Doug and Jamie Barthel tried unsuccessfully for several years to refinance debt and reduce the high interest rate they began carrying on a loan they took on when they bought a billboard company in 2008.
Their business, Rock City Media, an outdoor billboard advertising company in Woodstock that the couple started in 2005, had purchased the assets of Midport Outdoor using "hard money," or high-interest, lending institutions in the Midwest. Rock City Media was locked into a loan with an 11 percent interest rate that would have taken more than 30 years to pay down.
"We had tried to refinance for years with no luck. Now, we have a 15-year loan with an end date and a payoff," said Doug Barthel, president of Rock City Ventures Inc., the company that he owns with his wife, Jamie. It includes Rock City Media, a real estate company and Lotus Fine Arts & Design Inc., a handpainted art and jewelry retailer.
When Rock City Media fell short of the loan collateral requirements, Sterling National Bank looked to partner with NYBDC. Collaboratively they put together a $2.267 million, 15-year, 7(a) financing package with 6 percent interest.
"We recognized that a viable solution for the client and the bank was to participate in a 7(a) term loan with the NYBDC where we were able to receive a partial guarantee from the SBA to mitigate this risk," said Frank Armstrong, managing director and SBA specialist with Sterling National Bank.
The savings that the Barthels realized in interest costs has allowed Rock City Media to apply for a second loan through NYBDC. The new loan would help finance a $250,000 expansion to install the first digital billboard in Orange County, erect new billboards and upgrade existing ones. Meanwhile, Rock City Media had already remodeled many of Midport Outdoors' 86 billboards, the majority of which had deteriorated and sat empty for years.
Greg Powell, NYBDC vice president, said other lenders were having difficulty making the transaction because the business had such large debt with no tangible assets. However, Powell said, the value of the business lies in its advertising contracts and the dozens of land leases where its equipment is located.
"The 7A(a) loan program allowed Rock City Ventures the ability to refinance this debt and secure a much more reasonable rate," Powell said. "Looking towards expansion, Doug is now seeking to enter the digital board market as advertisers are seeking cleaner, more visible boards for their ads."
Since buying Midport Outdoor in 2008, Rock City Media has grown revenue 60 percent, and revenue is ex-pected to increase another 40 percent over the next few years. The number of billboards the company owns has also increased, from 80 to 130, at locations in Ulster, Sullivan and Orange counties. Rock City employs two full-time and two part-time people. One of those, a salesperson, is a new hire, and additional sales and operations staff will be brought on with the expansion.
"This has definitely allowed us to grow, and to reduce the tons of interest we were paying to those private lenders," Barthel said. "Now we are creating equity rather than just treading water."
Doug Barthel of Rock City Media, Greg Powell of NYBDC and Frank Armstrong of Sterling National Bank