SBA backing put expansion on menu.

• Author: Kirchen, Rich
• Position: FROM BEGINNERS TO BIGSHOTS

Milwaukee's century-old Brady Street shopping district has gentrified the past 15 years into a trendy mix of restaurants, coffee shops, bars, boutiques and hip second-hand stores.

Brady Street would seem an unlikely place for a walk-in hamburger and frozen treats shop, but Mike and Kim Schmidt decided otherwise. In 2000, they opened Bella's Fat Cat to almost instant success as a cool place--and the only place--to get a burger and a milk shake in a city neighborhood.

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Since then, the Schmidts have repeated the business model in two other Milwaukee neighborhoods full of hipsters and college students. Bella's also has a growing following among families with young children.

The Schmidts, Milwaukee natives who met in high school, attribute their success in selecting sites to their "feel for Milwaukee." As city dwellers themselves, they decided Brady Street would support their concept, and their gut feeling has proven accurate.

"It was more of what we wanted," Mike said of the site-selection process. "You had to take the expressway to get a burger."

In seeking financing, the Schmidts were helped by Mike's business track record. Mike, 38, had started three bars, and sold his share due to philosophical differences with his partner, he said. His first job was at a frozen custard stand. Kim, 36, had worked as a waitress since her teens, and the two wanted to go into business together.

For startup capital, the Schmidts had some cash from Mike exiting the bar business and a small family investment, but needed a loan.

As a restaurant and essentially a startup, Bella's fell into a higher-risk category that made it a candidate for a Small Business Administration-backed loan, said Carol Mick, vice president of SBA lending for Stearns Bank in St. Cloud, Minn.

Stearns provided SBA 7(a) loans for the Brady Street location and Bella's second site in the Bay View neighborhood. The first loan in 2000 was for $75,000 and covered equipping and remodeling leased space on Brady Street. The second loan in 2004 was for $285,000 and paid for buying, remodeling and equipping an old pharmacy building.

Bella's has paid off its first loan; the second loan has a 15-year term.

The SBA's 7(a) loan is its most popular financing program. Lenders like Stearns Bank that participate in the program share the risk with the SBA for a maximum loan of $2 million with a term of as long as 25 years. Proceeds can be used for a variety of purposes, including buying...