SBA 504 Loan Helps Family-Owned Small Business Buy Property, Embrace Growth and New Job Creation
How an offbeat family-run rest stop broke new ground with SBA 504 loan
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Think back to your last family road trip. Chances are, the best meal combo your pit stop could offer was a roller-grilled hotdog with a side of electric-blue Slushie. Their merchandise was probably just as lackluster and predictable, with cheaply made sunglasses, energy drinks and greeting cards.
The Mench family tired of this cookie-cutter experience. Inspired by their own road trips and the things they’d wished they’d found on them, the family vowed to do things differently with Orv’s, their Williams, Calif.-based business brand.
What began as a no-frills gas station passed down from family has since evolved into an offbeat one-stop shop for roadtrippers and even the occasional celebrity like Elton John and Guy Fieri. While gassing up, visitors can now enjoy fresh-made healthy fare and shop from a vast selection of unique merchandise, from gourmet olive oils to specialty hot sauces.
“We’re onto something exciting and people are loving what we’ve created,” said Brenda Mench, who co-owns Orv’s with husband, Dean, with help from their grown kids Brittany and Derek.
When they decided to launch their latest concept, Orv’s Farm Market, they looked to loan officer Ed Ryan, of CDC Small Business Finance, for guidance. As a leading SBA 504 real estate lender, we helped the Menches secure low interest, long-term financing to expand their beloved Orv’s brand in rural Northern California. Here’s their story:
Business’ roots lead back to original founder
As the Menches have focused on evolving their business over the last two-plus decades, they haven’t forgotten the importance of family tradition.
The business name, Orv’s, is a hat tip to Brenda’s late father, Orville Burgess. The native Oklahoman grew up poor and never graduated high school. Aspiring for more, he moved to California, met his wife Dorothy and started a string of independent businesses.
One of them was a gas station that was later sold to Brenda and Dean to eventually become Orv’s. Then, it was a simple gas station, country diner serving biscuits and gravy, and mini mart.
Reinventing classic brand through ‘trial and error’
Williams, Calif. is a rural community about an hour’s drive from Sacramento, known for its almond orchards, and duck and pheasant hunting. It’s also part of a common pass-through route for Northern Californians returning home from jaunts to Napa and Mendocino counties.
When the Menches acquired the business in the 1990s, their focus was to boost customer traffic by reinventing Orv’s as a delightful destination for roadtrippers.
Recognizing the dearth of quality merch at traditional gas stations, their first experiment was to start an indoor flea market. They’d stock up on a broad selection of products, from T-shirts to perfumes and toys.
The idea was to get Orv’s on the map as a purveyor of unique gifts and knick-knacks, the Menches said. This strategy proved to be such a hit that they now fly to Atlanta twice a year to buy items in bulk to stock up their shelves.
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Also in need of a facelift was the original country diner, which generated a loss every month. To draw more customers, they rebranded the space as a contemporary deli called the Chicken Shack. They not only offered hand-breaded fried chicken, but also 100% Angus beef burgers, crispy potato wedges, and other homemade-style comfort food.
Another smart business move was rebranding their fill-up station as Shell, whose brand name helped draw in more clients.
“It was through trial and error that we figured out what works and what doesn’t work,” Brenda said.
Stepping up their game with ‘farm market’
Not the type to rest on their laurels, the Menches wanted to add more value to their business around 2016.
They wanted to feed California’s growing appetite for more nutritious food options while on the road. That, along with new state legislation requiring gender-neutral bathrooms, made for great timing for their new concept, Orv’s Farm Market. They envisioned the shop would offer healthier choices, from wraps to freshly pressed juice.
“We knew we needed to step our game up,” Brenda said.
Their next goal was to find the right type of financing to fund the project’s construction.
How SBA 504 loan made this project possible
Before coming to CDC Small Business Finance, the Menches embarked on other financing routes but were ultimately met with dead ends.
Their frustration was later tempered by a chance connection through Dean’s brother, who met senior loan officer Ed Ryan at a finance conference. After one call with the Menches, Ryan was confident the couple would be great candidates for SBA 504 financing.
SBA 504 is fixed-rate, low down payment loan that can be used for buildings, land or major equipment. SBA 504 loans are structured differently than conventional real estate loans in that the small business borrower only has to put down 10 percent.
The remaining project cost is covered by a banking partner, typically at 50 percent, and a CDC (community development company,) at 40 percent. In this case, Collin Shelden with Bank of Commerce out of Redding, Calif., was the banking partner.
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“Both Ed and Collin have been nothing short of getting things done within a timely manner and we are so grateful to have had their expertise and help to make this project possible,” Dean said.
The successful financing of the Mench project is aligned with the U.S. Small Business Administration’s renewed focus on rural markets and ensuring they’re able to access the business capital they need to succeed.
In fact, the SBA is collaborating with the U.S. Department of Agriculture to bolster capital, training and other support to small business owners in rural areas like Williams, Calif. As a community-based lender focusing on the underserved, we support this meaningful initiative to encourage more lending to these communities.
When they were told no, CDC said yes
Prior to working with CDC Small Business Finance, the Menches were told by other lenders they were ineligible for an SBA 504 loan because they previously got an SBA 7a loan to fund convenience-store improvements. At one point, a lender recommended a much more expensive financing option.
Dissatisfied with their experience, they came to CDC. Ryan, a seasoned commercial loan officer, found a way to get the Menches into an SBA 504 loan after all. One of the main factors that sets us apart from traditional lenders is our in-depth knowledge of the SBA 504 product spanning 40 years of lending. This extensive knowledge fosters creativity in structuring real estate deals in ways conventional or community lenders may not know about.
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According to federal guidelines, Ryan said, if the lender of a 7a loan is unwilling to change the terms of the existing finance and they say so in writing, then the borrower can refinance the 7a debt secured by the eligible collateral.
The 7a loan they had previously obtained was then rolled into a new SBA 504 construction loan that allowed for their expansion using long term fixed rate financing.
“Ed was quick, efficient and not a procrastinator; he took action,” said Brenda Mench. “He’s become a friend throughout this journey. He truly does care about people and their business.”
Dean Mench called the entire loan process “easy,” adding “CDC provided us a list of requirements, we provided the needed information and the deal was complete.”
Orv’s Farm Market is now a reality
The Menches used their SBA 504 financing to build Orv’s Farm Market. The store, on the same lot as their original gas stop location, opened in late June 2018.
Their chicken shack is still in operation but visitors now have healthier alternatives if they want them through Orv’s Farm Market. There, customers have their pick of freshly made wraps, juice-bar concoctions, espresso coffee and more. Another component is their wide selection of gourmet foods including locally made olive oil, jams, vinegars, salami and hot sauce.
What’s more, the opening of the new store has led to the creation of eight new jobs and the increased support of local vendors whose products fill their shelves.
“We have people coming out of their way for our stuff like our hot sauces,” said daughter, Brittany. “Customers are coming back again and again because our products and services are unique.”
The Menches say the financing has played a crucial role in making happen their family dream of expanding their business while paying homage to Orville Burgess.
“Each day we learn something new, are inspired by our team who has contributed to making our business successful and are positively moved by customer’s enthusiasm for our store,” they said. “We cannot express how grateful we are to have built our dream business and have an overwhelming amount of love and support for it”
Jobs created & preserved: 15
Buying commercial real estate may seem like an out-of-reach goal. But it’s more attainable than you think. Have you always wanted to be your own landlord? Tell our SBA 504 loan experts about your business, and they’ll work to match you with a financing plan that best suits you. Let’s talk! Reach us at loaninfo@cdcloans.comor (619) 243-8667.
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