Peter Kelsey, a college dropout and one-time busboy who built the New French Bakery over nearly 20 years to 300 employees and $40 million in revenue, has sold the company for an undisclosed amount to an Illinois private equity firm that specializes in food-and-beverage concerns.

Kelsey, 56, said Tuesday that he sold for unspecified millions partly because he couldn’t get large banks to lend him $6 million to add the equipment and people for another production line. The company generated $2 million in cash flow in 2012. He didn’t dispute a sale price of more than $10 million.

After his primary lender, Northeast State Bank, told him that it would have to spread additional debt over several other small lenders, Kelsey said he concluded that he needed an equity investor.

He turned to Chicago-based Arbor Investments, which has $600 million invested in about 30 food-and-beverage companies.

“I was looking for an investor and these guys came along and said, ‘We don’t want to invest, we want to buy,’ ” Kelsey said. “I have to think about these 300 people and I usually just do what I want. It was time to get out of the way.”

The New French made its name in artisan breads, and operates seven days a week from two Minneapolis plants that bake about 3 million pounds of bread a month.

It provides fresh bread to 150 Minnesota customers, including the Minneapolis Club, Surdyk’s, Lunds, Target and the St. Paul Hotel. It also sells around the country.

Kelsey, who survived cancer several years ago, said an expansion would be risky without deeper pockets. And New French had a couple close calls over its thinly financed history.

“It’s the American dream,” Kelsey said, “I built a business to $40 million in revenue this year, but I didn’t have a nickel for my retirement or kids’ education. My oldest son is going to college this fall. I’m facing a big financing hurdle. I took the money.”

Kelsey said he put most of the cash flow back in the company, save a salary of more than $200,000. He also owns a house in St. Paul and a Cirrus airplane, worth more than $200,000.

He said even though he has an excellent credit report, he was unable to refinance his $380,000 home mortgage at a lower interest rate and had to put down 40 percent to buy the airplane in 2011 because banks considered him high-risk because he’s self-employed. Most of his company’s existing bank credit was insured by the U.S. Small Business Administration, which in May named him Minnesota Small Business Person of the Year.

Kelsey said he has a one-year consulting contract with Arbor Investments, but that he’s bored four days after the sale closed. He may invest in other food ventures, but they will be small ones.

Arbor Investments said that Jeff Getzkin, New French’s vice president of sales, and Michael Schultz, a veteran baking industry executive who previously worked for Best Brands, are also investing as part of the acquisition. A CEO has not yet been named to replace Kelsey, said Getzkin. Nothing is changing for the company’s customers or employees, Getzkin added.

“We believe that now more than ever consumers want authentic, high-quality baked goods in their neighborhood grocers’ in-store bakery,” said Gregory Purcell of Arbor Investments.