he himself could have done differently to deal with the last storm, Mr. Bloomberg brushed off the question. “Should have, would have and could have, I don’t know,” he said. “Next question.”

The expected snowstorm forced the postponement of the City Council’s oversight hearing on Walmart scheduled for Wednesday afternoon. It was rescheduled for Feb. 3 at 1 p.m. Opponents of Walmart’s entry into the city have also called off a rally they had scheduled for Wednesday.

01.04.2011 – Kitchen Startups Turn Up the Heat in Harlem – CRAIN’S NEW YORK BUSINESS

Kitchen startups turn up the heat in Harlem

HBK Incubates, a culinary incubator sponsored by the city’s Economic Development Corp., is catering to food retailers who want to expand their reach.

By Benjamin J. Spencer
Published: January 4, 2011 – 3:31 pm

Small food businesses in East Harlem got a shot in the arm Tuesday when the city’s Economic Development Corp. opened HBK Incubates, a new kitchen incubator space at neighborhood market La Marqueta.The incubator program is designed to help fledgling, home-based food retailers grow their businesses by providing them with inexpensive kitchen space, access to professional equipment and technical training, according to the EDC. Hot Bread Kitchen, a tenant at La Marqueta, will oversee the daily operations of the incubator and its training programs. The nonprofit, which trains immigrant women for culinary work, already uses the space for its headquarters.Elvis Hernandez, owner of home-grown cake business Daisita Bakery, plans to use the additional space and equipment he’s getting as a tenant at La Marqueta to expand his business to 100 supermarkets from his current 19. Mr. Hernandez started making cakes for friends and local markets after his bodega folded in 2007.

“My wife used to make the cakes whenever there was a birthday,” he said. “The next thing we knew, the guests at our birthday parties were calling to request them.”

Pretty soon, he says, they were struggling to fill the orders in their small home kitchen. The larger space and better equipment, he says, will allow him to increase production of his signature poundcakes from seven or eight a day to 20. He also plans to expand into flan, rice pudding and bread pudding, among other treats.

The center introduces a sorely-needed revitalization tool for an economically down-trodden area, said City Council Speaker Christine Quinn, a major proponent of the incubators.

“First and foremost, this revitalization will help a market that is barely holding on,” Ms. Quinn said. “And it’s going to put people to work.” Ms. Quinn also said that the incubators will help foster a local food scene in an area with a shortage of culinary establishments. The program was funded from a relatively small $1.5 million investment from the city, she said, but will provide major benefits to the community, starting with creating jobs for people with even entry-level culinary skills.

“It’s going to help some people start from zero, total start-ups,” Ms. Quinn said.

La Marqueta, formerly a mainly Hispanic market located under the Harlem Metro-North tracks, has struggled since the late 1970s to retain small food retailers, according to the Community Board 11 website. Once standing nearly empty, the main building has seen some recent activity with the arrival of several artisan craft shops and fresh fruit and vegetable vendors. But the kitchen incubator will still take up about a third of the 10,000-square-foot space of La Marqueta, according to the community board.

In a press release, the EDC said HBK Incubators will also train culinary workers for food certification and will be capable of holding up to 40 tenants on a revolving, time-share basis.