Bake and decorate 1,000 cupcakes in two hours. That was the final challenge Southern Girl Desserts co-owners Catarah Coleman and Shoneji Robison faced when they competed on Food Network’s “Cupcake Wars.”
As the last bakers standing, the duo took home the top prize and the title “Cupcake Wars Champions.” But the TV competition was a piece of cake compared to some of the challenges these entrepreneurs have faced since founding their Southern-inspired bakery in Los Angeles in 2007. Like many small business owners, they had the drive, ingenuity and grit to be successful, but they struggled to access the capital they needed.
Both Catarah and Shoneji had too much pride to ask their families for money to start their business, so they launched using personal savings. Eventually their families helped out, as Southern Girl Desserts was growing and doing well. They got an opportunity to develop a location in a high-traffic mall, but because the move would require building out the space and hiring new employees, they needed more funding.
While Southern Girl Desserts and its owners had banking relationships, banks would not loan them the working capital they needed. They found a broker who arranged $45,000 in financing from a lender they had never heard of, and they had the money within a week. For a while everything flowed, but when business slowed due to seasonal changes, and they realized the interest rate was exorbitant, they couldn’t keep up payments.
“We didn’t realize interest rates were over 50%,” Catarah said. “And that put us in a really hard place.”
Despite their payment issues, they continued to receive offers for more loans and accepted them, hoping an infusion of capital would ease their tight finances. However, as they sank deeper into debt, they quickly realized that the loan payments were eating their profits, and, despite increasing revenue at their new location, Southern Girl Desserts didn’t even have the money to pay their 14 employees.
That’s when they found Opportunity Fund, a Sam’s Club Giving Program grantee. Opportunity Fund offers reasonable interest rates and works with businesses to match the right loan product to the business need.
Opportunity Fund helped Southern Girl Desserts refinance its debt, which gave them cash flow and a better way to managing their business overall. They now credit Opportunity Fund and Sam’s Club with saving their business.
In celebration of National Small Business Week, Sam’s Club is making another big investment in small business success. As part of the Small Business Economic Mobility Initiative announced last year, the Sam’s Club Giving Program is awarding $8.8 million in new grants to nonprofits committed to helping small business owners — especially women, minorities and veterans.
By bringing together expertise, initiatives such as the recently announced Business Lending Center and philanthropic investments, Sam’s Club and Sam’s Club Giving are helping small businesses like Southern Girl Desserts achieve their dreams.