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Lenders find ex-monks are very bankable

August 3, 2009

Crain's New York Business - Elaine Pofeldt - ?Jul 31, 2009?

Patience, thriftiness prove to be virtues for co-owners of East Village
cheese emporium when it comes to getting financing.

 Small Business

What does it take to win a small business loan in today?s economy?
Monk-like discipline doesn?t hurt.

At a time when many new entrepreneurs are struggling to find financing,
former Buddhist monks and political refugees Thupten Tenphel and Lobsang
Tsultrim recently scored $400,000 in loans to purchase East Village
Cheese, located on Third Avenue near East 10th Street. Capital One Bank
provided $350,000, while microlender BOC Capital Corp., an arm of
nonprofit small business development group Business Outreach Center
Network, came up with $50,000.

Illustrating just how much determination it takes to get a small
business loan these days, Tenphel and Tsultrim spent several years
proving their creditworthiness before applying for the financing. After
working as employees at the store, they first negotiated a five-year
loan to buy it in 2005 from former owners Al and Carol Kaufman, who
founded it 25 years ago. BOC Capital Corp. provided a $25,000 loan for
the initial down payment.

Following tips from BOC Network about how to handle their finances, the
new entrepreneurs built credit scores of more than 700. After paying off
about 40% of the loan to the Kaufmans, the partners decided earlier this
year to seek bank financing so they would own the store in full. With
help from BOC Network, they approached Capital One Bank, which has
worked with the nonprofit group before.

?We coached them on preparing themselves to be able to produce all the
information a lender might want, ? said Nancy Carin, executive director
of BOC Network. Pro bono lawyers from J.P. Morgan Chase and Baker &
McKenzie helped with the transaction. ?We brought in the technical and
legal assistance for them,? says Ms. Carin.

What persuaded Capital One to bet on the entrepreneurs at time when
small business lending is down? ?The proprietors of the East Village
Cheese Shop worked with our community partner BOC, and we clearly saw
the strength and vibrancy of this neighborhood business that is such an
important part of the East Village,? says Richard Schnapper, senior vice
president at Capital One Bank. ?Capital One Bank continues to see good
lending opportunities and a demand for specialized products and services
in the region.?

BOC Capital Corp. says it was confident about adding its own $50,000
loan because of the team?s strong track record in managing the store.
?The cash flow of the store is excellent,? says Ms. Carin. ?The
profitability didn?t sink in the recession. It?s a discount model. The
fundamentals were all there.?

The transfer of the loan from the Kaufmans to the bank and BOC Capital
Corp. enabled the partners to reduce their monthly debt burden by 50%.

Perhaps beating the odds shouldn?t seem surprising for this determined
pair. Mr. Tenphel says he was jailed for several months in Tibet by
Chinese authorities for displaying a picture of the Tibetan flag. After
being released, he moved by himself to India at age 13 with his parents?
permission and lived as a Buddhist monk in an Indian monastery until he
was 23. In India, he obtained a visa to come to the United States in
1998 so he could support his mother and immediately applied for asylum
as a political refugee.

Not long after getting work as a dishwasher in Chinatown, Mr. Tenphel
found out about an opening at the cheese store from a friend who shared
the same Buddhism teacher. Then-owner Al Kaufman hired him, taught him
how to run the store and helped him learn English.

?My writing and reading were very bad. I didn?t even know the ABCs,? Mr.
Tenphel said.

Mr. Kaufman eventually encouraged Tenphel to buy the shop when he was
ready to retire. ?He said, `Work hard and learn as much as you can.
Someday you will own this business,? recalled Mr. Tenphel. ?I had his
words in my mind all the time.?

Mr. Tsultrim, a fellow Tibetan who had lived in the same monastery as an
orphan and a monk, joined him around 2003 and also got a job at the store.

Although Mr. Tenphel continues to practice Buddhism, he now describes
himself as an ?ex-monk.? ?I had to give up my vows to do business, wear
regular clothes and go out in public,? he says. ?It?s hard to be a monk
in America.?

Committed to the entrepreneurial life, Mr. Tenphel said he?s sticking
with the approach that has helped him grow the store in the recession:
offer great deals. ?We have very good prices.?

Since assuming co-ownership of the store from the Kaufmans, who used to
handle the finances, he?s constantly looking for ways to trim costs. ?I
am paying everything off,? he said. ?I pay the bills right away.?

Looks like the simple life of the monastery can be good preparation for
doing business in lean times.
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