Opening, owning, and running a restaurant is a business that many people dream of. The majority of them don’t know that it could be one of the most demanding and difficult businesses out there. It all starts with restaurant financing.

Whether it’s a fast-food outlet or a fine restaurant, one location or a dozen – one thing always should be on your mind…

Finding enough restaurant financing can be a major setback for many people. It is important to have as much of your personal financial information in order, before you go to the bank.

You can’t just walk in and apply for a loan with your personal credit scores in a mess.

But with the right restaurant funding options, they can be opened easily and/or should be able to overpass hard times, allowing them to keep their doors open long after the loan is repaid.

Here’s what you can do:

Restaurateur News - Restaurant Financing budget
Source: Financingforrestaurant

Step 1: Choose the type/concept of your restaurant

We start with the easiest step of all.

This is probably among the first things you think of when you are looking to open a restaurant.

There are many restaurant types that require little capital investment or you can go big and open a theme restaurant that will appeal to a certain audience.

Whatever you choose, the next thing you should do is to choose a name and think of a great restaurant menu.

What does differentiate your restaurant from others?
Why should people choose to eat at your place?
How is your menu pricing going to look like? …

These are the questions that you should be able to answer easily before engaging the next step of your restaurant financing.

Step 2: Think/Search for a Location

Find a great location for your business!

That’s it. 

One of the very basics of restaurant management is to find a location that will have a great impact on your sales.

Busy neighborhoods, business centers, crowded market place … there is no exact rule about it. It is only important that your location fits your restaurant concept and that you are able to drive customers to your place.

Definitely, consider the traffic, space, parking, rent and all other things that may be important.

Step 3: Draft a Business Plan

A business plan is basically a blueprint for your restaurant financing.

The plan is a ground stone for your restaurant concept. You should try to work out the type of the restaurant around the business plan.

This is showing any potential investor how are you planning to attract customers, generate money and stay profitable during time.

A basic business plan includes an executive summary, company description, market analysis, profit and loss statement, and start up budget.

Great business plan (the ones that banks look for) will show you have done your homework and that you understand the local market, competition and possible risks and gains.

Restaurateur News - Restaurant Financing Plan
Source: Mobe

As part of your business plan, you need to decide how much you are comfortable borrowing.

Also, what kind of collateral do you have, versus what collateral are you comfortable with.

No bank or small business bureau is going to even consider loaning you money without a well thought out business plan.

Step 4: Restaurant Financing Options

Now, on to the big point…

What are the restaurant financing options you can look for when opening your place?


One place you can always turn to is the bank.

But before you go to the bank, you should definitely prepare for the interview.

Along with your restaurant business plan, you should do your homework about the area where you want to open your restaurant.

Private Investors.

Some potential restaurant owners seek out private restaurant financing options instead of, (or in addition to) small business loans.

As you seek investors, think carefully before asking friends or family. Money can change the dynamic of a relationship, and you may find that going into business with a friend or family member may not be such a good idea after all.

Restaurateur News - Restaurant Financing Options
Source: Foodservicementors

Small Business Administration.

Known as the arm of the US government tasked with assisting small businesses, the SBA does not actually loan out its own money.

Instead, it has a huge pool of private lenders, which are backing up a large portion of the capital with their own guarantee, making it less risky for private lenders in case the restaurant owner’s default.

Short-Term Loans or Lines of Credit.

When your restaurant needs funds fast and can’t qualify for any other program, another good option to consider is a short-term loan or line of credit from an online lender.

These types of loans lets you can access the funds quickly (if approved).

These shorter-term products have less stringent credit requirements, but the catch is that these options can get very pricey.

Some will even have daily or weekly payments, opposed to the traditional monthly payments, which could put more stress on your cash flow.

If you’re considering a restaurant financing option like this, make sure your business can afford it and make sure you have a clear plan to pay back the money.

Also be sure to ask your lender what are yours early repayment options, as some short-term lenders won’t let you pass that without a fee.



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