Good news! In this post, we are going to take you through all you need to know to apply for a restaurant startup loan and get started with your business.
Without further ado, let’s discuss some of the restaurant startup costs you will likely incur:
Restaurant Startup Costs You Are Likely to Incur
Honestly, it’s quite challenging to convince the lenders to offer you a loan if you don’t know the amount you need.
It is therefore wise to have a draft of where you calculate the startup costs, from where you can figure out how much you’ll need.
In your case, you want to start a restaurant business, so below are a few startup costs you will likely incur:
Restaurant Insurance: This is a coverage that’s meant to cover your restaurant against any losses or damages that may arise during your restaurant activities.
Your Staff’s Wages and Benefits: You will have to employ people who will help you manage the restaurant – from cooks to cashiers who’ll be receiving payments.
License fees: The local government will require you to have a business permit to enable you to operate your business and pay taxes.
Kitchen Equipment: Obviously, you’ll need kitchen equipment like utensils to operate a restaurant business. These equipment require some money, so it’s good to put them in your budget.
Stock and inventory: Because it’s a restaurant business, you’ll need food stock to start operating your business. Make sure you include the stock in your budget.
Commercial Lease: Definitely, you are going to require a space to rent your business, and it’s not going to cost less. Include it in your budget as it is one of the most critical expenses you’ll most likely incur.
Working capital: You will need some funds to keep your restaurant running, for example, bed bug infestation may need some capital.
The above startup costs are just examples. So, don’t limit yourself – make your list as long as possible and make sure you have covered every expense that you’ll be most likely to incur.
Now that you have got the hang of how much you will need, let’s look at some of the options available for you:
Types of Restaurant Loans You Can Apply
1. Traditional Commercial Loan
Applying for loans won’t give you sleepless nights if you have a good credit score. Therefore, make sure you know your credit score before you decide you want to apply for a loan. Besides knowing your credit score, you’ll need to be a little patient because you’ll have to wait for up to six months to receive your loan. In case you are already approved by your bank, good for you because you can secure lower interest rates; which means you will be paying fair monthly payments.
You will also have the option to either choose between long-term loans or short-term loans. While you may consider long-term loans for your restaurant business, it’s not the best idea because there are unknown factors when you are just starting a business – maybe the market could not do well, or something unforeseen may happen.
Lastly, there is a need to choose wisely from where you will be getting your loan. Well-established banks are perceived to be the best, but it’s the opposite – small banks are always willing to create a relationship with you, and they understand the small markets well as compared to the big banks.
2. Small Business Loans
If your traditional bank rejected you, you could still secure SBA loans from myinstantoffer lending club. Small business loans are funded by a government agency that supports and protects small business owners’ interests. The agency works with banks as well as other financial lending institutions to help small business owners to obtain loans.
The SBA has tons of funding programs in place, though their guaranteed loan programs are specifically for restaurants. Through the programs, guidelines are set, which are then made aware to borrowers who wish to take a loan. To give you some insight, one of the guidelines the SBA puts in place is the guaranteed repayment of loans – which is to eliminate potential risks while also making it easy for small business owners to access the loans.
Usually, a good credit score will save you a lot, for example, if you have a credit borderline of more than 650, then you stand a better chance of securing a loan. The best of all is that small business loans offer low-interest rates, so there is no cause of alarm.
You have everything you need to apply for a business loan for your restaurant. It all depends on your credit score, whether or not you know how much you need.
Besides, you have loan options that you can choose from. Just make sure you have carefully compared the interest rates and decided on the one that’s the best fit for your business.