​Small brands, big potential

​Winning over banks when lending options decline

Amid rising interest rates, lending relationships are about more than singular transactions these days. As credit has become more expensive – and will likely become more expensive – banks are considering the value of their overall client relationships. They may well be looking for business opportunities beyond loans to help support their offer of credit.

Smaller restaurant brands are more likely going to feel the pinch of this than their larger, more established counterparts. Banks are moving deposits to where they can generate the best returns, leaving less capital to lend to small and mid-size companies. The prospect of a recession, as well as of the potential for additional bank failures, places additional pressure on these smaller brands.

That’s why it’s especially important for smaller brands to focus on lender relationships too. This could involve franchisors proactively scheduling one-on-one discussions with a range of lenders to discuss the brand and where it’s going. Building stronger connections across a range of lenders can help ensure that when franchisees need capital, their business has already cultivated a base of lenders who understand the brand and how it is evolving.

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