Restaurants Experience Difficulty Obtaining Financing

NEW YORK -- How will your restaurant stack up in a year that's projected to generate $537 billion in sales?

"A lot of our clients are restaurants," said David Goldin, president and CEO of AmeriMerchant (www.amerimerchant.com). "After all, it does

Banks, which became even more conservative after the Dot.Com crash, often reject restaurant loans for what they perceive as a high rate of failure. Statistics give it an almost 50% failure rate and, if we see those numbers, so do banks. Other reasons include lack of proper collateral, insufficient operating history, inappropriate amounts (banks sometimes have minimums or maximums imposed on their lending amounts.)

"The restaurant industry is highly competitive," said Bruce Grindy, senior economist at the National Restaurant Association. "Therefore, an establishment needs to constantly change and adjust--and do what it needs to do to stay on the cutting edge."

AmeriMerchant provides merchant cash advances and can supply working capital up to $200,000 per location to a restaurant. The company does this by credit card factoring; that is, by purchasing advance credit card processing sales.

"It's a tough business," said Ron Billotte, the CFO at The Council of International Restaurant Real Estate Brokers. "Banks are often hesitant to do business with restaurants."

The following comments are from a few AmeriMerchant clients:

"My sales have doubled in five years," says Holly Nelson "but that didn't matter. All that mattered was that I leased, not owned, the building." Nelson owns a restaurant in an airport in Ohio. She recently added patio space "which I could do because of AmeriMerchant."

"What I especially like is that decisions are made quickly and funding is fast--and it's sort of nice to have a little back-up," said David Wolff, owner of a catering company Wisconsin. He recently added a banquet facility. "I used the AmeriMerchant business cash advance to complete that expansion." Then he laughingly said, "Since they take the money every day, it just doesn't hurt as much."