Cupcake Wars Winners Gets Financing After Rejection from Multiple Banks

Audrey Hermes doesn’t look anything like a warrior. She’s petite with a smile that would make most dentists jealous. And yet in the course of two years she was engaged in two wars, winning one of them single-handedly – cupcake wars that is.

Audrey is the talented owner of Frost Me Cafe & Bakery, a full-service bakery in Little Italy, a trendy, pedestrian-friendly neighborhood next to downtown San Diego. But until some of her friends put her up to competing in the Food Network’s Cupcake Wars in 2012, she was struggling to make her small business dream thrive.

“We started slow and for a while I was questioning my career choice,” Audrey said, tongue in cheek. “But once I appeared on Cupcake Wars, things really started to take off.”

Cupcake Wars Victory – 2nd Time’s the Charm

Although Audrey didn’t win her first competition on the national cupcake battlefield, she was invited back the next year and this time, armed with recipes for espresso chocolate cherry, caramel cashew and apple molasses cupcakes, she was victorious. And the visibility that came with winning validated Audrey as a top-caliber baker and attracted scores of new customers.

Audrey did not always have her sights set on a career in baking. In college, she focused on dancing, believing it would lead to professional opportunities. But when she injured her knee, she had to consider other vocational paths. She moved to San Diego eight years ago, lured out of North Dakota by Southern California’s most treasured asset – the sun.

To make ends meet, Audrey waited tables in a downtown restaurant while launching a cupcake/catering business on the side. But running the business as a part-time venture for several years took its toll so she decided to devote 100% of her energies to her fledgling small business.

“I always considered myself a leader and wanted to be my own boss,” she said.

A Dream is Born with Fresh Financing

After selling her sweet goodies for a while out of a shopping mall cabana and a Seaport Village store, she was drawn to the idea of opening a third location in Little Italy. Her vision was ambitious; she would start with an empty commercial space and build out her new Frost Me Café & Bakery from scratch. She faced one glaring challenge – money.

“I talked to multiple banks about financing for all the tenant improvements we needed to do,” she recalled. “I was turned down multiple times.”

Exasperated, she followed up on a banker referral to CDC Small Business Finance, which led her to loan officer Stacey Sanchez, who listened to Audrey’s story and started the wheels moving to approve a SBA Community Advantage loan and a companion SBA Microloan for a total of $295,000.

“Audrey was impressive,” said Stacey. “She’s a hard worker, focused and diligent. And she was able to demonstrate that the business had good cash-flow to repay the loans.”

Related: see how another small business “foodie” mixed culinary expertise with affordable financing

State Guarantee Provides Frosting Finish

How does CDC get the flexibility to work with small businesses that banks turn down? One way is by working with California Southern, a state-sponsored, nonprofit organization that provides guarantees on as much as 80% of loan proceeds.

“With our assistance, banks and other lenders like CDC are more comfortable providing larger loans to small businesses, particularly those in industries considered higher-risk,” said Juan Carlos Hernandez, chief credit officer for Cal Southern.

Since it was established 30 years ago, Cal Southern has guaranteed loans with a total guaranteed amount of more than $203 million, which has helped pave the way for small businesses to grow and create jobs in San Diego and Imperial counties.

“Ultimately, when you give small businesses a chance to thrive, they will,” said Juan Carlos.

Thriving was Audrey’s intent all along. With the loans from CDC (and Cal Southern’s guarantees), she took a year to build out her new Frost Me Cafe & Bakery home in Little Italy. Beyond show-stopping cupcakes, she now offers an array of baked goods, Ritual coffee, sandwiches and other lighter fare. And to augment store sales, she’s the go-to wedding cake baker for Hornblower and Flagship cruise lines.

With a few years of perspective now under her entrepreneurial belt, Audrey is quick to tell would-be small business owners the key ingredients to success.

“Hard work,” she summed up. “If you’re uncomfortable putting in the hours for something you love, rethink things.”

Then again, being crowned the cupcake queen in front of millions on national TV never hurts. Wink wink.

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