The bankers don’t say why they deny loans — at least Shelton Ross says they never told him.
So figure this one out, he says.
The Ross family credit is decent, he says. They have capital saved up. Their business plans to open a second, and then a third, Steak’M Take’M Philly cheesesteak restaurant were based on the profitable success of the original restaurant.
“I showed them what we were expecting to make, showed them our potential,” he said. “And we’re still being turned down.”
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It may be notable that restaurant No. 1 is on Troost Avenue at 77th Street. The second opened in 2014 at 87th Street and Blue Ridge Boulevard. The third is under construction near 31st Street and Hardesty Avenue.
Their stores are in some of the mostly low-income, high-minority neighborhoods that Kansas City leaders complain are struggling for lending support.
There needs to be “a change in the environment and in the perception with banks,” said John Wood, director of the city’s Neighborhoods and Housing Services Department.
Many startup or expanding businesses in under-banked neighborhoods are turning to alternative lenders, like the nonprofit community development financial institution AltCap in Kansas City.
“The ultimate goal is that anyone willing and able to borrow money can do so on their own merit,” Wood said.
Ross said he was willing and able.
If anyone had asked him, the 38-year-old might have told how during school years he and his brothers worked summers in the restaurant for their father, Ervin Ross, 72.
He could tell them about when he was a 19-year-old student at the University of Arizona. He and a football teammate recorded each other talking about their dreams one night, and Ross imagined what he’d do with Steak’M Take’M and the money they’d make.
As he went on to earn a master’s degree in business administration at the University of Phoenix, he said, every paper he wrote drew on his real experience at the restaurant.
But Ross’ attempts with the traditional banks never got beyond all the paperwork.
“You don’t have a chance,” he said. “I haven’t seen any possibility of getting a loan.”
AltCap, 3200 Wayne Ave., has the flexibility to consider the stories and the people behind the loan applications, said Carmen Lopez, AltCap’s director of lending.
“We try to be creative with skin in the game,” Lopez said. “We look at character, project references and collateral.”
In one loan decision, she accepted the businessman’s offer of his ’98 Chevrolet truck as collateral, she said. “It (an old pickup truck) might not seem like much to someone else, but it was important to the borrower.”
These were not considerations she could make during previous years she worked at banks.
“There,” she said, “a ‘no’ was a ‘no.’ ”
AltCap began originally as the Kansas City, Mo., Community Development Entity, which was created to distribute federal new market tax credits beginning in 2008.
The federal tax credits encourage investment in economically distressed neighborhoods, and what is now AltCap distributed some $158 million into Kansas City businesses, AltCap President Ruben Alonso III said.
AltCap has since raised other funds to provide alternative sources for small businesses and has made some $4 million in microloans, including a $50,000 loan to Shelton Ross and Steak’M Take’M.
“We’re not competing with banks,” Alonso said. “We help show (banks) opportunities.”
Most of AltCap’s borrowers are in communities underserved by banks.
“But that could change if we can help demonstrate there is a market,” Alonso said. “We can show them they are good borrowers and stair-step them to a relationship with a bank.”
Many AltCap-supported companies are contractors that the Kansas City market needs to help general contractors meet city project requirements for hiring minority-owned businesses, said Davin Gordon, AltCap’s business development and program coordinator.
“They are an economic force creating jobs,” he said. “They are giving jobs to our youth.”
The Ross franchise, which already employs 10 people between its first two restaurants, will be employing more by they time it opens the third one, expected July 21.
Ervin Ross’ sons may be taking up more of the management of Steak’M Take’M, but he’s still the boss, and still “a workaholic.”
The retired Kansas City firefighter in his “Vietnam Veteran” ball cap is doing most of the rehab for their third restaurant himself.
The AltCap loan is supporting the work inside the building — a former KFC that had become weather-beaten and gutted by thieves.
But the transformation is underway. New tile covers the floor. Elegant windows, still boarded for protection on the outside, spur Ross’ imagination on the inside.
He can see the booths that will line the outside wall, and the customers who will be able to see the cooks at work through the giant opening they have cut in the wall between the dining room and the kitchen. They’ve added an entry foyer with glass doors.
Ervin Ross’ satisfaction is unmistakable.
“This location,” he said, “is going to be the best one so far.”