How to Get Financing For a New Restaurant
Many people dream of opening a new restaurant. However, finding enough financing for a new restaurant can be a major stumbling block for many people. To help financing go more smoothly, it is important to have as much of your personal financial information in order before you go to the bank. If you have any blemishes on your credit, it is also equally important to have an explanation ready, in writing. For those serious about opening a restaurant, here are some tips to get you started.
Choose a Restaurant Theme or Concept
It is probably the easiest step when opening a new restaurant. Usually, the restaurant concept or theme is the first thing people think about when they get the idea to open a restaurant. As you flesh out your theme, you need to choose a restaurant name, write a restaurant menu, and start to think about the interior design of your dining room and bar. What will your restaurant look like? What is it about your restaurant that will invite customers to eat there, rather than at the competition’s place?
Select a Location
It’s all about location when it comes to successful restaurants. Before you choose a location for a new restaurant, consider the traffic, either on foot or by car. Consider the size of the space, is it really big enough to accommodate the design of your restaurant? And lastly, consider the rent. Many times you can negotiate a lease with a prospective landlord.
Create a Business Plan
A restaurant business plan is like a blueprint of how you are going to open your restaurant and how you plan to be profitable during the first couple of years (or until the loan is paid off) and beyond. No bank or small business bureau is going to consider loaning you money without a well thought out business plan.
Prepare for Your Bank Interview
Before you go to the bank or small business bureau, there are a few things you can do to get ready for your initial interview. Along with your restaurant business plan, you should do your homework about the area where you want to open your restaurant.
Some potential restaurant owners seek out private investors instead of, or in addition to, small business loans. Landlords may pro-rate rent in exchange for a share of the restaurant. As you seek investors, think carefully before soliciting 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 all that it is cracked up to be.
Be Prepared to Sign on the Dotted Line
Even with a stellar business plan, fabulous restaurant location, and private investors, you may need to put up collateral. Banks might require you to use your personal property (like your house) as collateral for a business loan. Think long and hard before you sign away personal assets for your business.
What Is Needed
- Patience and lots of it.
- People skills
- Did I mention patience and persistence?