If you’ve ever had a dream of opening your own restaurant, you probably know how expensive it can be. But did you know that there is financial help available? Restaurant loans are designed to help restaurateurs open and operate their restaurants. If you’re thinking of delving into the restaurant business, read on to find out more about these this type of business loan.
A restaurant loan, as the name suggests, is offered to those in the food business. This could be a restaurant in the traditional sense, a food truck, a bar, hotel, club, or other similar type of food-service business. The amount of the loan for which you will be eligible will depend on several factors, one of which will be the particular type of business you want to open. For example, a traditional restaurant will likely be eligible for more funds than a food truck.
If your business is already operational and you are looking for additional capital, such as to expand or renovate, several factors will be taken into account. Let’s look at each of these more closely:
How long have you been in business?
The restaurant business is very competitive, especially in a city like New York. The longer you have been around – the more staying power you have – the more likely you are to be successful in your loan application. Lenders want to know that you aren’t going to close tomorrow and default on your loan, so if you have a proven track record, you’re seen to be less of a loan risk.
What are your annual sales?
Regardless of how long you’ve been around, the numbers speak for themselves. If you have a solid revenue recod and can prove it, that will certainly weigh things in your favour when applying for a loan.
What is your credit score?
As with any loan (mortgage, car loan, etc.) your credit score plays a significant role in whether you’ll be granted a restaurant loan. As always, a lender will give higher priority to those borrowers who have a good credit score. They know you have a good track record of being responsible and they know you can pay back your loans. That’s the kind of person they want to loan money to.
Can you justify the loan?
Some lenders will want to know what you plan to do with the money you are seeking. To better your chances to be successful, go into your loan meeting with a clearly outlined plan for your loan. This will show a lender that you are serious and that you have a clear vision for what you will do with the funds.
Starting and running a business involves a lot of work – and a lot of money. Nearly everyone will require a little financial help to get the business up and running, and that’s where a restaurant loan comes in. If you go into the process with a clear idea of what you will do with the money, a good credit history, and a good reputation, there’s a very good chance you’ll be approved.
