It’s not easy getting money you need to open a restaurant these days but there are many options available. Here are 8 options to explore when looking to finance a new restaurant.
Has it been your lifelong dream of opening a restaurant and you are ready to put in the work rather than fantasize about it all day? If the answer is yes, you probably have a vision on the ideal location, how the décor will look like, the food and drinks to serve and all the nifty gritty details that will make your food establishment a top choice for many people who like to eat out.
The only barrier to realizing your dream, however, may be financing. You may already know that start-ups require quite a bit of money that you may not have at the moment. It should not deter you from realizing your entrepreneurship dreams as there are various options on ways to get financing to start a new restaurant.
8 Ways to Get Financing to Start A New Restaurant
Here are 8 ways to get financing to start a new restaurant:
1. Look for Investors or Partners
One of the means on how to find funding is to work with high net-worth individuals who can raise the cash without too much trouble. Before you go out searching for people who may be willing to buy into your dream, you must come up with a convincing business plan.
When potential partners or investors go through the program, they should be able to see that they will be pumping in money into a worthy cause that will give them back their investment sooner rather than later.
2. Ask Friends and Family for Financial Help
If you have supportive relatives and friends, you can go ahead use them as a source for getting money to open a restaurant. Politely ask for contributions to help you start your food joint. You should not consider this as charity as you must have written agreements on how and when you plan to repay them.
It means that you must carry out thorough research when dealing with the money side of the business calculating the projections well, to set realistic payment terms where everyone will be happy.
3. Commercial Loans
Getting a restaurant credit from commercial banks is possible. They are an ideal option especially for people who have experience running businesses before. Banks are strict in regards to lending money, as they look for good credit history, collateral, and capital before they consider a person to be an ideal candidate for the loan.
Federal government programs like the small business administration offer money to banks and credit unions to lend to small business entrepreneurs. Be sure to do your homework diligently when looking to take advantage of such loans to get one that will work for you and not lead you deeper into debt.
4. Targeted Funds
You can also get the money you need to take your restaurant from the ground from targeted grants and loans that are set aside for specific populations. These could be veterans, women, ethnic minorities, individuals with disabilities, and women, etc. Federal, state, and local agencies usually have funds in various geographical regions.
You can find the information online so that you know if you qualify for such funds and how to go about applying to get the money. Worth noting is that there are small business incubators which may be public or private in numerous communities.
These frequently provide education and assistance to new business owners. Some also go ahead to offer small loans or extend a hand with assessing loans.
5. Crowd Funding
You may be surprised that there may be people out there who would like to offer a hand with your project of opening a new restaurant. With this option, you will be approaching general public for small amounts of money in exchange for rewards and perks.
Even though one person may not be in a position to give you much, you can get a lot of cash when many people contribute. It can also work as a great marketing tool where you can get clients before you even open shop.
There are numerous platforms you can benefit from such as foodstart.com that is just for the food and beverage industry.
6. Personal Assets and Savings
Among the best options for ways to finance a new restaurant is to spend your savings. It is an attractive option because it means that you will not fall into debt. In case your savings may not be enough, you can sell some assets to raise the balance.
You can then replace the items once you start enjoying the profits from the business. You can also treat this as a regular financial transaction where you get to pay yourself with interest. Do not inject all the savings into your entity as it is crucial to set aside some money that can help you out during emergencies.
7. Home Equity Loans
Among the business financing options for restaurant owners is to use a home equity loan where you can use your house as collateral for the upcoming restaurant. Use this option very carefully, because it would be sad to lose both your business and home at the same time.
8. Your Future Landlord
If you are planning to rent premises for your new business, your landlord could be a great option for restaurant financing. Approach him/her with your business proposal and ask them if they are ready to strike a deal.
If you find a kind one, you may be able to stay in their spot rent free for a couple of months as your restaurants gets its bearings in exchange for a percentage of the returns or equity. In most scenarios, however, property owners agree to reduce the rent amount reducing the cash to look for when starting your hustle.
Never think for a second that without money it is not possible to open a new restaurant. Instead, explore various financing options for restaurants diligently going through the pros and cons of each to identify the one that will work out best for your situation.
From here, be sure to put in a lot of effort and run an excellent business so that it can return the start-up costs as soon as possible and you can begin enjoying the profits.