Runaround
‘Is it a sure-fire way to speed me up? When all it does is slow me down’ (BluesTraveler)
The Banks
I first started visiting banks in August 2024. As I write this, in May 2025, we still do not have a loan.
So let’s start at the beginning.
HRSBDC (Hampton Roads Small Business Development Council) introduced me to one bank and I began conversations with two other banks. We had a couple of things figured out:
We would rent a space with 15,000sqft
Aaron & I put $200,000 in cash into the business
We would use our house as any collateral
We wanted to go with a SBA 7a loan
I had a working copy of our business plan and financial forecast to show. We had starting looking for locations to get some more accurate understanding of the location that would work best for our clientele and what the overall costs would be. I felt pretty good. The feedback I had initially was that I was more prepared than others walking in but I learned quickly that I needed more.
Suddenly, I was updating our business plan every other week to accommodate more suggestions, fine tune sections, and meet whatever requirements were needed. I met with banks on weekly and monthly basis. We got an LOI for a space and they were willing to work with us. I was so close to that term sheet….
For those who aren’t aware, a term sheet is basically the bank saying ‘yes’ to you. It is needed to secure a lease or building purchase. And you need an LOI for renting or purchasing a building. These things have to happen together.
We thought we had everything in line - and then right before Thanksgiving, the place we had an LOI with rented to another ‘more established’ company. Our loan progress was put on hold. We had to find another place and fast. But when we did - we started hearing the response ‘we are not comfortable with a startup.’ We also got that they were not comfortable with the noise we would cause for their other tenants (pucks and kids are loud). We heard these responses on a location three more times.
After the holiday season passed, it was time to try again. To amend the business plan, to update our financial forecast, and to just keep grinding.
We are so thankful to have friends who are always willing to provide advice. So many of our friends have started business, invested in startups, and know what it takes to get a bank to say yes. One of the biggest objections we had to our business plan was that it was too much. The cost of a $2.5 Million Startup today was a non-starter for so many banks. We had to prove to them that scaling down was not appropriate and that we would outgrow a smaller approach within months of opening. Because the last thing a bank wants is for you to come back to them and ask for more money while you are trying to close a loan or shortly after.
So we tried the exercise. If we could scale back to:
Rent a place 5,000-7,000sqft
Our equipment would be 1 skatemill, 2 shooting lanes, and no goalie corner
A small cafe with grab-and-go food
Proshop would consist of skate sharpeners and limited items
It turns out our profitability jumped from month 12 to month 23. Our breakeven jumped from 36 months to 44 months. And based on availability of the skatemill and rush times, we would not be able to accommodate the pricing model we wanted to have by including skatemill sessions in our monthly base price. It would be an add-on cost (or on-demand billing) every time someone wanted to use it and that was IF it was available. We would outgrow this model within three months of opening.
There was no point for us to have to go through all of this to then turn and rent a second location or move. The cost of moving all the synthetic ice and equipment would have been near $100,000 or more. Plus the cost of construction to do it all again, somewhere bigger - well, it did not make logical or financial sense. So this was all a hard no.
In February, it was suggested we look at purchasing a building. This would give banks added security in the event we failed - they would own a building to sell then. This opened us up to the SBA 504 loan.
The 504 loan was the best idea ever! The introduction we received from the HRSBDC to a person that could help us with that loan was magical! We got the best feedback ever on our business plan - write it like a research paper! Use graphs, pictures, and bullet points! (Apparently, Aaron and I wrote too much prose - ha!) And use the 504 to cover the equipment - better rates, longer terms. YAS! With this guidance, we were able to update our business plan (hopefully for the last time), our financial forecast to show the difference between renting vs purchasing and 504 vs 7a; and build a marketing plan to show the need and want from the community.
Unfortunately, purchasing a location made us jump from a $2.5 million startup to a $5.2 million startup. So what does that mean in other terms? Well, lots…..because the state of the SBA changed.
Politics aside, the state of the economy has changed drastically with the new administration. The SBA loans froze for 3 days as funding was frozen and it was being sorted out IF they were going to cancel the SBA funding. Tariffs on countries, like Slovakia where we are getting our equipment from, have affected our pricing. SBA loans jumped for a deposit from 10% down to 30% down. This is not an economy for starting a business - at least a bleeding edge business, like ours, that banks deem ‘risky’. Again - politics aside - this is just what we have experienced. And we know that experiences vary.
So where are we today? In a vicious circle, LOI vs term sheet with an added bonus of trying to raise between $500,000 - $750,000 to cover the deposit for the loan.
This is where we are now having to utilize Private Equity firms and Venture Capitalist groups. Unless someone in the family/friends category wants to invest for a percentage of ownership? :)
The search is on-going. But we have faith that things will shake free for us soon. The community needs a place like EVHC. A place where we can help athletes grow - no matter their sport. Where we can provide community. Where we all LIVE COLD.