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Tuesday, May 17, 2011

Funding a Restaurant Franchise?

It’s raining and raining. Like the sunshine, good loan opportunities are hard to come by for restaurant franchises or franchisees. Whether the collateral is commercial or residential, the pool of good quality well collateralized, stabilized loan opportunities are small and, along with employment numbers, shrinking. Costs, meanwhile, and the regulatory burden on small businesses are climbing. Tough times to be a banker, not to mention a small business owner. Some have had loans called in by lenders, foreclosed on and others have walked away but the times are a changing. You can negotiate on the restructuring of your loan, and in some cases, buy back the loan at a sharp discount.

According to Tom Mullaney, founding principal with Huntley Mullaney Spargo & Sullivan, Inc. (HMS) specialized in debt restructuring for companies and high-net worth individuals having trouble paying back their lenders:

“If you have the appetite to think about growing again, now is the time to strike. If that great location is at $90,000 this year, it will be at $120,000 next year. Banks make loan loss reserves every quarter, so it’s a good time to go to the bank and buy your loan back because as time goes by and reserves increase, you odds of getting a discounted loan payoff improve. And, if you do it right, you can buy back your debt at a significant discount. Of course, it all depends on the situation—including personal and corporate guarantees. But there are ways of dealing with guarantees. Now is the time to horse trade with a landlord. The landlords need to show their lenders they have signed tenants with lots of lease term. They don’t want their loans called in, either. The window of opportunity will be gone soon.”

Franchisees are the great American story and franchise lenders are more willing to put capital to work in franchising. So here are some options to grow your business:

1) The answer to lackof-credit-access issue without becoming a lender. Franchise
Note Buyers purchases business-backed notes (IOUs) on the secondary market. They allow franchisors to drop the risk of being their franchisee’s lender while also helping buyers and sellers of existing small businesses to finance and cash-out their
resale transaction without requiring a buyer’s bank loan. They specialize in buying franchise-backed notes, but they also buy notes that are secured by non-franchised small businesses.

“We’re spreading the word that deals can get financed without bank loans – transferring some power from the banks back to business owners.” For more information on Franchise Note Buyers, contact Rich Kolman, president, at (855) 362-2274, or by e-mail at rich@franchisenotebuyers.com .

2) First Franchise Capital specializes in lending to the franchised restaurant industry, and works with well-known brands across the country. The company provides financial solutions to help franchisees purchase real estate and equipment, remodel,
finance new construction, acquire existing locations, refinance debt and restructure ownership. For more information, contact Tom Schuldt, president, at 201-326-4007, or at Thomas.Schuldt@firstfcc.com ; or contact Rick Riecker, first vice president, marketing development at (201) 326-4021, or at Richard.Riecker@firstfcc.com.

3) Infinity Franchise Capital will offer conventional financing for experienced
operators in the nation’s top restaurant brands. The firm will offer loans for equipment, real estate, new store development, partnership restructuring, refinancing and remodels from $100,000 to in excess of $20 million. For more information on contact Sharon Soltero at ssoltero@infinityfranchise.com .

4) GE Capital, Franchise Finance is a lender for the franchise finance market via direct sales and portfolio acquisition. With more than 30 years of experience and $14 billion in served assets, they serve more than 5,000 customers and more than 22,000 property locations. For more information, call 866-GET-GEFF (438-4333).

5) Wells Fargo Restaurant Finance provides capital to corporate restaurant brands, multi-unit restaurant franchises, private equity firms and other financial investors in restaurant companies. For more information, contact Becky Brown, managing director, at (858) 756-8422 or by e-mail at becky.d.brown@wellsfargo.com.

6) United Capital Business Lending, which recently acquired the small business lending operations of Butler Capital, is a subsidiary of BankUnited, the largest bank in Florida with $11 billion in assets. The newly formed United Capital Business Lending now brings the prior experience of Butler Capital together with the financial strength of BankUnited. For information on United Capital Business Lending, contact Trey Grimm 866-218-4793.

7) CG Commercial Finance finances equipment for middle and large-ticket deals for larger or multi-unit restaurant companies, both through debt financing and tax leases. For more information on CG Commercial Finance, contact Jon Albin, senior vice president at 949-720-9511 or by e-mail at jon.albin@cgcommercial.com.

8) Guidant Financial is a provider of 401(k) rollovers as business start-ups (ROBS). Guidant’s services allow entrepreneurs to invest their existing IRA or 401(k) funds into a small business or franchise without taking a taxable distribution or getting a loan. Guidant also offers franchisees the option of matching their financing needs with an appropriate lender. For more information on Guidant Financial, contact Jerry Darnell at 888-472-4455, or by e-mail at jerry.darnell@guidantfinancial.com.

9) AEF is an equipment financing and leasing company, operating in multiple locations across the U.S. and headquartered in Warren, NJ. AEF provides same-day approvals for up to $250,000, and specializes in leases and loans ranging from $25,000 to $1.0 million. AEF is an independent commercial finance company specializing in financing to the QSR franchise and retail petroleum industries. For more information on American Equipment Finance, contact Richard A. Baccaro, president, at 800-785-3060, ext. 203 or by e-mail at rbaccaro@aefllc.com.

10) Pinnacle Commercial Capital, founded in 2002, is a commercial finance company that specializes in financing franchisees throughout the U.S. Pinnacle’s clients include multi-unit operators of national and regional restaurant concepts and specialty retail brands, and provides and manages franchisor-sponsored loan programs to assist with franchisee acquisition and conversion initiatives. For more information, contact William Wildman, president, at (317) 472-2828 or by e-mail at ildman@pincomcap.com; or James B. Railing, vice president, at railing@pincomcap.com

11) BoeFly is the online marketplace connecting lenders with business borrowers, secondary market loan buyers and professional service providers. For more information on BoeFly, contact Mike Rozman, executive vice president, at (646) 755-7433, or by e-mail at mrozman@boefly.com.

3 comments:

  1. Hi...Your post really got me thinking man..... an intelligent piece ,I must say. restaurant franchises opportunities .

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