Eighteen-year-old Otis McNeil turns to Rising Tide for training, business planning and funds to help him create a company from scratch.
In 2006, Otis McNeil was faced with a decision. He had been working for a weatherization contractor and was offered a partnership in launching a new weatherization company. He had been doing the work for a couple of years and was a fast learner, but when he crunched the numbers, the offer just didn’t make sense—financially or personally.
So, at just 18 years old, McNeil struck out on his own with the goal of creating an energy conservation company that would work with local utility companies to help low- and middle-income families weatherize their homes.
“I didn’t grow up in the greatest neighborhood and I saw a lot of friends and family making really terrible decisions,” McNeil said. “It seemed like everyone was always too busy making excuses to come up with solutions and I was really motivated to do things differently.”
While his goal was noble, the deck was stacked against him. When McNeil started approaching banks for startup capital, he was turned away again and again… and again. He had no credit, no collateral and was just so young.
Business Owner in Training
“I was furious—I never thought my age was a problem until I went to the bank for a loan and they pretty much laughed at me,” McNeil said. “I couldn’t understand why it mattered how old I was. I had the experience, a plan and the hunger to make it work.”
McNeil might not have had capital, but he did already have his first job lined up—a verbal agreement with the Community Action Committee of the Lehigh Valley (CACLV) to perform a number of weatherization services. After getting the first “no” from a bank, he approached CACLV for permission to mention their informal contract as a way to prove he could build a customer base. It was there that he first heard about Rising Tide Community Fund.
A CACLV staff member suggested McNeil think about taking Start Your Business classes and reaching out to Rising Tide for one-on-one loan application assistance, but he was determined to get a bank to hear his case so it was a few months—and more than few no’s from banks—before he reached out.
“When you’re a startup, you just want to get started. I didn’t want to have to ‘waste time’ taking a class; I really just wanted to get my business going,” recalls McNeil. “It took me three months to really make myself fund-able, but it was totally worth it.”
McNeil completed the small business course and then Rising Tide helped him put together an actual business plan that started to answer a lot of the questions the banks had been asking him. Finally, McNeil decided to apply for a Rising Tide loan rather than going back to the bank. The interest rates were higher, but he felt like he’d have a better chance of getting his business ideas heard and seriously considered. He still needed to bring something of his own to the table, but was able to use his grandmother’s house as collateral to secure the loan.
McNeil’s hard work and the trust his grandmother—and Rising Tide—placed in him paid off. His application was accepted and he received $19,700 in funds to get his company up and running. He purchased the essential equipment, a company vehicle, and the materials he needed to get his first job going. Although money was tight after making his startup purchases, McNeil managed to get enough contracts to make his first hire within a couple of months.
Within two years he had a crew of three working for him and was able to spend less time in the field and more time growing his business. It took McNeil the entire five-year term to pay off the initial loan rather than the two he anticipated, but he never missed a payment. And when he needed another loan to purchase additional equipment, he went back to Rising Tide. With Rising Tide, Otis was able to secure his second loan with limited business assets and continue a growth trajectory, eventually doing well enough to refinance through a traditional bank.
Today, he has a total of eight employees, a 5,000-square-foot multi-use office/warehouse space, a small fleet of trucks and all the equipment they need to deliver on just about any job—and Custom Weatherization LLC is still growing.
“Rising Tide got me started by providing all the steps I needed to take to be successful. I was able to learn what I needed to and then go for it,” McNeil said. “I would recommend anyone who wants to start a business go straight to Rising Tide, learn what you need to know, and then apply it. Because while knowledge doesn’t create action, you can only get so far on action without knowledge.”