Heard on the Street

Chicago is much more like Main Street than Wall Street, but some talk surrounding the state of restaurant financing still can be found at the NRA Show.

Bernie Siegel of Siegel Financial Group, along with Lynette McKee, vice president of franchising at Dunkin' Brands, and Dan Stone, director of franchise sales at The Melting Pot Restaurants, gave a state-of-the-state round up of restaurant lending this afternoon -- and by most accounts, it still doesn't look good out there.

Even with all the talk of TARP, TALF and government intervention specifically into SBA lending, banks are not approving loans to restaurants. Siegel took aim specifically at the new head of the SBA, Karen Gordon Mills, who President Obama named last year.

"She must still be looking for the ladies room," Siegel said. "They just don't get it ... and the devil is in the details."

Stone said the four preferred lenders that The Melting Pot had worked with during the past years have stopped lending to the restaurant industry. To help lenders of Melting Pot franchisees feel more comfortable, the casual-dining company has agreed to guarantee loan payments for up to 12 months for franchisees that find themselves in default. They also will operate the unit for up to 12 months and commit to re-marketing the restaurant.

Stone also said he wrote a letter to CIT Small Business Lending, one of the largest SBA lenders that halted new lending last year when the secondary market totally froze. In the letter The Melting Pot explained in detail any sales slips or development bumps. The communication led to a soon-to-be-finalized agreement between CIT and The Melting Pot that would resume lending.

"We found a way to work around the hurdles," Stone said.

A recent article from NRN showed that operators were a bit more optimistic about lending trends for the months ahead, mainly because of the SBA programs in the works. Click here for the story.

-- Sarah E. Lockyer
slockyer@nrn.com