Preparing for Your Restaurant Loan Interview
Getting a loan for a new business- any new business can be difficult. Getting a loan for a new restaurant can be even more difficult because restaurants traditionally have a high failure rate. So, how do you get the money for your dream restaurant? The most obvious place to start is with the bank.
Create an Awesome Business Plan
Begin by creating an awesome business plan. I mean, it really needs to knock their socks off. A business plan shows the bank you know what you are talking about and this isn’t some harebrained scheme you thought up over your morning cup of coffee. A great business plan (and that is the only kind you should give the bank) will show you have done your homework and that you understand the local market, competition and possible risks and gains.
Have Your Paperwork Ready
Once you’ve finished your business plan, there are a few other details to take care of before heading off to the bank. Make the loan officer’s job a little easier by showing up with as much paperwork as possible already completed. Along with a business plan, here are some other documents to include:
- Three Years of Personal Tax Returns: Tax returns show that you have a documented income and that you are a stable individual who can hold down a job. Tax returns also indicate that you aren’t about to take off with the bank's money if things get a little sticky. The loan officer will need to keep your tax returns, so be sure to make a couple of copies of each one.
- Personal Financial Statement: A personal financial statement is a place to list all your assets and all of your liabilities (debts). Assets include things such as real estate, automobiles, and life insurance policies along with their estimated value. Liabilities, or debts, include mortgages, student loans, personal loans, auto loans, etc. You should also list all of your bank accounts and their balances at the time of preparation. Don’t bother trying to pad the numbers on your assets, or lie about how much you owe. The bank is going to run extensive checks on you, and any glaring discrepancies will only make you look careless or dishonest, neither of which will help you get a loan.
- Explanation of Any Criminal Record: Character is a major influence on a banks decision to issue a new business loan. They look for people who have a steady employment history, own their home, or have resided in the same place for a long time. They also look at any criminal history. If you did commit a past crime, no matter how minor (letting off firecrackers outside your college dorm room, for example) give a detailed explanation of what happened, and be clear that it won’t happen again.
- Credit Report: You don’t need to provide the bank with a copy of your credit report since they will run their own. However, it is a good idea to familiarize yourself with the information on the report. If you have a low score due to late payments or collection agencies, have a detailed explanation ready for the bank, preferably in writing. Be honest about the reason for any late payments or other discrepancies. For example, if you had a tight month due to an illness, or if you went through a divorce and got behind on your bills, write out a brief explanation. A low credit score isn’t going to endear you to the bank, but they may overlook it if you have other qualities (like collateral). Checking over your credit report ahead of time also allows you to look for any mistakes or possible identity theft. If you have anyone cosigning the loan with you, such as a spouse or business partner, they should complete all the above paperwork as well.
More Tips for Meeting With the Bank
Call and make an appointment. Loan officers are busy, so don’t just show up at their door and expect to be ushered in. Als,o make sure all your papers are organized neatly and store them in either a folder or small binder that the loan officer may keep. Finally, put your contact information on all your paperwork.
Showing up prepared to your bank interview will let your loan officer know that you are serious about opening a new restaurant. By making their job as easy as possible, you increase the likelihood of loan approval.