In August of 2005, Leslie and I lost everything. We lost our customers, our house, and everything we owned that wasn’t in a suitcase. We had ridden out Hurricane Katrina in north Mississippi at Leslie’s parents’ home. We had opened Lazy Magnolia in January of 2005 as Mississippi’s first legal packaging brewery since Mississippi had enacted Prohibition in 1907. It had been nearly a hundred years in the making.
After the storm, I arrived at our house, located on the banks of the Jourdan River, to a flooded mess, the likes of which I couldn’t possibly have imagined. Our house was no different from thousands of other houses that would eventually be razed to the ground. I can tell you from personal experience that a piano, when pushed off a balcony, really does make that Looney Toons sound.
Lazy Mag had been in business for nine months before Katrina. When we started Lazy Mag, we had raised funds from family and friends, borrowed more money from a bank, and obviously put in all the cash that we had. After nine months of learning that no one knew how to build a brewery in south Mississippi — in the most expensive ways possible — we found ourselves flat broke. Not just a little broke, but all the way broke. You see, we had spent all the money building a brewhouse, investing in employees, buying materials, and paying contractors (often twice). The brewery had just started to cash flow, and now it was occupied by Marines.
In December, we got a visit from the SBA. They were doing disaster assistance loans. I thought we were a match made in heaven — they had money, and we had just lived through a disaster. We filled out all the paperwork, a ream of paper, and eventually, an SBA administrator dropped by to discuss our application.
He started, “Mr. Henderson, I am just dropping by to discuss your application.” Likely the first time I had ever been addressed by a title reserved for my father. He went on to say that we were already in the SBA system — a true statement as the only way I could get money from a bank as a 29-year-old punk looking to change the world was with an SBA guarantee.
He lamented that we had been in business for nine months, that we had spent all the money, that we had not had any revenue in the last three months, that 82% of our business had been on the beaches of Coastal Mississippi, that those businesses no longer existed, and that the collateral on our existing SBA loan was not in merchantable quality (our home was in the Bayou at that time). I remember saying to him at that time, “When you say it like that, it doesn’t sound too good.” We both chuckled.
The SBA did not give us a disaster assistance loan. Instead, they called our existing loan. We had to pay it off immediately. The SBA man suggested that bankruptcy was a very appropriate thing in cases like this.
Imagine being homeless, having your dream of entrepreneurship dying in front of you, and facing seven years of purgatory while you try to claw your way back up to the poverty line. As an adult, I have wept a few times — none more profoundly than sitting by a tent, down by the river that night. Leslie is stronger than I am. A little meaner as well. She wrote that check and promised that we would never have another SBA loan. We haven’t.
Paying that loan required everything Leslie and I ever had. We sold anything that wasn’t bolted down and required to make beer. We sold everything we could salvage from the house before it got bulldozed. We drove a 1988 F-150 with a cracked exhaust manifold and peanut butter in the rear differential. We cashed in our retirement accounts and sold everything but her wedding band. We didn’t know what the future would hold, but we knew that we would do it, and we would do it together. We put together a plan, hiked up our britches, and got to work.
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