Restaurants, bars and night clubs make for interesting business opportunities; interesting because of the convergence of dozens of factors that can go into making a restaurant successful and popular with the market. Also, the fact that not all of these factors are under the manager’s control makes restaurant management an interesting yet challenging endeavor.
However, before you even reach this point, you will need to sort out the financing puzzles for your restaurant. Premium range restaurants can be capital intensive, and considering the necessity as well as the whopping costs of interior designing for swanky restaurant, securing a loan could well be a trouble. We have culled together some concrete tips for you to follow in order to give yourself better chances of securing an affordable loan for your restaurant business.
Organize your financial documents
There are reasons for you to be happy about having a decent credit score or good payment history, as you can arrange all the relevant documents are create a bulky pile of papers that represents your loan-worthiness. Such documents invariably help you cause by connoting a sense of professionalism and credit worthiness to the lending institution. Also, you don’t want to lose any time when you are asked to produce any financial document. Also, banks normally expect you to produce a credit report card when you appear for your interview for being granted a loan to start your new restaurant. In addition to all this, you would do well to have a credit report card ready for your spouse as well, as there are many banks out there that check credit histories of the loan requester’s spouse as well.
Have 15-20% of the desired amount arranged in cash
Don’t let this be a shocker for you; most lending institutions will expect you to have 15-20% of the loan amount in cash. This percentage could shoot up in case you are pitching for massive loan amounts. If you are absolutely cash strapped and have no way to accumulate the requisite percentage of cash, then you might want to consider community funding services that help you arrange the cash required to have the loan process move forward with community members providing contributions.
Have a concrete business plan that does the talking
Expect the bank officials to penetrate deep into the business plan you show them. Expect a blitzkrieg of questions, the answers to which could decide as to whether or not you get the desired loan. This makes a detailed and comprehensive business plan absolutely instrumental for your restaurant’s funding requirements. Be as detailed as possible and try to impress the officials with the market insights you outline in the document.
Let investors fund your restaurant in addition to the bank
If you find managing massive capital requirements tough, here’s a tip that will sail you across the treacherous waters. You can reduce the loan amount you seek from a bank and then meet the difference with what’s required for your business by inviting investors. Restaurant business is not something that investors ignore, and that’s where you can leverage your unique idea and concepts to attract investors. Moreover, you can also try to make the landlord for the restaurant location’s plot agree to an arrangement wherein the rent gets pro-rated in exchange of share in the restaurant. Not only will such an arrangement make your capital requirements easily manageable, but will also look good on your business plan when you meet the bank officials.
