Tea, sympathy don’t pay bills

Diane Krup spent more than $200,000 four years ago to buy a small shop in San Juan Capistrano that sells British foods and knickknacks. Then the recession hit.

Krup hasn’t taken a salary in over a year, and she has been steadily losing money for months.

She expects to be out of business soon.

“Where’s my bailout?” Krup, 49, wants to know. “I’m not asking for a golden handshake. I’m not asking for a lot of money. But there needs to be some way to help small businesses during times like this.”

It’s a safe bet that the global economy will bounce back even if Krup’s shop, Flavour of Britain, goes under.

But it’s worth taking a moment to appreciate what small businesses are up against these days, and to acknowledge the legitimate frustration many business owners are feeling.

“Maybe I’m just having a boo-hoo pity party,” Krup said in her tidy British accent. “But something isn’t right when AIG and the banks and the car companies are given all this money for doing such a terrible job, and the rest of us can’t get any help at all.”

Alberto Alvarado, Los Angeles district director for the U.S. Small Business Administration, said he sympathizes with people like Krup.

“Small businesses are up against rough times,” he said. “Banks aren’t lending to them.”

But Alvarado said help for small businesses was on the way in the form of an infusion of $730 million in federal cash included in the nearly $800-billion stimulus bill signed into law by President Obama in February.

The money will be used by the SBA to offer loans to business owners and provide assistance in weathering the storm. More information on what’s available can be found at the agency’s website, www.sba.gov.

“I’m optimistic,” Alvarado said of the prospects for small businesses. “We’re beginning to see light at the end of the tunnel.”

In Krup’s case, though, the only light visible is the white kind that comes as a little store passes on to small-business heaven.

When she bought the shop, she assumed a lease of $1,325 a month, plus about $500 in monthly utility costs.

The lease expired in June 2007 and Krup’s landlord wanted to jack up the rent to $3,350 a month.

So Flavour of Britain moved to another site nearby, where Krup said she was charged $2,685 monthly, including utilities. Her new landlord, Tom Hribar, is a real estate professional and a San Juan Capistrano city councilman.

Hribar is a stand-up guy. When Krup went to him in January and said she was having trouble with her business, he abandoned plans to raise her rent by $600. Instead, he raised Krup’s rent by just $25.

When Krup subsequently said that she didn’t think Flavour of Britain would survive, Hribar agreed to help find a new tenant by advertising the property at his own expense.

“That’s what you have to do,” he told me. “You have to care for people.”

Up to a point, that is.

Krup is now asking whether she could walk away from her seven-year lease rather than face the prospect of bankruptcy.

That’s where Hribar has drawn the line.

“I spent $18,000 preparing the site for her,” he said.

“You can’t just let that go. Nobody can ever walk away from a lease -- ever. This is business.”

I asked Alvarado at the SBA whether federal authorities were considering some sort of provision that would help people like Krup deal with such situations.

“Right now,” he replied, “we don’t see movement in the area of voiding of contracts.”

That’s understandable. A deal’s a deal.

What landlord would rent to a small-business owner if he or she knew the business owner could just tear up the lease at any time?

But that doesn’t change things for Krup and others like her.

“It seems so unfair,” she said. “I started my business before the recession began. This isn’t my fault. Now I’ve lost everything.”

What would she like to see happen?

“I’d like to see some sort of legislation that keeps people from being kicked when they’re down and out.”

That’s not exactly a Marshall Plan for small businesses. But I agree with the general idea that when times are tough, you offer a helping hand.

That’s the American way -- even for a shop named Flavour of Britain.

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David Lazarus’ column runs Wednesdays and Sundays.

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