Wednesday, April 21, 2010

Aleks Duni (Baraki) unable to secure needed construction loan

Aleks Duni of Baraki is quoted is this Washington Independent newspaper article.

The first few paragraphs of this WI article have been copied in below. You can click on the link to read the entire article.

Small Business Owners Represent Lost Opportunity for Recovery
Frozen Credit Markets Still Plague Main Street Economic Growth
By Annie Lowrey 4/20/10 6:00 AM

Bloomingdale — a pretty neighborhood in central Washington, D.C., with brightly painted Victorian townhouses and wide tree-lined streets — is gentrifying. Ten years ago, it had problems with gangs, robberies and drug-related violence. Today those issues are greatly reduced, thanks in large part to the efforts of the neighborhood`s tight-knit community of black families and young professionals. In the past five years, it has cleaned up its streets, developed two new parks and a small urban farm and watched its home values rise.

Now, residents of Bloomingdale — east of the U Street corridor, near Howard University — could use some businesses. There is Windows Market, which sells sandwiches and groceries; Big Bear, a popular coffee shop; and Timor Bodega, an organic grocer. But the closest place to grab brunch or a drink after work is a fifteen-minute walk away. ``There`s just tremendous pent-up demand,`` John Salatti, the neighborhood commissioner, says. ``I couldn`t imagine how well a business would do if it could just open up.``

But the problem for Bloomingdale is that it just cannot get businesses to open up. It is not for a lack of trying. In the past year, at least half a dozen restaurants have attempted to set up shop in one of the neighborhood`s empty storefronts. There is the sandwich and pizza place attempting to move in next to the Howard dorm and the fancy new condo building. There is the neighborhood tavern trying to open near the yoga studio. There is the restaurant that wants to take over the old fire house. Not one has succeeded.

Consider, for instance, the case of Aleks Duni. He owns Veranda, a Greek restaurant in the Shaw neighborhood, as well as Heller`s Bakery and Marx Cafe in Mount Pleasant. The three small businesses together employ nearly 40 people and did well even during the worst of the recession. Duni set out to open a pizza restaurant on the main drag in Bloomingdale. He scouted out a location and secured the necessary permits, even getting a liquor license and thus a guarantee of good revenue. Now, no bank will lend him the $50,000 he needs to finish the job. ``It is only a matter of getting the money,`` Duni says. ``If I did, I could be open in a month.``

Duni approached four banks about securing the loan to finish construction and open the doors. Each one said no. ``There are a million reasons they give,`` Duni says. ``The first of them is that credit has been reduced.`` Now, he says, he is concerned about continuing to apply for loans just to be denied. ``If you apply and you don`t get the loan, your credit score goes down,`` he notes. Frustrated, he has even sought the help of the Small Business Administration, the government agency. ``They had nothing for me,`` he says. ``I don`t need to know what the loan requirements are. And the SBA cannot give me a loan.``

Duni is one of millions of frustrated small-business owners, who represent a lost opportunity for economic recovery and a major concern for the Obama administration. Over the past 15 years, two-thirds of the new jobs created in the United States were created by a small business. Small businesses, like big businesses, require loans to grow and hire new employees. But unlike their medium and large counterparts, small businesses are still hobbled by frozen credit markets. Lending remains on the wane despite the Obama administration throwing tens of millions of dollars at the problem. An SBA initiative to back loans has worked, but only on a limited scale. Most Main Street banks continue to decrease funding to small businesses, allergic to the higher risks they pose.


Scott Roberts of Bloomingdale said...

I can't believe that no one has a comment on this topic!

Amy said...

I've been harboring a hope that the summer weather would help bring an influx of customers to Veranda, thereby funding Baraki. I like to think that when I eat at Veranda, a portion of the proceeds go towards Baraki. But that might just be me rationalizing going out for dinner.

Amy on Rhode Island

Anonymous said...

Well it's that?

NonAnon said...

Heller's Bakery and Veranda cannot serve as collateral for a $50K loan to fund Baraki?

Heller's and Veranda don't generate enough free cash flow in a year to fund start-up costs at Baraki?

Mari said...

Well I didn't want to comment because "if you can't say something nice...." but you want comments...
One of a dozens reasons why we are in our current financial mess is because banks lent money too willy nilly, so I actually think the shrinking of credit is a sound thing and I suspect there is something in this that may appear to be a bad/poor investment for the banks. I could be wrong. I just hope that future businesses start out with stronger financing (cash flow from existing funding, savings, parents' Roth IRA, inheritance from nanna, etc).
Over in the TC (Truxton Circle y'all)

bamoll said...

It would be a great investment opportunity for someone with capital.

Anonymous said...

To me, this sounds like a cover for some other problem. Either failing to get 50k in financing is a symptom of the underlying problem or the lack of financing of 50k isnt the hold up at all. Something sounds wrong with this...

NonAnon said...

"It would be a great investment opportunity for someone with capital. "

Really? How do you know? Have you see the business plan for Baraki?