Waiting on a shipment one muggy afternoon last week, Francis Jamiel was in good spirits that day, a far cry from how he felt a few months ago.
In 1937, Jamiel's family bought a shoe store from its owner and over the next 72 years, Warren, R.I.-based Jamiel's Shoe World grew to become an icon, as many described it, across the state. Even newly tapped Small Business Administrator Karen Mills fondly recalled the days when she took her children to the shoe store.
"My husband's from Rhode Island. When the boys were younger, we used to buy shoes from Jamiel's all the time," Mills told Credit Union Times.
Over the next seven decades, Jamiel's grew its hometown appeal by specializing in larger sizes and widths for men, women and children. Business was strong, with $1 million in annual revenue and a second store opening in 1994 in Warwick, on the other side of Rhode Island.
Then a Mack truck hit the nation's economy in 2007. Many small businesses struggled to stay alive. Among them was Jamiel's, which was forced to close its Warwick store after a rent increase and debts piled up. Ten years ago, the shoe store secured a $600,000 SBA loan with Citizens Bank, a regional financial institution it did business with for 30 years. The loan had been paid down to $200,000, but the $5,000 monthly payments were becoming harder to pay amid the recession. Jamiel approached Citizens Bank to refinance the loan.
"They flat out turned me down. They said the reason was because we lost money over the last two years," Jamiel recalled. "We've been in business for 72 years, we never missed a payment. I thought it was a no brainer."
Determined to keep the business started by his parents afloat, Jamiel sought refinancing relief from 10 different banks over a nine-month period. He went big, thinking the larger banks would have more money. All of them turned down his requests. One Saturday morning, a dejected Jamiel ran into Alan Crisman, executive director of the Mount Hope Enterprise Zone, a regional economic development organization in Warren. The two had known each other for more than a decade. Crisman had come to the office to catch up on some work that weekend, went across the street for coffee and "saw the longest face I had ever seen on 'Tut,'" he said, using Jamiel's nickname.
"He told me what was happening with the business," said Crisman, adding that Mount Hope helped the shoe store secure grants in 1998 for a remodeling project. "Everyone who lives in Rhode Island knows Jamiel's. Here's this icon going out of business because the banks won't give him a line of credit."
Crisman suggested he reach out to Coastway Credit Union in Cranston. The $300 million financial institution had built a strong business lending reputation in the state and was frequently named one of SBA's top lenders. Jamiel would soon meet with Coastway President/CEO William White and Vice President Joe Hindle. It took about two months to process, but Jamiel's Shoe World was able to secure a $400,000 SBA loan with a 90% guarantee. To tide the store over during the processing period, Coastway extended a line of credit that Jamiel's would pay off when the loan came in.
Frustrated with Citizens Bank, Jamiel has since moved all of his accounts-payroll, credit card servicing, business checking and personal checking accounts-to Coastway. In late April, 6,000 of the credit union's nearly 25,000 members voted to convert to a mutual bank, according to published reports. Coastway has said the main reason for the conversion was the inability to offer more loans because of the 12.25% member business lending cap. Even though Coastway is attempting to make the switch, Jamiel said he will continue the relationship.
"From what I'm told, the credit union can only lend out a certain amount," Jamiel said. "We're staying. They were the only one who stepped in and saved us."
Coastway did not respond to several requests for comment, but CEO White recently told a local newspaper, "It's still about the people."
"If we can't take a risk on people who are as heavily invested in the community as the Jamiels are, then there's something seriously wrong," White said.
On April 27, Rhode Island Gov. Donald Carcieri, Lt. Gov. Elizabeth Roberts, Rep. Patrick Kennedy (D) and more than 100 officials, friends and family members attended a celebratory gathering at Jamiel's Shoe World. An emotional Jamiel praised Coastway and expressed thanks and relief that the shoe store was going to pull through.
"All the moons were aligned. [Bill White] and his people stepped to the plate," said Mark Hayward, district director of the SBA's Rhode Island district office. "I remember Bill saying, 'Credit scores don't pay loans, people do.'"
Hayward said Coastway's decision to convert to a bank is between the members and the credit union. However, he described White as having a "commitment to SBA and the community going back to when he was a loan officer at Fleet Bank."
"His wanting to contine to reach out beyond where he is right now was probably prevalent when he made the decision to take it to the members," Hayward said.
The SBA's ability to offer the 90% guarantee and fee waivers under the American Recovery and Reinvestment Act was put in place as incentives for lenders to make more loans, said Norm Deragon, public information officer at the SBA's Rhode Island district office. Jamiel's was the first business in the state approved for a loan under the new terms.
Coastway's MBL cap is roughly $36 million. SBA loans do not count toward the threshold. Regardless, Deragon said, "Any time a [financial institution] has more funds to lend to the community, that's a good thing."
Meanwhile, Jamiel has since paid off the remaining $200,000 on the SBA loan through Citizens Bank, and monthly payments with the new loan are now a manageable $3,500. He also bought some much-needed inventory and is considering hiring to expand the store's staff of eight employees.
"I've heard of banks taking away lines of credit. The reality is some businesses are just not going to make it. Others just need credit," Jamiel said. "The moral of the story is the big banks lost out. Little did I know that the big banks love you until you need something."
–msamaad@cutimes.com

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R.I. Shoe Store Shunned by Banks Is Saved From Brink by Coastway CU

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