With “Main Street” restaurants still struggling to find working capital despite an improving economy, financial services provider Capital Access Network (CAN) announced that one of its subsidiaries will make such loans more available to small- and mid-sized businesses.
NewLogic Business Loans Inc. uses a proprietary business model to approve loans for restaurants, service practices, and retail businesses every day, within hours of application.
“We don’t require extensive business plans and multiple years of tax returns, things like that,” says Mark Lorimer, chief marketing officer for CAN.
“We also don’t premise the approvals on owners’ credit, but rather on the history, status, and health of the business itself, where most other programs are exclusively or heavily based on the owner’s FICO score. For us, that doesn’t really matter. What we really want to concentrate on is the actual performance of the business itself.”
NewLogic uses the CAN FinTech Group’s Daily Remittance Platform (DRP) for loan transactions, which examines 35 different variables when approving loans for restaurants.
Lorimer says that leveraging this platform, which uses a “very dynamic algorithm” that’s updated every night to enhance the business model, reduces the risk involved with approving loans so quickly.
“The modeling we do allows us to feel very comfortable … in that we understand the way cash flow works in small businesses, restaurants in particular, and we feel very comfortable in assessing the risk associated with that based on our historical profiles of businesses,” he says.
The NewLogic payment structure for borrowers also sets the program apart from other lending entities, Lorimer says. Approved business owners can either pay back in fixed amounts every weekday, or opt to pay back in flexible amounts every weekday, which takes into account card sales volumes and works around the ebb and flow of a restaurant’s business.
This kind of behavior-based modeling for both loan approval and payment is the direction lending is heading in, Lorimer says.
“The wave of the future is probably hooking the ebbs and flows of the business of cash flow and payment together in a way that is mutually beneficial because it works to both the restaurant’s and the merchant’s cash flow, as well as you get paid a little bit each day,” he says.