Veterans Qualify for SBA 504 Financing

The SBA promotes the 504 program as an economic development tool which benefits the local community both through job creation or retention and increasing the local tax base. Generally, a business must create or retain one job for every $50,000 guaranteed by the SBA, except for manufacturers who must create or retain on job for every $100,000 guaranteed by the SBA. A business can also qualify for a 504 loan if it meets one of several “public policy goals”. Businesses that meet a public policy goal do not have to demonstrate job creation.

Currently there are nine public policy goals: Business District Revitalization, Expansion of Exports, Expansion of Minority Business Development, Rural Development, Enhanced Economic Competition, Restructuring because of Federally Mandated Standards or Policies, Changes Necessitated by Federal Cutbacks, Expansion of Women Owned Business and Expansion of Small Business Concerns Owned and Controlled by Veterans and Service-Disabled Veterans.

For purposes of the 504 program, veterans and service-disabled veterans were added as a public policy goal on August 16, 1999 when President Clinton signed into law the “Veterans Entrepreneurship and Small Business Development Act of 1999”. To qualify as a veteran owned business, the business must be 51% or more owned by one or more veterans and whose management and daily operations are controlled by one or more veterans. The definition of the term “veteran” means a person who has served in the active military, naval or air service and who was discharged or released under conditions other than dishonorable. The time required in active duty is a minimum of 180 consecutive days. To determine whether an individual qualifies as a veteran, it is important to request a copy of their Form DD-214, Report of Separation. This document will supply the needed information such as days of active service and conditions of release from service.

HCDC has assisted many veterans with 504 financing. One such veteran is Walter Bohn of Walt’s Barbeque. A Vietnam Veteran, Walt served in the United States Navy from 1966 through 1969 as a radioman. Mr. Bohn began the restaurant due to his love of smoked barbeque. About 15 years ago he received a smoker as a Christmas gift from his family.  After several failed attempts, he came across a technique that provided a consistent taste and texture.  He also worked on a sauce to enhance the natural flavor of the meat.  A special sauce was developed for which he won an award for in a local contest.  In effect, that was the beginning for Walt’s Barbeque.  He differentiates himself from the competition by making his own sauces, smoking the meat on the premises, and will only use a combination of pecan and peach wood to smoke the meat to provide that special flavor.  He currently receives sporadic orders for sauce from across the country, including from the cast of the Sopranos.

Mr. Bohn opened Walt’s Barbeque in March 2001 and since then sales have grown, on average, 20% per year.  Mr. Bohn did not anticipate the growth of the business to occur so quickly, and realized that based on the limited size of his facility, he would need to turn the tables more quickly to improve his sales potential.

As a result, he removed the televisions that were on the walls so that customers would not
“linger” after finishing their meals.  This has increased sales, but the size of the existing facility was a tremendously limiting factor.  The current facility was a former fast food restaurant with a maximum occupancy of 36.  

Catering, as an option to increase revenue, is limited based on the size of the kitchen.  The kitchen for the proposed facility will be as large as the existing restaurant.  Mr. Bohn does some catering.  However, based on kitchen limitations- all food is prepared on site- he limits the catering business so as not to interrupt the restaurant sales.

Working with First Financial Bank and HCDC, Mr. Bohn obtained a $367,000 SBA 504 loan as part of an $885,000 total project to construct a new 180 seat restaurant on the site of his current location. Once the new building is finished, the original building will be torn down and the parking lot expanded. In addition to 170-180 inside seating, there is room for another 40 plus patrons being serviced on the patio.  The new location will also have a full service bar and a play area for the kids.  Walt is committed to providing a family friendly atmosphere for his clientele.  

The new building is being built adjacent to the current facility and has attracted new clients interested in the construction.  By maintaining the existing facility while the larger location is built, it has acted as a marketing tool so potential customers will be made aware of the increased capacity.  Mr. Bohn also has historically spent 8-10% of total sales on advertising.  This has assisted in building the sales to their current level.  The new restaurant is scheduled to open in early April 2007, stop on by for some great Barbeque! Walt’s Barbeque is located at 6040 Colerain Avenue.