No Dough

Richard and LaJeanne Williams had big dreams for their bakery--until a bank figured their plan was just pie in the sky

It would seem that the bank was covered. So what happened?
"It doesn't make any sense," Richard Williams says. "We don't have a sensible answer."

LaJeanne Williams is a bit more blunt.
"I don't think they ever intended to give us the money," she says.
Her conviction stems in part from a meeting the Williamses had with Miller and James Breedlove of the SBA when the loan problems were at their height. The SBA wanted to know why the loan had not been funded, and set up a meeting that was supposed to include the Williamses, the SBA, and Bank of America. No one from Bank of America showed up.

But Bank of America had a copy of Scratch Bake's business plan, and should have known that the second loan was crucial to the continued life of the business. It seems more risky for the bank to deny the second loan than fund it, since a thriving business would be more likely than a dead one to pay back the money that Bank of America had already loaned to Scratch Bake.

Breedlove of the SBA notes that a bank is perfectly within its rights to change its mind. He remembers being contacted by Bank of America after the bank decided to deny the second loan to Scratch Bake. Breedlove says the bank told him it was not going to fund the loan.

"They said that they discovered information that was either inconsistent or different than what they had made in their initial details," Breedlove says. "They did not feel with that new knowledge they could actually complete the deal." Breedlove could not remember what these new details were.

In May 1995, the Williamses received a letter from Bank of America saying that the loan was now denied. By that time, Scratch Bake Bakery had long since moved into its downtown location and fired up all its new ovens. Money was getting tighter and tighter because the company had bought, built, and hired on the belief that a $100,000 cash infusion was on its way.

The bank's behavior caused Scratch Bake's finances to begin toppling like dominoes. The company fell behind in payments to Bank of America on the first loan, because the bakery needed all its cash to keep its doors open. The cash crunch also caused the company to be a month late on a rent payment.

The Williamses scrambled to keep afloat. They contacted Bank of America to find out why the loan had been denied, and were given a nebulous statement about credit problems. The couple contacted the SBA hoping the agency could help find another bank to fund the loan. For another two months, the couple lived by means of the fax machine and prayers, shunting aside past-due bills and hoping money would arrive.

Bank of America again flip-flopped and began telling the Williamses they would receive the money. On July 14, 1995, Richard Williams' secretary left him a note saying that a loan representative from Bank of America had called saying that--once again--the bakery's loan had been approved.

But it was too late. The bank's delays had dragged on for too long, and Scratch Bake was broke.

The next day, Richard Williams and his manager told company employees that this would be their last day of work. Scratch Bake Bakery was closing its doors.

"It was devastating," he says. "Me and my family went through a lot of anguish. A lot of people later came up to me and said it hurt them personally. It had shaken their confidence."

These days, Scratch Bake Bakery is nothing more than a sweet memory in the minds of those who tasted it.

"It could have been bigger than life," says Chapman, the former downtown manager.

Scratch Bake's location on Camp Wisdom Road is now a deli. The downtown store--the linchpin of the Williamses' confectionary dream--is now a restaurant. Richard Williams says he can't bear to see it.

Bank of America auctioned off the stainless-steel tables, the mixers, and other equipment, Richard Williams says.

The closing was rough on the family, and the pain continues. "We're losing just about everything we own," Richard Williams says. The family cobbled through just enough money to send its last son off to college this year. The Williamses are living on what LaJeanne brings in from her job at Southwestern Bell, a job she held during much of the bakery's life.

Like a groom left standing at the altar, Richard Williams wonders what he could have done differently. Nothing, he concludes. He played by the rules, jumped through all the necessary hoops, gave the bank everything it asked for.

Did Scratch Bake receive such harsh treatment from Bank of America because it was minority-owned? Richard Williams doesn't hesitate with his answer.

"Yes. I think that our growth potential was a little bit more than other people wanted it to be," he says.

Scratch Bake wasn't a fly-by-night company. It was within striking distance of reaching $1 million in sales in 1996, Richard Williams says. When he approached the bank, the company had more than a decade of success and customer satisfaction behind it. It had letters of intent from big buyers. It had the good will of many in the business community.

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