3 Tips for Financing Your Restaurant
After years of honing your skills to become a top-notch chef, you’re now ready to fulfill your dreams of being a restauranteur. Many people dream of owning a restaurant. However, they come to a halt when they realize the day-to-day costs that come with the venture. Perhaps, they lack access to the correct information that informs them of various financing options available to restaurant owners.
If you’re planning to start a restaurant business, this article offers three essential tips for financing your restaurant. In the end, you’ll understand the types of financing available and the payment conditions they come.
1. Type of Finance
There are many reasons why restaurants require financing in the first place. Common causes include starting a new business, renovating an old space, investing in new equipment, rebranding, and opening a new branch. At the end of the day, your reason determines the type of finance you’ll receive.
For instance, if you want to acquire new equipment like a commercial regulator or commercial freezer (like Atosa refrigerators), you might be better off purchasing from companies like The Restaurant Warehouse. They allow you to finance the equipment you need with a low monthly down payment. Even better is that they sell affordable units (both used and new) that come with free shipping.
Some pieces of equipment provided by The Restaurant Warehouse include chest freezers, shelves, ice machines, and prep tables. So, don’t hesitate to consider this method as a solution to equipment financing.
Asides from this retailer, there are many other lenders and financial institutions that offer multiple funding sources with flexible financing options without asking for any down payment or collateral. This way, restaurant owners can quickly meet their financing needs immediately. This also allows under-capitalized restaurants to retain a hedge against inflation since the monthly payment is made in dollars in spite of the rise in equipment prices.
2. Deal with reputable money lenders.
You can significantly minimize risk when getting a loan by choosing to deal with only reputable lenders. A quick Google search of “hard money lenders near me” will reveal the nearest and most reputable companies. No doubt, you want a private lending company that’s fast, reliable, and friendly. Their goal shouldn’t be solely to flip loans and make above-market returns but also to deliver security and safety features that no traditional financing institution possesses in today’s market.
Additionally, a suitable lender and lending partner should be able to offer around 70% LTV on average while making a higher LTV, ARV-based loan term available to a borrower. So be a smart loan applicant and choose your money loan company or private investor wisely.
3. Get your finances in order.
Last but not least, get your finances in order. Before you tender in your financial documents to a private money lender, make sure they’re accurate and up to date. Essential documents to have at hand include your balance sheet and income statement, as this will show how strong your restaurant’s financial position is. It’s also proof of your effective skills. A robust understanding of these documents will also help you defend your reason for requesting a loan.
Additionally, when scouting for a private lender or investor, make sure that you pay attention to their interest rates and fees for an intending borrower and ensure that you meet their minimum requirements to avoid wasting your time and energy. Remember, the more prepared you are when requesting financing, the higher your chances of getting an investor.
All in all, the best restaurant financing options will largely depend on your individual needs as a restauranteur. However, the above tips will help ensure a swift and efficient process.