Toast Inc. was awarded a Valuation of $ 2.7 billion this year by creating software used by tens of thousands of restaurants. Now, the data the Boston-based company has collected on these restaurants could generate new revenue.
The company is launching a program called Toast Capital that will allow some customers to borrow up to $ 250,000 for kitchen equipment, renovations or other expenses. In an example of how information may become commonplace in the digital age, Toast plans to earn interest on loans without investing his own money.
Instead, a business partner – Utah-based WebBank – will provide the funding. The contribution from Toast, whose software powers sales and payroll transactions, will provide insight into the famous restaurant industry – insight that can help predict which potential borrowers would be sufficiently successful in paying off their loans and which would default.
Toast and WebBank will share the profits from the interest payments on the loans.
Toast’s commercial director, Tim Barash, said the company has developed software features that go beyond accounting to help restaurants increase their income and “to do that we had to determine their health by first place”.
“So,” he added, “we put a lot of that experience and know-how to use with the dataset we have to determine what makes a good, solid and healthy restaurant. “
Barash said Toast Capital’s loans will be short-term, typically repaid in nine months. He declined to say what the interest rates will be.
Mary Zeven, director of the graduate program in banking and financial law at Boston University Law School, said “a partnership with a bank in Utah, where Utah has loose restrictions on wear, will allow higher interest rates than a Massachusetts bank. “
Howell Jackson, a Harvard Law School professor specializing in financial regulation and consumer protection, added that it was “standard practice” for companies that run loan programs to partner with banks in the Utah for this reason.
Barash said Toast “had just sought to partner with banks that are already funding other programs like this.”
He said one of the benefits Toast Capital will provide to restaurants is a variable reimbursement structure. Rather than paying a fixed amount each month, restaurants will pay a percentage of credit card sales, processed by the Toast software. Payments will therefore be lower in the slowdown months than in the busy months.
Barash said Toast tested the concept of lending with around $ 20 million of his own money before partnering with WebBank. The new deal with the bank allows Toast to direct its significant venture capital to other uses.
Private investors have invested around $ 500 million in the company since its inception in 2013, according to Crunchbase investment tracker. Toast raised $ 250 million in a single round in April and says BostInno when he planned to hire an additional 1,000 people by the end of the year.
Barash said the company has already reached that milestone, bringing its workforce to around 2,500, half of which are in Boston.