Farid Ali Lancheros, co-owner of Bogota Latin Bistro, a thriving Colombian restaurant in Park Slope, Brooklyn, is frequently asked by budding entrepreneurs how he came up with the money to start his business. The challenge of raising money is an area Farid is all too familiar with.
Before opening his Latin restaurant in July of 2005, Farid and his partner George Constantinou had applied for and been denied numerous small business loans before finally landing the big “yes.” The constant rejection had them second-guessing their award-winning business idea (the two won first prize in a business plan competition sponsored by the Brooklyn Business Library in 2003) but meeting a loan officer who loved frozen margaritas changed everything and solidified their future success in less than thirty minutes.
To get their entrepreneurial venture off the ground the pair had to secure a $100,000 loan. In contrast to what banks would have you believe, they generally don’t lend money to new businesses, especially restaurants, which fall into a high-risk category. According to a study by Cornell University, about one in four new restaurants fail in the first year.
The two partners met with over fifteen bank officers, all of whom would say, “Thank you, we’ll be in touch.” They also heard, “Sounds like a great idea. I’ll see what I can do.” Each time they would leave with high hopes only to have their dreams dashed as a result of not having cash, collateral, or business experience.
The loan application was either rejected or ignored by bankers who wouldn’t return the partners’ email and phone call inquiries regarding a decision. Farid was relentless. He and his partner George believed in their dream restaurant and were certain that someone would eventually say yes and loan them the money needed.
One day a close friend asked Farid how the loan application process was coming along. Upon sharing his frustration, the friend referred Farid and George to a bank that had already denied them a loan insisting they go to a particular branch and see a personal friend of his who happened to be the vice president of small business banking. After some initial resistance, the partners acquiesced.
The lending officer was a tall well-dressed muscular gentleman who could have been a professional football player in another life. After the usual pleasantries they presented him with a thick binder containing the requisite three-years of tax returns, their business plan, sample menus, and the loan application.
Upon the loan officer’s review of approximately five pages of their business plan he closed the binder, pushed it aside and asked, “Tell me a little bit about you. What are you looking to do?”
Farid and George communicated their vision of a colorful Colombian, Pan-Latino restaurant with amazing food, excellent music, and an incredible atmosphere with a full-service bar featuring fantastic Latin-inspired cocktails including mojitos and caipirinhas. The loan officer interrupted and asked, “Are you going to have a frozen margarita machine?”
They had decided not to have a frozen margarita machine because they associated margaritas with Mexican restaurants and they wanted to distinguish their eatery as Colombian. They wondered where the lending officer was going with the question but instinctively felt they should say yes and simultaneously answered, “Sure.”
“Well, you better,” the loan officer said snapping his fingers. “You know how us big gay guys love our frozen margaritas.”
He pulled out a blank application and began filling it in stating, “I’m going to indicate here that you’ve been in business for six months, that you are operating in the black, and you’re looking for a capital improvements loan. We’ll push this through to the underwriters and we’ll see what they say.”
The meeting ended with the officer shaking their hands, wishing them luck and saying, “I have a good feeling about you guys. No matter what happens I am sure you’ll be successful.”
Farid and George left the 30-minute meeting bewildered and unsure of what had just transpired. They walked away assuming this meeting would end up the way all the other ones had with the application being rejected.
Half an hour later the loan officer called Farid to inform him that he had just been approved for a $100,000 loan.
The loan officer surprised the entrepreneurs two years later by showing up unannounced with a group of friends to dine at the now successful restaurant. The business owners proudly gave him a tour of the business he was so instrumental in creating — beginning with the frozen margarita machine.
Of course the banker’s meal was on the house including his margarita.