Some Players Still Sidelined in Lending Game

By Emily Maltby – November 4, 2010

Banks have slowly begun to increase their lending to small companies. But generally, only the strongest of firms – those that tend to be larger, with cash and collateral on hand – are receiving loans and lines of credit.

Many of the top small-business banks issued more new loans to small companies in the third quarter. Wells Fargo & Co., for instance, issued $3.9 billion, up from $3.3 billion in the same quarter last year. Bank of AmericaCorp. extended $5.7 billion to small firms, up from $4.1 billion last year, while J.P. Morgan Chase Co. lent $2.7 billion in its last quarter, up 42% from $1.9 billion.

However, much of the money is going to the “big” small businesses, banks say.

“The larger the business, the better they are doing,” says Kathie Sowa, who handles small-business credit at Bank of America, which last month announced plans to hire 1,000 bankers to work with small-business clients.

Meanwhile, the smallest companies—those with less than $1 million in annual revenue—”are not recovering at the same pace,” she says.

In the first six months of 2010, small businesses that reported the greatest success in winning financing had positive revenue growth, a five-year track record or had used 2008 profits to finance themselves during the credit crunch, according to a survey released last month by the Federal Reserve Bank of New York.

Banks also say they’re paying more attention to the health of a company’s industry.

Regions Financial Inc., for example, is lending primarily to professional practices such as physicians, veterinarians, and accountinglaw and engineering firms, which don’t depend on discretionary consumer spending. The bank has become “aggressive” in “fishing where the fish are,” according to John Asbury, head of business services at Regions in Birmingham, Ala.

That’s placed companies like Efficient Lighting Corp., a Buena Park, Calif., maker of energy-efficient light bulbs and light fixtures, in a sweet spot when it comes to securing credit. The four-year-old company, which powered through the recession thanks to tax incentives and government subsidies directed toward the green industry, expects annual revenue of $4 million this year.

Efficient Lighting secured a $500,000 credit line in March and an SBA-guaranteed real-estate loan for a $3.4 million industrial building in August from Bank of America.

“You need money to grow,” says Vu Thai, the company’s president. “When I got the line, I could increase inventory. And I could bridge time between client payments.”

On the other end, Shane Ramsey, president of seven Schlotzsky’s restaurants in Oklahoma, says he was denied financing by five national and regional banks as he tried to open an eighth franchise in Tulsa.

Mr. Ramsey says banks are being too picky about borrowers’ revenue and industry. While his combined revenue is about $8 million, each of his restaurants generate only around $1.2 million. And size wasn’t the only deterrent, he says. “When we pressed them for a reason, their only excuse was, ‘We’re not lending to the restaurant industry.'”

A few months ago, Mr. Ramsey stopped trying to woo the banks and instead found private investors to help with the start-up costs. He anticipates the restaurant will open in January.

Banks say they are simply being cautious, as finding credit-worthy borrowers —no matter a company’s size or industry—is still a challenge. According to the Federal Reserve data, demand remains strong—59% of business owners tried to get financing in the first half of the year—but applicant quality has weakened.

Marc Bernstein, who heads the small-business division at Wells Fargo, says that the broadest problem in trying to extend credit is that business owners are still trying to pay off debt they accrued prior to the recession.

“I don’t want to hear anybody tell me banks don’t want to make small-business loans,” he says.

“We are really stretching as far as we can prudently stretch to approve as many as we can. We have an obligation to make sure they are repaid.”

Banks say they’re not ignoring the smallest businesses. At Bank of America, Ms. Sowa says the new bankers will be actively recruiting the smallest of businesses—not necessarily to extend credit, but instead to process their deposits and help manage their cash flow. That way, when they become ready for a loan or line of credit, the banking relationship will already be well-established, she says.

Source: The Wall Street Journal

Carvel to Give Away FREE Ice Cream September 23rd!

Come by any time on Thursday for a Junior cup or cone of soft-serve ice cream

AUSTIN, TEXAS  – Schlotzsky’s-Carvel cobrand locations are celebrating you – our wonderful fans – with FREE ice cream September 23rd!  Come celebrate fall with a Junior cup or cone of our delicious soft-serve ice cream at no charge.  Consider it a scoop of thanks for your year-round support!

EVENT: FREE Junior cup or cone of soft-serve ice cream*

DATE: All day, Thursday, September 23

LOCATIONS: Schlotzsky’s – Carvel cobrand locations in the following cities-

Athens, GA;  Atlanta, GA;  Austin, TX;  Brea, CA;  Cedar Park, TX;  Fort Worth, TX;   Granbury, TX;  Lexington, SC;  Mesa, AZ;  San Antonio, TX;  Tulsa, OK;  Tuscaloosa, AL

*Free Junior cup or cone is 3 oz. size. Not valid with any other offer. Offer good  only on September 23, 2010 at participating Schlotzsky’s-Carvel cobrand locations.

Schlotzsky’s Hits the Road with Route 66 Promotion

Austin, TX (May 31, 2010) Pack your bags and hit the road this summer with Schlotzsky’s Route 66 promotion, now through August 29. For the first time, we’re putting together a two-part promotion centered around famous stops along the historic Route 66 highway.

Part one of the promo features three sandwiches that will take you through the first leg of the tour, making their way from Chicago, through Tulsa, and on to Albuquerque. Part two will start in the fall and finish out the trip down Route 66, heading through New Mexico and California. But first we have a grand summer adventure planned with our three Route 66 sandwiches, which feature large portions of premium meats.

The first stop along this American highway is the Windy City Pastrami & Swiss, with slices of top-quality pastrami and Swiss cheese with Dijon mustard, served on our dark rye bread.

Next up is the Tulsa Two-Step Angus Beef & Cheddar, featuring Angus roast beef, crispy bacon strips, cheddar cheese and red onions topped with hickory BBQ sauce and served on Schlotzsky’s signature Fresh-from-Scratch® sourdough buns.

And rounding out this historic trip is the Albuquerque Turkey, with smoked turkey breast and crispy bacon strips, cheddar, mozzarella and Parmesan cheeses layered with fire-roasted vegetables, shredded lettuce and chipotle mayonnaise and served on our kickin’ jalapeño cheese buns.

“This is a very unique promotion for us in that we’re serving three sandwiches, each with various meats and cheeses, which gives us a real variety for the flavor profile,” said President Kelly Roddy.  “With generous portions of high-quality cuts of pastrami, Angus beef and smoked turkey, everyone is sure to find a sandwich they love with the Route 66 promotion.”

Schlotzsky’s targets Oklahoma for Cinnabon-linked expansion


April 30 (The Oklahoman) – Schlotzsky’s is working on a sweet new image.

The fast-casual sandwich chain has recently signed on a new franchisee to open six new stores in Oklahoma City. All the new locations will partner with Cinnabon, a co-branding effort by Focus Brands, which owns both restaurant concepts.

Locations for the new Oklahoma City Schlotzsky’s have yet to be announced, but company president Kelly Roddy said the first is expected to open later this year. Read more.

Source: The Oklahoman