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ARF specializes in restaurants and I found them disarmingly honest. They lend you money and charge you an interest rate that reflects your credit worthiness and the risk of the loan. No messing around, just straight talking. This approach lets you, the restaurateur, decide if the deal works for you or not.
Q Scott, first question,what exactly does Advance Restaurant Finance do?
We supply financing and loans primarily to restaurants across the country in all 50 states. Ninety-five percent of our portfolio are independent restaurants.
Q What’s different between you and a bank? Why wouldn’t a restaurant owner just go straight to the bank?
As we all know it’s a pretty volatile business and many banks will not lend money to restaurateurs because of the nature of the business. In a lot of cases they are seasonal. So you have significant up and down sales volume.
Our company (the senior management team in particular and most of the reps) has had a background of owning restaurants, working in restaurants or selling to restaurants. So we’re very familiar with the cost structure of a restaurant. We go directly into the restaurant and work with management to determine the loan amounts and what they can afford. We know the restaurant business far better than banks.
Q What’s a typical loan term? Are you loaning for short-term cash flow or longer term business development?
It’s mainly short term, probably around 26 weeks is a typical loan. It ranges from 20 weeks up to 78 and there has been some case-by-case situations where we have given a three to six-week loan for somebody that needs some bridge money.
Q What does a restaurateur have to do/be in order to qualify for a loan? Do you have to be in business for a particular length of time?
That’s the good part about our business. We look at everybody and pretty much everyone is eligible. We look at a couple of different things. Firstly sales volume. Sales volume has got to be about $150,000 or more per year.
You have to actually be in business. The day after you’ve opened your doors is when we would have an opportunity to come in and look at you. We do not have an unopened restaurant product.
We ask that the individual has a Beacon score – it could be in the 450/500 range.
We look at home ownership. We do not collateralize the loan (so a customer’s home is not put up as collateral for a loan), but we do look upon people that own homes as more creditworthy individuals. We do give a lot of loans to people not owning a home, but home ownership is a way to get a better rate from us.
In addition, we rate sales volume and credit score. We check to see if people might have been overextended or have been bankrupt. It is very rare that we decline a loan, but the specific items that we look at do determine the rate and the term and the amount of the loan.
Q If I’m interested in a loan, how long does it take to organize?
That’s the primary reason why people come to us. It’s a very quick process. That, and because it’s not collateralized. We usually take three to five days and I like to set the expectation of five days.
It’s a very simple process. We fill out a page and a half credit application and then we ask for bank statements or credit card processing statements to show sales volume. Then the key with our product versus a lot of other people in this type of industry is that we automatically debit from a chosen account. Typically once a week. We don’t do anything with credit card processing or the credit card processors.
In this industry we sometimes get compared with the factoring companies and cash advance companies, but we are not like either. We are a licensed lender which is quite a bit different.
Q Can you describe a typical recipient of your loans? Do they fall into a particular category of restaurant? Do you also deal with large organizations?
Our typical restaurant is probably about a half million dollars a year. Probably a 26-week loan. Probably average about $30,000 - $35,000 needed for cash. They probably need the cash for expansion. We have a lot of people that want the money to put together maybe a new marketing program for Thanksgiving, Valentine’s Day or build a new patio or get new bar stools. And they really want a strong return on their investment and we can help them very quickly.
And it’s usually the independent restaurant. It might be the mom and pop store who needs some extra cash and are somewhat overextended with the line of credit from the bank. Or perhaps they don’t want to use their own money or have to get a partner.
It’s not talked about a lot, but to actually go out and get a partner is probably one of the most expensive things in this industry. That’s our personal belief. There are some people that don’t believe that but that’s our belief because you’re perhaps giving up 50 percent of your profit, 50 percent of your equity and sometimes it can be 100 percent of your problem.
So we try to fill that void versus going into a partnership where available. And we try to make the process as simple as possible and as fast as possible to try to keep the headaches to a minimum with obtaining cash.
Q I understand that you help with leasing as well. You have products to assist with equipment leasing?
Yes. We do have a partnership with a company called Kingswood Leasing. We basically gather information and applications on their behalf and we hand that over to them. They do the actual leasing of all the equipment.
So, the money doesn’t come directly from us. The leasing doesn’t come directly from us. It’s a partnership we have.
Q You cover the whole of New England and you can lend in any state in New England?
Any state in the United States. We’ve got reps – close to 50 sales representatives across the country. And that’s one thing we really pride ourselves on. In this industry there’s a lot of phoning of restaurateurs and they’re probably pretty sick of it. They probably get two, three calls a day from finance companies. And we do our share of calling, obviously too, but we call into our own market and we also do about 75 percent actually physically walking into the restaurant, sitting down with a restaurateur.
We like to call ourselves the neighborhood bankers. We work with three banks that we have very strong relationships with where we get our money from and again in this industry that’s not the norm. A lot of it is, “I’m living in New York and I’m gonna call into the Los Angeles restaurants and try to lend them money.”
Again, we’re a little different. And we pride ourselves on that, too. It’s somewhat of a boutique type of company but we really think this is the best way to do it. And conversely, quite frankly, what I can tell you is when we do that we actually bring our bad debt down to a manageable level if we actually physically walk into the restaurant and see what the operation is like.
We just find it surprising that people phone into restaurants and ask them if they want to borrow money and then they give them a loan over the phone. It’s just a little scary for us.
Q Do you you have other financial products?
Yes. I think we run the gamut with a lot of different products. We’re not just a loan company. We’ve got line of credit products and we have interest-only products. So, we’ve got a lot of different products versus just giving a normal loan. We would like people to know that and understand that, because if we do talk to people they think we are just after them for $30,000 but some people do just like to establish a line of credit for emergencies. Some people do like to just pay interest and then at the balloon term, they like to pay the whole amount off.
And again, some of this is because of the Small Business Administration. They offer loans to people but it does take them a little longer or a bank might take a little longer. Well, in between that time who do you use? A lot of people use us. So we want to make sure that people know that we’ve got a lot of different products.
We thanked Scott for his description of Advance Restaurant Finance. His answers were refreshingly open and obviously he knows the restaurant business and its loan needs very well. Advanced Restaurant Finance can be reached at 866-702-4430 or vist them on the web at www.arfcash.com
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Finance 
