Visitors to the weekly farmers market in Franklin can indulge their sweet tooth with a variety of cupcakes. But if you want a sweet treat from Cupcake Chateau after 11 a.m. Saturdays, you’re out of luck.
Husband and wife Jeff and Jacqui Shatto pass by the former Padgett’s Signs building on Monroe Street and think it would be the perfect place to open a bakery. In order to make that happen, they’ll need at least $75,000 to buy equipment and food.
They want to be in downtown Franklin, and they’ve asked about a local program to help them get the money they’ll need for their startup business. As of right now, none exists.
But an organization created and funded by the city with tax dollars is considering starting a small-business grant or loan program.
Franklin can offer tax breaks or cash incentives to industrial companies looking to start, relocate or expand but doesn’t have any local programs to spur small-business growth. And other programs offered to small businesses, such as through the U.S. Small Business Administration, don’t offer grants.
More than 10 people, including small-business owners or residents looking to open a shop or restaurant, have asked about programs to help finance startups, Franklin community development director Krista Linke said.
What they want is a program that pays part of a business’s rent for half a year, gives them a $5,000 grant that wouldn’t need to be paid back or offers a low-interest loan to help buy equipment to get a new business started, Linke said.
The newly reorganized Franklin Development Corp. could consider the program as one of its first new projects after the city got more of a say in who serves on the board. The organization was started in 2008 with $5 million in tax dollars from city tax-increment finance districts, or TIF districts, which set aside property taxes collected from certain businesses for economic development.
The program would be more high-risk than facade programs or renovation loans the organization has done in the past but could help bring new shops downtown, Linke said.
Right now, Cupcake Chateau is based out of the Shattos’ home. They sell cupcakes and other baked goods at the weekly farmers markets and downtown events and take special orders. Jacqui Shatto recently completed pastry training at the Art Institute of Indianapolis, and the couple want to open a bakery.
When the renovation on the former Padgett building is complete in the spring, their dream is to move in if they can get the money they need.
Commercial baking equipment is going to cost at least $40,000, and with food, supplies, insurance, rent and other expenses, the startup cost will be at least $75,000, Jeff Shatto said.
“There is some grant money that’s there for renovating the face of the building, but I’m not finding much money as far as helping a small business start out, and that’s where we’re at,” he said.
Tracey Kaiser opened Simplify, an art consignment shop on North Main Street, in July and also owns Electric Impulse dance studio on Jefferson Street. Right now, she rents both spaces but wants to buy a building and renovate it to become a permanent home for both businesses downtown. Buying a building likely would cost about $200,000, and she can’t afford that, she said.
Franklin has been investing millions improving downtown streets, parking lots, sidewalks and building facades to bring people downtown, and Kaiser thinks it’s time for the city to start investing in businesses, too.
“I think the struggle with Franklin in the past is that there’s so many vacant buildings. When someone invests in something as an owner, it’s just natural that the care and the upkeep for the building is a higher quality,” she said.
State laws allow the city to help industrial projects by offering tax breaks or offering cash loans that don’t need to be repaid if a company hits job-creation goals. But those types of programs aren’t allowed for commercial or small businesses, Mayor Joe McGuinness said.
“We don’t have those incentive offers for small-business startups, for someone starting a business in their home or in the downtown, retail or yogurt shop or restaurant,” he said. “We would love to see them start that business here in Franklin for another opportunity to come to Franklin and check it out. There’s a large expense on the startup end of that.”
The U.S. Small Business Administration can help startup businesses get loans from local banks but doesn’t offer grants. A locally run program could allow the Franklin Development Corp. to give money that wouldn’t need to be repaid. Local officials, including board members Linke and McGuinness, could work with the business owners on their plans, Linke said.
The mayor likes the idea of low-interest loans or grants to help pay for operating or equipment costs, but he would want businesses to share their business plan or current finances and also be investing a large share of their own money before getting city tax funds.
“There needs to be some skin in the game from the recipient,” he said.
The Franklin Development Corp. was created with the goals of downtown revitalization and economic development. The group has given out low-interest loans and grants to help homeowners and businesses with renovations and has more than $2 million left of the more than $5 million from the city. As a nonprofit organization, it can fund programs for small businesses that the city’s redevelopment commission or city legally couldn’t.
Funding half of a business’s rent for six months or paying for $5,000 in equipment is a riskier investment than some of the group’s past projects because the shop could go out of business after a year. But the investment could help start a successful downtown business that might not have been able to open otherwise, Linke said.
“That’s really what they were created for, those projects the city entities weren’t designed to fund,” Linke said.
This year, the Franklin Development Corp. agreed to give the city more control over who is appointed to their board and for how long, and of seven original members, one is returning. Linke said the new board will need to get information about the organization and its projects, but she plans to discuss a small-business program with them in the future.