Krista LeRoux had a business plan, the experience and the ambition to own a hair salon and tattoo shop. But she didn’t have the money.

For many budding entrepreneurs, the dream can often come to a screeching halt right there.

And more than three years ago when the hairstylist sought to take over Twisted Banana — a well-known hair and tattoo establishment in Sherwood Park — she met her fair share of adversity.

“I probably went to three or four different banks, but nobody would really give me the time of day,” says LeRoux, 30.

But she kept knocking on doors and finally arrived at Servus Credit Union. It was a fortuitous move for the entrepreneur.

“Servus was the first place that took the time to listen to me and realize that I wasn’t some dumb teenager,” says LeRoux, who bears ample tattoos and a funky hairstyle. “I got judged a lot and then Servus came into the picture.”

To put it bluntly: she didn’t fit the traditional business mould. But her business plan was detailed and thorough, and she had been the salon’s manager for a few years prior to making the pitch to buy it.

LeRoux knew how to run the business. And more importantly, she knew how to improve it.

“I developed a really intense business plan to help to get people to listen to me,” she says.

Right away LeRoux felt she was dealing with a different kind of financial institution at Servus. The people at Servus cared and wanted to hear her story.

The young entrepreneur’s experience isn’t unique. She is among thousands of Albertans who have discovered Servus. At first, LeRoux knew little about credit unions and their co-operative model where clients are members — not customers.

“When I met with Servus, the adviser saw me right away, looked at my plan, and she said, ‘There is something here.’”

LeRoux immediately realized she and the credit union were on the same page. She wanted money to renovate — to add a little more flair to the salon while expanding the footprint of its popular tattoo operation. Not only did Servus give her a loan worth more than $100,000, her adviser was also there to help develop the business.

“She worked hard to get me the right loan amounts for purchase as well as for renovations she knew were important to me, while keeping in mind I wanted to be able to pay my loans down quickly,” LeRoux says. “She also helped me through the entire purchase offer with the previous owners and lease negotiations with my landlords.”

Then her adviser helped LeRoux get in touch with the right professionals to manage other aspects of her business.

“She set me up with an accountant whom she trusted very much, who became very indispensible to me right away, as well as a life insurance broker,” suggesting life and other insurance would be a wise move considering LeRoux’s young age.

Her adviser went above and beyond what was expected.

“She was constantly asking me what my next move was — like asking whether was I promoting and marketing.”

And so far, with Servus’s guidance and financial backing, LeRoux’s plan has proven to be a successful recipe for profitability.

Business has been brisk, especially at the tattoo shop.

“It’s booked for months in advance and has turned out to be an excellent source of revenue,” she says, adding that she has more plans in the works as she closes in on repaying her loan.

“I believe in pushing to get better,” LeRoux says. “My goal is to make us bigger and better, with more services and more staff.”

And she’s confident she can turn to Servus again for help.

“It doesn’t feel like a bank,” LeRoux says. “You feel like you’re talking with people who care and want to help.”

Many lending options available

Business adviser Andrea Irwin with Servus Credit Union in Lloydminster says there are many things to consider when choosing a loan. TYLER MARR

Business adviser Andrea Irwin with Servus Credit Union in Lloydminster says there are many things to consider when choosing a loan. TYLER MARR

“Entrepreneurs have more options than ever to fund their business,” says business adviser Andrea Irwin.

But it’s important to find the one that fits best. First off you must
understand how much you need to borrow and for what purpose. 

“Are you buying something or are you going to borrow for operating capital?” asks the adviser at Servus Credit Union in Lloydminster.

Equipment purchases are often financed with more traditional business loans. You make fixed payments until the loan is paid. Some may choose fixed interest rates. Others choose floating rates. It depends on what you’re most comfortable with, Irwin says. 

Businesses with frequent equipment purchases can also choose a more flexible umbrella loan with a limit. This allows a business to create several loans as required over time, like for purchasing a fleet of trucks, for example.

“If you hit your limit, you can’t buy more trucks, but as you pay down each loan, credit is available again.”

For businesses that require loans for operating, a line of credit is usually a better option. Lines of credit are usually smaller for cash businesses where customers pay immediately, she adds, while businesses with accounts receivable, where payment can take weeks, often need larger lines.

Many lenders want an idea of what a business’s cash flow will be to determine the right limit for the line of credit. That can be problematic for startups that have yet to generate any revenue.

“In that case, we’d do a cash flow projection and from there, figure out what kind of limit they’d need,” Irwin says. “A lot of times new entrepreneurs just like to have a buffer in place in case something drastic comes up, but that won’t involve a large line of credit.”

Larger lines often need to be secured with a mortgage, and more traditional business loans usually require entrepreneurs to have money invested to qualify. That’s generally a 25 per cent down payment. Otherwise, Irwin says they can access the federal government’s Canada Small Business Financing Program.

“With it, you can qualify for a business loan with zero down, so the government program is a great option.”

Article by Joel Schlesinger, Postmedia Content Works