My restaurant industry passion began with my first teenage job as a hostess for Max & Erma’s casual-dining restaurant, where I even dressed up as Max in full costume a few times (no pictures live on). The experience left me with a keen perspective of the unique challenges restaurant owners face in operating and growing their businesses. Today, as a director for Wells Fargo’s Restaurant Finance division, I now support the financial needs of restaurant owners of all sizes and many brands.
To say the past year and a half has been difficult for restaurants would be a vast understatement. Despite being one of the most impacted industries during the pandemic, many restaurant owners have persevered and somehow found the determination to continue. Many are even looking toward the future with an eye on expansion or reinvestment, which could include debt financing or securing capital.
Restaurant owners are accustomed to facing hard challenges. Searching for the right lender and applying for a loan shouldn’t be one. With that in mind, here’s a checklist that can help you prepare to approach potential lenders:
1. Financial statements
Starting with the basics, lenders need to understand your historic and current financial position. They will ideally need to see three years of historical financial statements up to the current period, with items including a balance sheet and P&L (profit-and-loss) statement to provide a consolidated, unit-level presentation.
2. Store list
Next, paint a thorough picture of your restaurant holdings. Lenders like to see a list of all your current stores, including the following information:
Addresses
- Details on brands (if you have multiple brands, identify which brand is associated with each location)
- Opening or acquisition dates
- Property type (whether leased or owned)
- Lease expiration dates
- Franchise expiration dates
3. Overall capital expenditure plan
Get crystal clear on your long-term needs and goals. Ask yourself these questions and document the answers:
- Looking to build new stores: What is the expected timing and cost of each project?
- Planning acquisitions: What’s on the radar right now?
- Remodels on the way: What is the expected timing and cost of each?
4. Overview of your organizational structure
Lenders need to know the full picture of your organization. Make a document that details the following:
- Operating entities (if you have multiple entities, identify which stores are held in each entity)
- Real estate entities
- Management companies
- Holding companies
5. COVID support
Finally, summarize any support your business received throughout the pandemic, including:
- Paycheck Protection Program (PPP) funds: How much did you receive and have you been granted forgiveness?
- Rent relief from landlords: Which stores and when did you receive the support? Are you now current on rent payments?
- Relief from franchisors or other vendors: What were the terms and conditions?
- One-time COVID expenses: Did you provide any ‘hero pay’ to employees?
6. Bonus information
Consider including professional bios of the key management team, owners, and partners for your business. Lenders want to know who is running your business and their focus areas. Lastly, an additional pro tip: Use a data room to store everything in one place.
My hope is that this checklist helps ease any anxiety you have about the process. Lenders will appreciate your planning and take note of your ability to demonstrate that you have a pulse on the business.
Veda Cloud is a director for the Wells Fargo Commercial Banking group, with 16 years of industry experience. Email her at Veda.M.Cloud@wellsfargo.com.
