Undergrounds Coffee House & Roastery Overcomes COVID Challenges with Small Business Relief Loans

Undergrounds Coffee House & Roastery

Business closures, new safety precautions and expenses, supply disruptions and reduced capacity: For restaurants across the U.S., the COVID-19 pandemic has meant unprecedented challenges. For Undergrounds Coffee House & Roastery, add a burglary, too.

How did co-owners Sara Heidinger, Bridget Morris and Erin Morris make it through? Sara says that tremendous community support helped them stay positive, while a $100,000 loan from the New York Forward Loan Fund — secured with help from Pursuit — has put the business on solid financial footing and positioned Undergrounds for long-term success.

Creating a neighborhood asset

With a goal of creating a neighborhood coffee house, café, and wholesale and retail roastery, the founders (Sara, Bridget and another co-founder and former partner) purchased a building in Buffalo’s Old First Ward. After a whirlwind year of planning, Undergrounds opened in 2016.

The building’s former use as a funeral home inspired the business’s name. “When customers and the media picked up on the connection, it evolved into a theme, an homage of sorts,” Sara explains. “The menu, for example, is filled with items named after deceased coffee entrepreneurs and Buffalo-born celebrities.”

The theme is carried out in merchandise, the Roastery Club membership and a new line of “White Light” special roasts (as in, the “white light” that the dying are said to gravitate to at the end of life). These roasts are developed in honor of notable deceased women: The first is for U.S. Supreme Court Justice Ruth Bader Ginsberg, with the roast described as “bold and balanced.”

The pandemic pushes Undergrounds to the limit

Undergrounds became a destination for its outstanding coffees and innovative menu. When the pandemic hit, though, nearly all operations were put on hold or were significantly reduced, which meant that revenue declined sharply.

“Essentially every facet of our work took a hit,” says Sara. “Catering stopped, our onsite business closed and wholesale business dried up because restaurant clients were also closed. The only thing that grew was bagged coffee for people to make at home.”

On top of that, in April, Undergrounds was burglarized, causing significant damage to the shop and its inventory.

“There’s no good time for that to happen,” Sara says, “but the pandemic made it really hard. It was tough to get crews in to help with things like replacing broken windows, for example. And our inventory was ruined and supply-chain issues made it difficult to get new beans.”

Customers and neighbors rallied to support Undergrounds and soon they were back in business. In late spring, an SBA Paycheck Protection Program (PPP) loan helped cover some of the new and ongoing expenses incurred to stay open for takeout service.

As Sara says, “The PPP loan was a huge help at the time, but because the funds had to be used quickly and for specific pandemic-related expenses, these weren’t the kinds of loans that helped businesses like ours create long-term stability.”

New York Forward and Pursuit

Sara says that she and her partners were actively looking for a working capital loan when she learned about New York Forward. She also says that it was exactly the kind of loan they needed: It offered a fixed rate, interest-only payments for the first year and quick access to funds.

She adds, “It’s hard for businesses like ours to get approved for traditional business loans, because the collateral requirements and other criteria are beyond what we can meet. But we realized that to strengthen our position, we needed to sustain and upgrade our operations with the help of a working capital loan. And based on the New York Forward payment terms, we knew that if we could get the loan, we could make it work.”

Through 43North, Sara learned that Pursuit offered help with New York Forward loans and she reached out to the Buffalo team.

“Our Pursuit team told us that the New York Forward loans are based on pre-pandemic sales figures, which made it easier to demonstrate our plan for success,” Sara explains.

Sara says that Pursuit’s guidance also alleviated stress about the process. “The application was straightforward, even with multiple business partners, and it was done seamlessly online. And when we needed help, our Pursuit team was there for us,” she says. “We received our approval quickly and the funds were in our account a few days later.”

Undergrounds is looking forward

“With funding in place, we’re open every day and we’re expanding our capacity as regulations and safety allow,” Sara says. “And although we don’t know what’s down the line, the loan has given us financial breathing room and alleviated many of the stresses that we faced over the last year.”

She continues, “We were pretty debt averse before, but now we know that funding gives you options. Now, we’re looking to the future and we know we’ll be okay.”

New York Forward and Pursuit: Funds are available, contact us today

Pursuit has decades of experience helping businesses across New York State and was selected as one of only five community-development financial institutions, or CDFIs, in New York State to help administer New York Forward.

Sara says, “We really enjoyed working with Pursuit. They made the application process a stress-free and easy experience and I’m thankful that we’re connected with them. I encourage business owners to give Pursuit call — you have so much to gain with a New York Forward loan and because of the great terms, there’s nothing to lose.”

New York Forward funds are still available, so if your business needs funding or you just want to learn more, contact Pursuit today.

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