Renegotiating a Lease

With economic factors continuing to squeeze the life out of businesses across the Nation, lease renegotiation is a tool we recommend to many of our prospective and existing funding merchants at this time. Many business owners are surprised to learn that one doesn’t have to relocate to save money on the lease.

In this economy, commercial real estate landlords are hesitant to risk incurring an extended vacancy period by allowing the space to turn over.

Typically, the lease should be 6-8% of the occupancy cost of a restaurant. The problem is that as sales decrease, the traditional fixed lease payment continues to shrink a restaurant’s margins over time. In addition, as the environment changes and foot traffic decreases (due to big boxes or anchor locations going out of business) the lease needs to tie directly into a percentage of sales.

Therefore, due to the current economic situation we recommend shorter term leases at 5 years or less with extensions available. Real estate is too unpredictable at this time and most “white table cloth” and casual dining restaurant’s valuation are much lower today than they were a year ago.

Three tips to renegotiating a lease:

• Conduct research on the commercial real estate market in your area
• Provide appropriate financial data to your landlord to prove the decrease in sales
• Be assertive, but respectful as to avoid being forced to relocate or close your doors

Should you require any assistance with your business or have any questions regarding this blog entry, please do not hesitate to contact Steven Velasquez at Global Swift Funding.

Line of Credit Opportunity

While a vital source of small business financing becomes increasingly unavailable to small business owners, where can a typical small business go for expansion, inventory, or even working capital? We are in a current trend of larger organizations with better credit history and more experienced operators utilizing the Merchant Cash Advance industry, these are businesses who typically qualify for large sums of money. The majority of these business typically need a portion of their qualifying figure to purchase inventory, equipment, an acquisition or "patch" financing.

A tactic we have seen with the really established Small Business Owners is only taking an advance of a portion of what they qualify for, reducing impact on cash flow and coming back to us only when it is necessary. They essentially treat our product as a Line of Credit, which is simply unavailable from traditional sources. Once they are qualified and a customer of Global Swift Funding, it is extremely easy and an even quicker process to get the Working Capital they need to grow at any time.

This is simply one example showing just how flexible our industry has become and the evolution that the current small business financing world is in.

Colin Fleming
Marketing Director
Global Swift Funding
619.482.7200 x 131
colinf@gsfusa.com

2008 Restaurant Finance & Development Conference

The 2008 Restaurant Finance & Development Conference in Las Vegas was no surprise to us, as the rumors of the scarce resources available from traditional lending sources proved to be true. However, the most successful franchisors, restaurateurs and operators are chomping at the bit to take advantage of some great acquisition deals out there. There are tons of development opportunities where owners can obtain a restaurant in a location featuring strong demographics, affordable commercial Real Estate, and be able to negotiate favorable rates with construction companies. The Small Business Administration (SBA) and other long-term financing sources used in the past are not an option for most operators at this time. Even though ALL working capital/Merchant Cash Advance providers are under collection pressures and capital raises are harder than ever, we fill a major void in this economic environment. The keys to success in choosing the client are to have strong underwriting criteria, flexibility, and help cater to your individual clients’ needs.

At Global Swift Funding, we recently hired Dan Chaon as our Senior Vice President of Business Development. Dan’s 16 year experience as a restaurant operator and as a key contributor to Brinker International has provided significant insight to our underwriting team. We are focused on existing operators and tenured franchisees with multiple restaurants and years of successful restaurant experience. We can help these operators take advantage of this tumultuous environment and grow their business!

The main components we need to recognize are; we are in an evolving industry and each deal is going to be different. The days of being able to base an advance on a certain set of data parameters are a thing of the past. In addition, as we start to work with large groups and publicly held entities, there are no more “cookie cutter” deals.

The short term financing option we provide to the restaurateur has many benefits including not giving up an equity position and providing access to quick capital. As operators are in growth mode, we are here as a resource for them to provide an infusion of capital. We understand that we are not going to take the place of traditional lending sources; however, NOW is the time to for small business owners to look at alternative financing partners as we can help them grow their business quickly, effectively and affordably.

Steven Velasquez
Director, Merchant Services
619.482.7200
www.globalswiftfunding.com