Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, March 5, 1995                   TAG: 9503040017
SECTION: HORIZON                    PAGE: G-5   EDITION: METRO 
SOURCE: JEFF DEBELL
DATELINE:                                 LENGTH: Medium

YOUR TAX DOLLARS, BANK'S GAMBLE GO TO START UP A MACHINE SHOP

He left his job at Salem's Graham-White Manufacturing Co. the week before Thanksgiving, and opened the doors of his own business - Virginia Machine Solutions - on Dec. 9.

Pretty simple, right?

Wrong.

While it's true that Smelser was in business within a month of leaving his job, that's just the happy ending of the story.

Important parts are left out, parts like the unpleasantness at the first bank he went to in hopes of borrowing operating capital.

It was last June when Smelser and his wife, Anita, both 48, began talking seriously of going into business for themselves. Harold had been at Graham-White for about 10 years and felt he was looking at another decade of the same work as a manufacturing engineer and machine shop superintendent.

The economy was healthy. He saw plenty of demand for the production parts that he could make in his own shop, and he felt there would be plenty of customers among his contacts in the manufacturing industry.

"We got to thinking this is the time to do it," Smelser said.

He set out to formulate a business plan, with Aug. 9 - the couple's 25th wedding anniversary - as their goal for that phase of the process.

"We got a lot of help," Anita said. "We tried to listen to advice and make smart decisions - not think we knew it all, because we sure didn't."

Relatives, friends and business associates were consulted. Smelser's research took him into computer data banks and to the Salem Public Library, where he said Lisa Bachelder of the reference desk proved particularly helpful.

The Smelsers had their business plan by Aug. 9.

Then Harold went to the banks - three on the same day.

The first banker more or less laughed at him, Smelser recalled. "He said, 'You must be kidding. We don't do start-ups.'"

"It wasn't a good start," Anita said. "He crawled out of that one on his belly."

The second banker was less dismissive. He advised the Smelsers to seek guidance at the Blue Ridge Small Business Development Center, which has offices adjoining the Roanoke Regional Chamber of Commerce in downtown Roanoke.

Smelser said he felt a deal with the second bank was possible. But it fell through when his contact there abruptly resigned "and passed us on to a real new, junior guy" who lacked his predecessor's experience and knowledge of the machine shop business.

"That really threw us for a loop," Smelser said. "This was where the 'Low-Doc' really came to the forefront."

Low-Doc stands for low documentation. It's the shorthand description of a new Small Business Administration program aimed at cutting the paperwork required to secure the SBA's guarantee of a loan.

Until Low-Doc came along, SBA paperwork was so burdensome that fund-seekers and banks sometimes just ignored the federal agency.

The Smelsers made use of the program, with help from both the small business development center and Bill Skeen of First Union National Bank.

The couple had hoped to borrow $90,000 in working capital to get Virginia Machine Solutions under way. Noting that the business plan projected a profit in six months, the bank offered $50,000. After further dickering the parties agreed on $60,000, with the SBA backing the loan and the Smelsers using their home as collateral.

Among other things, accepting the deal promised relief from "banker's headache," an affliction that struck Anita Smelser during more than one of the couple's long sessions with the financial types.

The loan was approved in October. The Smelsers leased a building at 722-C Roanoke Street in Salem, took delivery of their first machine, and opened for business on Dec. 9.

Harold is president and sole director of the corporation. His wife handles the books and some of the sales. Roger Snyder is head machinist and, so far, the only outside employee.

A second machine and production shift are anticipated later this year.

"We had fun doing it," Anita Smelser said. "We figure the worst that can happen is we lose our house and we have to pay off a few bills and Harold has to get another job."