If your full-service restaurant has applied for and been denied a bank loan in the past, you’re not alone. Historically, restaurants have been one of the riskiest industries for entrepreneurs to undertake and banks have always been weary of lending to them. But things are changing, and restaurants may no longer actually be the doomed-to-fail enterprise they have always been made out to be. While the Financial Crisis of 2007-08 certainly wasn’t pretty for full-service restaurants, things are finally beginning to look up. Restaurants experienced an average annual growth rate of 2.6% from 2009-14 with revenues reaching $141 billion.
However, despite the encouraging numbers, banks are still not lending like they used to. But why is this? Well, with basically any issue surrounding small businesses, it’s mainly due to the Recession. In the wake of the financial crisis, government regulators came down hard on banks, forcing them to strengthen their lending standards. Now, many businesses who are otherwise in good standing and have a successful track record are being shut out of receiving loans. Banks normally want to see a credit score of 700 or above and a legitimate form of collateral before even thinking about lending to a business.
Thankfully, alternative lending can be your savior. Alternative lenders operate differently from a bank in that their main goal is to give you the money as quickly as possible. Applications are very short—most can be filled out in minutes—and upon completion your restaurant can be approved for funding in as little as 60 seconds. Alternative lenders also utilize online applications which speed up the process, something that banks have been reluctant to do. Additionally, alternative lenders generally only look for a credit score of 500 and above and most do not ask for any collateral.
But what can you use alternative lending for? How does it benefit full-service restaurants?
Hiring reliable employees: Quality customer service is paramount to running a successful restaurant. At a QSR or fast-casual restaurant, customers have very little interaction with employees. Usually, they just go up to the register, give their order and that’s it. But at a sit-down establishment, there is significantly more interaction among customers and servers. Customer service doesn’t just start and end with servers, either. It’s essential you have excellent cooks and hostesses because customers will remember everything: how they are treated when they’re waiting for a table, how their food is cooked, how long it takes their food to get there, and so on.
How alternative lending can help: An alternative lending program can provide you with the money to hire legitimate employees who can make sure your customer service is on point. The last thing you want is a poor Yelp review hindering the success of your business.
Purchasing inventory: Fast-casual and quick service restaurants have an array of items, so when they run out of something it’s usually not that big of a deal for a customer. But this doesn’t apply to a full-service restaurant. Over time, your restaurant will become known for certain appetizers and entrees; customers will literally go to your restaurant because they want something particular on your menu. Because of this, it’s in your best interest to always have an appropriate amount of inventory on hand. You never want to be in the position of running out of a popular item that a customer is looking for, or any item for that matter. Aside from food, you also need to be stocked up on every day supplies like plates and silverware, dish washing materials, cooking utensils, and more.
How alternative lending can help: Alternative lending can provide you with the money to purchase additional inventory as you see fit. When the need arises to buy supplies, the financing you receive will be there.
Menu expansion: A common trap restaurants fall into is menu expansion. Too many full-service restaurants keep the same exact menu for years. But why? It mostly has to do with available resources; restaurant owners don’t often have the money or the wherewithal to even think about menu expansion. A lot of effort goes into hiring a menu consultant or a new chef; so many owners simply choose to bypass menu expansion, much to their detriment.
How alternative lending can help: Alternative financing can give you the necessary resources to finally overhaul and revamp your menu. Customers are always looking for what’s new, and you’ll be doing your business a big service by adding some new flavor to your menu.
Brand recognition: It cannot be stressed enough how important brand recognition is to a restaurant. Fast-casual and QSRs that operate nationally have extremely large brand recognition with a treasure trove of resources available for advertising and marketing campaigns. Independent restaurants obviously don’t have the advantages of national chains, so they need to make it up for it where they can. Aside from TV, print, and radio, you should also look into spreading your restaurant’s brand across social media channels including Facebook and Twitter.
How alternative lending can help: Advertising, whether it’s traditional or online, requires a lot of capital. An alternative lending provider can give you money for advertising as well as hiring a digital agency to help with launching social media campaigns.
If you’ve been repeatedly been denied by a bank, alternative lending may be for you. Remember: you’re in control of the future of your full-service restaurant and alternative lending can help you expand your business today and for the future.
This article was originally published by Amerimerchant