Small Business Owner Finds Nothing Fishy About Advantages of SBA 504 Loan

article_pic_qualityRenovations, Expansion Help Austin Business Thrive

Carol Huntsberger has a great fish tale to tell. It’s not a tale about the one that got away. Instead, she can tell a story of helping to turn around Quality Seafood when it was struggling. Then, with the help of Texas Certified Development Company (TxCDC), she was able to get an SBA 504 loan to buy and renovate the company’s building, which has helped her increase revenues by almost 25% over a two-year period.

img001A Long History of Sole Food

Since first opening in 1938, Quality Seafood has provided fresh fish to its Central Texas retail and wholesale customers. The Austin-based business, which is a U.S. Food and Drug Administration-approved fish processor, filets the fish in-house, thus ensuring a high-quality product. Quality Seafood also has an in-house restaurant that serves lunch and dinner to approximately 3,500 customers per week.

In late 2003, Huntsberger and her husband purchased the company after he lost his financial services job in the wake of the attacks of September 11, 2001. At the time, Huntsberger was focused on raising her young children and continuing her work with Mary Kay so she wasn’t initially involved in the company’s operations.

However, everything changed at the end of the first year when Huntsberger received a call from the company’s bookkeeper. “She told me that we could either make payroll or we can pay the fish company,” Huntsberger remembered, adding that she immediately called a bank loan officer and arranged a $20,000 line of credit over the phone.  That event prompted Huntsberger, who has an accounting background, to have a visible daily presence at Quality Seafood.

Turning Around the Business

By the end of the couple’s first year of ownership, Quality Seafood lost almost $200,000. “I was just flipped out of my mind about what we were going to do because my husband had taken a huge pay cut and I was working up there for basically nothing and still trying to run my Mary Kay business and had a 9- and 11-year-old,” she remembered. “So I was working full-time round the clock. I came in here and got stuff cleaned up and I learned this business from the very bottom up.”

Her husband eventually left Quality Seafood to return to work in the financial services industry as the economy rebounded. Huntsberger decided to leave Mary Kay to become “the head fishmonger” three years into their ownership. “I just gradually fell in love with the business,” Huntsberger said. “I could see the rewards of my efforts. The one thing that I didn’t realize in the early days of this business that brings the greatest reward is that so many people have so many memories of this place. They can remember, ‘Oh, I used to come here with my mom’ or “I came with my grandma and we ate fish every Friday and we’ve been coming here for 30 years.’ Now their children are coming so we’ve crossed generations.” When the couple divorced in 2010, Huntsberger retained ownership of Quality Seafood.

quote_qualitySecuring a Long-Term Home

Another hurdle to Quality Seafood’s future soon emerged when the building owner looked to sell the location. Anticipating a significant increase in rent, Huntsberger began to consider moving from the location that had housed the company since 1970. She calculated that in order to pay the new rent, Quality Seafood would need to significantly increase its revenues. That would require an expansion and numerous renovations that would be prohibitively expensive since the building wasn’t up to code. However, her landlord really wanted Quality Seafood to stay so they reached an agreement for Huntsberger to purchase the building. To do so, Huntsberger needed a $4 million loan, which would include the expansion and renovations. She contacted University Federal Credit Union (UFCU), which brought in TxCDC to help Huntsberger apply for an SBA 504 loan with a very low interest rate that only required a 10% down payment. Since its inception in 1981, TxCDC has assisted more than 550 businesses in getting this type of SBA financing which, in turn, has resulted in the creation and retention of more than 13,000 jobs for the state of Texas.

Even with a background in accounting, Huntsberger found that asking for a $4 million loan was daunting. “Sometimes when you’re the one going to ask for money, you feel like you’re the subservient person. So you feel like they’re the ones in control and you’re the one begging for the money,” she said. “Particularly as a woman, you can feel sometimes looked down upon when asking for an amount of money that I can’t imagine making in my lifetime. It’s pretty amazing that TxCDC and UFCU believed in me and were partners with me and trusted that I knew my business.”

Working with consultant Armando Ruiz, Huntsberger was able to apply for and quickly secure the loan. “Armando was so nice. He came in and walked me through the paperwork,” she remembered. “He was so organized with a folder of copies of everything for me. He worked with UFCU as a team and made it all happen.” Ruiz has more than 25 years of successful government and private industry experience in public finance, commercial real estate development and business development.

She purchased the building in 2012 and started the renovations in August of that year. The owner found the TxCDC staff was equally helpful as the expansion and renovations took place by gently prompting her when tasks related to the loan needed to be accomplished. “I felt like they were vested in it, also,” she said. “The best part is that I still see them come in to eat at the restaurant. They’re still supporting me.”

Serving as a Model of What’s Possible

Quality Seafood unveiled the renovations during a grand reopening on Jan. 27, 2013, which was the company’s 75th anniversary of being in business.  The expansion and renovation project doubled the company’s space to 16,000 square feet. The additional space includes a private dining room that is used to host cooking classes, business meetings, book club meetings and a variety of special event dinners. The restaurant also doubled in space, allowing the addition of a grill and 60 additional chairs. The retail shop got what Huntsberger described as “breathing room,” including back-up coolers and freezers that are used to supply fresh seafood to retail customers as well as businesses, including some of Austin’s top restaurants and country clubs.

These changes have helped Quality Seafood continue to prosper. Since the completion of the renovation, Huntsberger has added 17 additional employees and finds that the restaurant is always full. “We’ve been exceeding all of my sales goals,” she said, pointing out that sales increased by 17% during the first year after the renovation was completed. In 2014, the company’s sales have thus far increased another 10%.

This small business owner believes that Ruiz, TxCDC and the SBA 504 loan were a godsend in helping Quality Seafood move to this new level of prosperity. “We don’t have to live in fear of getting kicked out or moved out,” Huntsberger said. “And especially when you’re looking at the renovations that are happening around Airport Boulevard, this is home now. I think because of us and some of the success we’ve had over the past few years and other businesses coming into this area, I think we’ve shown that people come here to eat so other restaurants are coming over here. So I think it’s been good for not only our business, but I think it’s helped this area.”

Written by Dorian Martin

Photos by Quality Seafood