How To Secure Financing For A Restaurant Business

Venturing into the catering business is an ambitious project, which requires a lot of preparation and, above all, a solid restaurant finance option. The financing of a restaurant is usually done with a mixture of debt and equity. Banks and credit institutions offer different instruments, the duration of which is adapted to the types of assets to be financed.

Regarding the bank loan for restaurants, it should be noted that the banks check the viability of projects and the solvency of project holders. Many entrepreneurs embark on the creation of a restaurant without any experience in the sector. To reassure banks, it is advisable to do an internship or specialised training in addition to the mandatory training to obtain a license to operate the eatery.

A personal contribution corresponds to the amount that you can raise from your pocket or by joining hands with several partners. Banks generally require that the personal contribution represents at least 30 percent of the investment.

The exact percentage will depend on several criteria:

– The amount of funding required
– Viability of the project
– Applicant’s professional experience
– Credit history

Personal savings

In most cases, personal savings are not always sufficient to provide the amount of money required to secure restaurant finance. When this is the case, you must then seek to supplement this amount with other sources. On the other hand, love money refers to the money invested by close people: family and friends.

The advantage of this form of investment is that it is often easier and faster to obtain. Your loved ones know you and trust your abilities, which is not necessarily the case with your banker. Love money, however, has two disadvantages: the sums collected are sometimes very small (a few hundred dollars per person) and this can cause tension, especially in case of bankruptcy because you will have to announce to your relatives that you have lost their money.

Crowdfunding for restaurants

Crowdfunding is a very effective financing method for restaurants. The idea is to collect funds from individuals via a crowdfunding platform (Foodraising.com and Ulule.com). It is up to you to choose what you grant to funders in return for their participation. However, if this is the first time you start a business, you may not know the different types of incentives.