1. Have a Business Plan in Place
Whether this is your first or your fifth restaurant, you will need to have a business plan in place before seeking funding. Regardless of where you’re trying to garner capital, lenders are going to want to know that you have a solid plan that makes their investment worthwhile. Investors will need to see your plan to turn your new business into a profitable establishment.
2. Start with Family and Friends
Who knows how motivated you are more than your family and friends? Certainly not banks. This is why many budding restaurateurs start by asking friends and family for loans. This should be treated like any other loan, including having contracts and terms set out beforehand. Even if you’re only able to purchase your outdoor restaurant furniture or bar tables through this endeavor, you’re still saving money on potentially high interest loans from the bank.
3. Work Something Out with the Landlord
In many cases, restaurateurs don’t buy the property where their eatery will be located. Instead, they lease or rent a building. If this is your situation, it may be a good idea to make a deal with your landlord. By offering a portion of profits or equity in the restaurant, it may be possible to get monthly rent reduced. While this isn’t a typical way of financing a restaurant, anything that works is worth the effort.
4. Seek Help from the SBA
The Small Business Administration (SBA) of America is focused on helping entrepreneurs become successful. When it comes to restaurants, the SBA knows that buying bar tables, a prime location and commercial restaurant equipment is essential for success. That’s why they are willing to help business owners obtain loans.
Keep in mind that the SBA doesn’t directly provide loans, but they do work with both public and private lenders to secure guarantee loans. If you sought out a loan from a local bank and were refused, that lender might just grant the loan if the request is coming from the SBA. This is clearly an option worth looking into.
5. Utilize Credit Cards
While a traditional loan is a better option, having a business credit card can certainly give you an edge. Check local credit unions and small banks if you’re unable to secure a loan from larger institutions, but if you can’t get all the funding you need this way, a credit card can make up the difference. Avoid flashy offers such as “free frequent flier miles” and instead focus on finding a card with a low interest rate that you can actually pay off quickly.
Once revenue is flowing from the occupants of your bar tables and restaurant furniture, it becomes simpler to keep things going. Initial funding, however, will be the bulk of your challenge. Fortunately, countless restaurants have come before yours, and this means we know how to reach success. With the aforementioned tips, finding funding for your restaurant is a cinch.