Restaurateurs fit more on their plate with help of loan program: funding helps add seats to bistro, open cooking school and kitchen shop.

* Caprial and John's Kitchen is getting ready for a cooking class of 60 students who will peer into the saucepans of two of Portland's master chefs and taste their signature Northwest/Asian-inspired creations.

As the staff chops veggies and stacks plates, people browse the adjacent KitchenWare Shop's selection of meat thermometers and lunchers come from Caprial's Bistro around the corner to find the spice that will make their grilled lamb sausages taste just like the restaurant's.

Running multiple businesses suits Caprial and John Pence, who orchestrate a growing menu of ventures that began with a tiny bistro. Two U.S. Small Business Administration 7(a) loans of $260,000 each opened up opportunities that now include books and TV, gourmet tours abroad and the cooking school.

The pair met at the Culinary Institute of America in Hyde-Park, N.Y., in 1982. After graduation, Caprial took a job in Seattle, close to her family in Portland. John, who figured they "would hang out together for a while," followed.

They began at the bottom in Seattle: Caprial's first job paid $5.50 an hour, and John got $1 more. That changed when Caprial landed a job at Fullers at the Sheraton in Seattle and John was hired a month later.

In the seven years they were in Seattle, they married and started a family, and Caprial's career took off: In 1998, Time magazine named her "the latest star in town," and she won the 1990 James Beard Award for Best Chef in the Pacific Northwest. She was working on her first cookbook, teaching classes and appearing on local TV. By 1992, when daughter Savannah was born, the Pences were able to write their own ticket.

They moved to Portland and bought the old Westmoreland Bistro with private financing. "We got a loan from a close friend, who opened up his checkbook to us," John says.

The bistro seated only 26 when they applied for their first SBA 7(a) loan in 1998. John knew the time was right to remodel and expand. "The restaurant was booming. We had good relationships with our banker and our landlord," he says. But the trigger was space opening up next door.

Friends told John he would retain more control over a bank loan than private financing, so he went to a regular customer, a bank president. The banker encouraged him to seek SBA financing, and his bank facilitated a $260,000, seven-year loan. Renovations began in mid-1998 and the bistro opened with a capacity of 70 Nov. 30.

Only a glass of wine kept them from opening a family-style restaurant in the space that now houses their cooking school and shop. They were planning to "serve mac and cheese, but offer a sophisticated wine list to parents," Caprial says. But over a drink, they decided it was more important to diversify. "We like to create new businesses," she says. And "the P&L on the restaurant was too tight," John says. "It would distract from the bistro, while the school and the shop complement it."

A second SBA loan "allowed them to open the school and shop, which has helped triple revenue. The restaurant initially averaged $1,000 per day; now it brings in $4,000 to $5,000 "on a regular weekday," John says. And the company, which began with eight employees, now employs 45.

Most work in the bistro, but some support the new projects. The culinary program offers classes and demonstrations nearly every evening. Guest chefs join Caprial and John for classes. Students--who pay from $35 to $135 for a hands-on class or demonstration and tasting--feast on barbecue, risotto, bratwurst and cheesecake, all accompanied by fine wines. And those who prefer to learn outside the kitchen may join Caprial and John on a cooking cruise to Alaska or a tour of Provence.

This month marks the first production of their TV show, which will broadcast from the new space. It's also their first time as producers, says Caprial, a veteran of six TV series.

Caprial has written a cookbook to accompany each series, and just celebrated the release of her eighth book and the pair's first written together.

"We're more particular about opportunities now, but we always open the door," Caprial says. "If we're not ready, it won't work out."

When they're ready, they'd go back to the SBA for another loan, this time with the benefit of experience. "We've learned to get into this business at the lowest debt level and have a cushion of working capital," John says.

7(a) Loan Guaranty Program

What: Loans to small businesses unable to get conventional financing, Private-sector lenders' loans guaranteed by the SBA.

Amount: Maximum loan amount of $2 million but maximum the SBA can guaranty is generally $1 million.

First step: Contact local lenders, who should be familiar with SBA loan programs. Borrowers must have repayment ability from cash flow, good character, management capability, collateral, owner's equity.

Loan purpose: Proceeds can be used for most business purposes, including buying real estate; construction and renovation; acquisition of furniture, fixtures, machinery and equipment; purchase of inventory; working capital.

Terms: Terms vary but maximum loan maturity is 25 years for real estate and equipment and generally seven years for working capital, Interest rates are negotiated between borrower and lender but subject to SBA maximums. Rates may be fixed or variable.

Northwest Cuis. Inc.

The umbrella company for Caprial's Bistro and Caprial and John's Kitchen

Owners:

Caprial and John Pence 1608 SE Bybee Blvd., Portland, OR 97202 [phone]

www.caprial.com

www.caprialandjohns kitchen.com

Year founded: 1992

Annual revenue: $1.5 million

Employees: 40-50; average 45

BBA-backed loan amounts: two 7(a) loans of $260,000 each

Loan terms: 7 years each