Tag Archives: payment

A Square Deal

May 25, 2013 by
Photography by Bill Sitzmann

Café 110 opened its doors at the corner of 13th and Farnam in March 2012. Owner Allan Zeeck had been at the Benson Grind in the hip Benson neighborhood for about eight years before he closed shop and headed downtown with his eyes set on a space in the Old Market’s business district.

The business, which is known for its catering and live music weekends, serves delicious foods and drinks to its Old Market customers from 7am to 5pm Monday through Friday and 9am to 2pm on Saturdays and Sundays. Breakfast and coffee are the main attractions, in Zeeck’s opinion, but Café 110 also has an assortment of pastries, a healthy soup and salad bar, and fresh sandwiches.

But it’s not just the food that has Omaha buzzing about Café 110. It’s Zeeck’s implementation of an electronic payment service called Square.

Similar to the Passbook app, which stores coupons, boarding passes, event tickets, and more on a smartphone, Square is the new-age system of business transaction around the country. Rather than using the traditional cash register, businesses that use Square can have their customers pay either by swiping the card through a reader attached to a portable device, like a smartphone or computer tablet, or through the Square Wallet app.

“[Square] keeps track of my inventory, taxes, gratuity, credit card statements—it has a whole library of my entire history that I have access to any time I need.” – Allan Zeeck, owner

With the Square Wallet app, customers can set up a user profile on a smartphone, linking their name, a photo, and their credit or debit card information. When it’s time to pay, all customers need to do is open the app and make a quick payment with the touch of a finger. Receipts are then sent directly to the customer via text or e-mail. The app also allows customers to pay with gift cards and coupons and keep track of business punch cards.

Zeeck, who began experimenting with Square four years ago and has been using it ever since, has nothing but praise for the technology. “The process is very efficient,” he says. “It keeps track of my inventory, taxes, gratuity, credit card statements—it has a whole library of my entire history that I have access to any time I need. It [also] lets me know what sells and what isn’t selling.” He adds that the best parts of using Square are that each swipe is only 2.75 percent with no additional fees and that the money is in his business account the next day.

Though he’s heard some mixed reviews about the Square technology at his café, Zeeck says overall, his customers have received it very positively. “People like that it’s so snazzy and modern. There’s no pen or stylus to deal with; you just use a finger and a phone…It’s easier to retain records of the purchase, too, so if there’s ever any kind of misunderstanding with a purchase, I have the ability to go back and refund without the pain of the bank.”

Zeeck knows there are other systems similar to Square available, but he’s certain that he wants to stick with Square. Down the road, he even hopes that his customers will be able to both order and purchase from their phones with Square. “You always worry about minimizing the personal communication with your customers, but I think as long as [Square] continues to progress at a rapid pace and continues being so efficient, I’ll keep using it.”

Café 110
1299 Farnam St. #110
402-932-4040
cafe110omaha.com

Strict Banking Requirements

Photography by Bill Sitzmann and Great Western Bank

With interest rates having been at all-time lows for over a year and forecast to remain at record lows for the foreseeable future, it’s likely that either you or someone you know has refinanced their home recently. But does the same hold true for commercial building owners? Have business owners and those with commercial leases been able to take advantage of such low rates? Have entrepreneurs seeking new loans been able to set their dreams in motion, even in these tough economic times?

According to Gary Grote, Omaha group president for Great Western Bank, while commercial loans may not have been impacted by the low rates as much as residential loans have, there still has been a significant effect in the commercial market.

“The difference between residential and commercial is that in the commercial loans…there may be pre-payment penalties that apply until the maturity day,” explains Grote. “So you can’t always just pick up the phone and…refinance on a whim like with a residential mortgage.” He does add that though it may not be as “easy” to refinance a commercial loan, “many people have already taken advantage of the low rates…and we continue to see opportunities.”

Craig Lefler, senior vice president and manager of commercial banking with Mutual of Omaha Bank, agrees with Grote, saying while there may be a few more obstacles for commercial loans to be refinanced, there are still ample opportunities for businesses to seek lower interest rates on existing loans. “A lot of commercial real estate loans are done by banks on a five-year type of basis and some of those, depending on the bank, may have a penalty for early payoff. That would certainly be a consideration for [when it comes to the] cost of refinancing the loan.”

“The difference between residential and commercial is that in the commercial loans…there may be pre-payment penalties that apply until the maturity day.” – Gary Grote, Great Western Bank

Both Grote and Lefler say that although rates are at historic lows and there are many opportunities available for commercial loans to be granted as well as refinanced, the process and underwriting standards are higher than ever.

“After the financial crisis, credit certainly tightened up and [banks] returned to more prudent, conventional underwriting standards,” says Grote.

Lefler agrees that there are more stringent standards and more in-depth analyses today than in the past. However, those are countered by the benefit of lower interest rates. “It’s a mixed bag,” he says.

Interest rates for commercial spaces are different than those for residential mortgages. Grote explains that the typical five-year loan originated from the trouble that the Savings and Loans went through in the 1980s. The S&Ls offered CDs for two to four years at fixed rates. They then would loan money at fixed rates for 10- or 15-year loans. “When the rates went up, they got burned because their cost of money increased but their loans were at a fixed rate.”

He shares that banks typically keep five-year commercial loans on their balance sheets while traditional home mortgages are sold off to other organizations.

“A lot of commercial real estate loans are done by banks on a five-year type of basis and…depending on the bank, may have a penalty for early payoff. That would certainly be a consideration for [when it comes to the] cost of refinancing the loan.” – Craig Lefler, Mutual of Omaha Bank

As another option, Grote says that some banks, such as Great Western, may offer certain clients 10– and 15-year fixed rates. But he says that this is a unique situation.

Thirdly, he shares that the Small Business Administration has a popular product called the SBA 504 Program, in which a portion of the loan allows the borrower to do a 10- or 20-year fixed rate. “So there are options out there, and it just kind of depends on the property and the borrower and where they’re at in their life cycle and what makes the most sense for them.”

Depending on whether the loan is for owner-occupied real estate or investor real estate, Grote explains that the lender will underwrite the occupant’s financial statements or the investor’s ability to rent space. Both men recommend that businesses have their financial records in order and ready to be submitted for review.

“Be organized and be able to quickly produce their financial statements in an organized fashion,” says Grote. “That helps banks respond quickly and be able to give good guidance and good answers.”

Lefler adds that, in addition to the financial records, the lender will also consider “the projection, going forward, of how the space will be used and ultimately, from the lender’s point of view, will the debts get repaid.

“My sense is that there is a feeling that banks are not willing to lend money on new business ventures and to projects like this, but I would say that this is not true,” says Lefler. “In our market, which is stable, banks play an active role in these spaces on a daily basis.”