December 7, 2009
Can’t get financing for your new restaurant? Upland, CA, wants you anyway, and it has created a Restaurant Attraction/Incentive Program to get you on board, including market-rate loans the city itself will make. Even the loan caveats are operator-friendly: the program is limited to full-service restaurants that will have beer and wine licenses. If only more cities thought this way.
They want restaurants and they want them now in Upland, CA, a prosperous suburb located east of Los Angeles. The Upland Community Redevelopment Agency has the job of getting them, and it has created a program that should attract full-service operators in droves. Here’s how the agency describes this program’s purpose:
“The primary objective is to provide financial assistance to restaurant owners wishing to establish new sit-down full service restaurants located within the Agency’s 2006 Amended and Merged Redevelopment Project area,” i.e., a huge swath of downtown Upland.
The program’s overall goals are aimed at moving the city’s economy forward. They include upgrading the appearance of the project area’s property; retaining and creating new jobs; and increasing retail sales, property values and generally improving the business climate in the city. Restaurants are considered a good way to make these goals a reality.
But the city fathers also simply want more good restaurants to set up shop in their town. They state so clearly on the short list of program goals: “Increase the fine dining options that are available within the City of Upland.” And they’re backing it up with cash loans to any restaurant that wants to move in—as long as it’s full service. As stated specifically in the program materials, “no fast food.”
The loan terms are good. As is true for a traditional bank loan, money will be awarded on the usual criteria: the borrower’s ability to repay, specific use of the loan proceeds and the useful life of the assets financed. The city is providing 10-year loans for building improvement costs, five-year loans for fixtures and equipment.
The interest rate is fixed and other terms mirror those of the U.S. Small Business Administration’s Basic 7 loan program. For a loan of $50,000 or more, that means a rate of prime plus 2.25 percent if the loan maturity is less than seven years. It’s prime plus 2.75 percent for seven-year or longer loans. Loan proceeds can be used for architectural costs; purchase of fixtures and equipment; purchase of materials; interior/exterior improvements to the building; and other costs. Documentation requirements are similar to a bank loan, but remember: Upland is looking to make it easy for restaurant operators to set up shop, not drive them crazy with red tape.
There are a couple of other operator-friendly eligibility requirements in addition to the stipulations that a restaurant must be full-service and have at least a beer and wine license. Program participants must keep their restaurant open for both lunch and dinner, must operate a minimum of six days a week and “must consider providing live entertainment.”
In short, the Upland officials are looking to make their town a lot livelier than it currently is. They think having a vibrant restaurant scene is the way to do it, and they’ll front start-up money to full-service operators willing to set up shop. Let’s hope other cities create this sort of operator-friendly environment soon.
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