Financing your restaurant

Before you get too involved with starting a restaurant, you need to understand a few key concepts in regard to financing.

Do you have the funds in cash yourself to open your own restaurant? Most or at least many people do not and must rely on financial assistance to get the ball rolling. If you are going to need some financial help, let's take a look at where to find the financing for your dream restaurant.

Banks
     Banks are typically very large institutions and they do have a lot of money so, you may think that the first place to go would be a bank, right? Understand that banks don't want to be in the restaurant industry and most restaurants fail within the first 3-5 years so getting a bank to lend you money for your start up is probably the most difficult way to go. Oftentimes, banks are also so large that they may be too busy to get to know each of their customers as well as their corporate offices aren't located in your town or city and all the paperwork and decision making could happen at the corporate office. That's not always the case though and many banks are trying harder these days to get more in touch with their customers.
     If you already do business with a large bank, keep your accounts current, up to date, pay all your loans on time and make friends with your banker. Don't lose hope and think that there's no way you can do this without a bank, there are other options and you just might end up with a bank after all.

Private Financing
     There are private financing individuals or companies that lend money to start up businesses and this could be a viable option for you. Some of the best places
to find these people are through your personal networking, friends and connections. You can also check out the local newspapers to see if you can find someone that is reputable and listing themselves as private financiers.
          A word of caution here: never give your personal financial information to someone that you find in the paper or online without doing your homework. Find out all you can about them first and also ask around, check the Better Business Bureau for information on the person or company as well.
     Oftentimes, a family member can end up to be your private financier if they trust you and are willing to make an investment in you. Avoid getting into family disputes if you think a family member can help you but, they say they can't! None of us truly know someones financial obligations and they don't need to share that with you.

Credit Unions
     Since credit unions are very similar to banks, locally owned and operated and smaller they may be much more willing to assist you in your restaurant plan. One of the best things you can do is to develop a relationship with the bank manager while you do your regular banking business with them. Make a point to stop in often, say hello, keep your accounts in good standing and when you're ready to discuss financing your restaurant you'll be much more confident to do so with a credit union loan officer.

Small Business Association
     You'll want to definitely take a look at your local SBA office by either making an appointment to discuss what is required of them for a financial loan or at least get the ball rolling by checking them out online. The SBA has funds to loan and with the right business plan, this could be the way to finance your start up restaurant.

Savings Account
     Start your own business savings account right away if you haven't already done so. Make sure to add regular contributions to this account and don't touch it! That's the hard part but, if you really do want your own restaurant no matter where you end up getting financing from, they will want to see your own contribution towards your business. You wouldn't want to help someone that isn't already helping themselves and neither will any bank, credit union, family member or other private financier. You may need up to 40% of your own funds to make your restaurant dream come true, so start saving now!
     Get a second job if need be and put all those extra funds into your dream business account (that will someday be realized!) and watch it grow. Every little bit adds up and if you don't touch it, it will grow to where you need it to be.

     Use these tips to start to save money fast!

This is the starting point for financing your restaurant and we'll discuss them more later. The next steps should probably be to get your own personal financial paperwork and your business plan in place so those will be the next successful restaurant tips we discuss. Stay tuned and thanks for reading. We're sure we can help you to have a successful restaurant by taking it one step at a time.