Texas Entrepreneur Uses Economic Development Grant to Fund His New Storage Business

Gonzales, Texas entrepreneur Henry Schmidt must have seemed like a poster child for a small business loan program or an economic development grant program. Schmidt had many years of business experience under his belt, working as a sales manager for used oil collection company Midstate Environmental Services. Then, like many men and women who have spent enough time working for other people, he decided that he would like to start his own business. He looked around and realized that the Texas self storage industry was ripe for expansion.

What Schmidt didn’t realize at first was that he qualified for a grant program designed to stimulate economic development and encourage the development of small businesses. Many such small economic development grant programs exist at the state and local level in different states, but entrepreneurs are not always aware of programs that they may qualify for. Schmidt wound up receiving a $25,000 economic development grant in addition to his loan, and used it to buy two self storage facilities. The facilities were side by side, so Schmidt put a security fence around both and made them one business -- Apache Storage. Apache opened its doors for business in July.

Schmidt received enough economic assistance to make it possible for him to add an electric security gate to the facility, replace the doors on all the individual units, add an office on site, add boat and trailer storage, add accessible parking, and begin the process of installing security cameras.

When he began the loan application process, though, Schmidt had no idea that he would end up in a position to do so much with the properties that interested him.

“I contacted a couple of banks in the area for information about a small business loan,” Schmidt said in a press release dated September 1 and reprinted at Forbes, MSNBC.com, and The Gonzales Inquirer. “When the opportunity arose to buy one of the properties, Lone Star Bank said they had an economic development program that I might qualify for, and I could possibly get some grant money that would help me buy both properties. I was all ears when I heard about that.”

Gary Mobbs, Lone Star’s vice president and branch manager in Gonzales, walked Schmidt through the grant application process. He explained to Schmidt that he would need to go through the Economic Development Program (EDP) and Economic Development Program Plus (EDP Plus) at the Federal Home Loan Bank of Dallas (FHLB Dallas). Lone Star Bank is one of FHLB Dallas’ member institutions.

“EDP and EDP Plus have been great tools for us to help develop new business and expand existing business within our community,” Mobbs commented in the Sept. 1 press release. “Mr. Schmidt was a great candidate for the program because he is a small business owner that is improving and expanding an existing business in order to better serve our community.”

Not everyone qualifies for both the economic development programs at FHLB Dallas. To qualify for an EDP advance, a member must fall into a certain geographic area, income level, or demographic group. To qualify for an EDP Plus grant, a small business must be in an underserved area or serve an underserved population. In Schmidt’s case, he qualified for an ordinary Lone Star Bank loan, and then received a $25,000 EDP Plus grant from FHLB Dallas.

FHLB Dallas has granted $1 million in EDP Plus grants to small business so far this year.

Now that Schmidt has bought his two storage properties and has begun the process of making improvements, he has more plans. He hopes to build more units, add covered RV parking, and, eventually, build and operate more self storage facilities in South Texas.

Currently, Apache Storage offers 122 units, and 30 spaces that are big enough to hold a boat, RV, or trailer. The facility is about 40 percent full, and Schmidt hopes to be full by the end of the year. The new storage facility is the only one in Gonzales.

Sources used:

“Economic development grant helps to renovate and expand Gonzales storage facility.” Forbes. Sept. 1, 2010.

“Economic development grant helps to renovate and expand Gonzales storage facility.” MSNBC.com. Sept. 1, 2010.

“Economic development grant helps to renovate and expand Gonzales storage facility.” The Gonzales Inquirer. Sept. 7, 2010.