Restaurant Funding

Funding of a restaurant

Today’s younger generations see eating out very much as a necessity, and not as a luxury that has been seen for years, and it’s not like this college debt filled millennials just got a lot of money. What this does mean for this ever-evolving restaurateur industry is that there is revolution coming and if a restaurant owner wants to always see increased profitability in this dynamic environment, they need to adapt to the changes that are generating consumer demands as well as expectations. Also, the restaurant industry now is beginning to be heavily influenced with the newest generation – the Generation Z before was at the age of choosing their preferences and forming their own brand loyalties.

For people in the cut-throat restaurant industry to begin embracing not only Millennials, the industry will also have to take a closer look when incorporating technology into its business, if any restaurant owner thinks Millennials technology is driven, they need to wait for the wave to start shifting consumers and their preferences.

Restaurants are costly enough.

We have to pay for staff, position rents, equipment, lodging, insurance and other expenses. But obviously those are the continuing costs. There are additional capital costs involved in building the restaurant, investing in business interiors like nice tables and creative digital signage, as well as marketing and supporting the new restaurant business.

Unfortunately, obtaining a restaurant loan is almost as complicated as running the company itself. Because many loan companies already know that restaurants have high start-up costs and a higher risk of failure, they are very stringent in terms of eligibility and lending. Nonetheless, there are plenty of options you may want to make in getting your restaurant financed and off the ground.

Restaurant Startup Costs

Asking a bank to invest a huge amount of money into you is overwhelming and the more knowledge you’re armed with, the better off you’ll be. When you decide to persuade a lender to go ahead with your plan, be sure to bear in mind a few figures so you know how much you need. Your overall financing (personal funds and loans) would have to cover the following costs: repairs, your room may require only a fresh coat of paint, or it may need to be completely fitted with sufficient gas, water, and electrical lines.

Kitchen equipment – Make kitchen equipment one of the first things agreed at your loan meeting to ensure the expenses are covered, just in case you are not accepted for the amount you originally intended. The cost of your new commercial kitchen varies according to the size of your restaurant and kitchen.

Starting stock and inventory – Create a sample menu and estimate your restaurant’s food inventory costs. The inventory will also include plates, flatware, serving utensils, furniture and linens as well as food storage.

Working capital – You have to provide some funds at the beginning to cover running costs because your restaurant has more expenses than profits. Working capital is the sum of money that’s needed to keep the restaurant going everyday. Ideally, you’ll be budgeting 6–12 months of running expenses to tide you over before the restaurant is profitable.

Marketing capital – A lot of publicity happens by word of mouth for a new restaurant. Though, if you want to finance a publicity campaign to get the word out, please be sure to account for those expenses in your overall loan application.

Good Credit Does Go A Long Way

If you consider interest rates for a loan, it’s truly amazing how much money you could earn in the number of years spent giving it back.

You could save over tens of thousands in dollars for a long term loan by increasing your credit score and reducing your interest rates. Cleaning up your account before you try to fund your new restaurant is certainly worth the time and cost.

Some of the types of loans that we offer is for Financing Equipment Loans

Depending on the kind of restaurant company that you want to open, you’ll need expensive equipment (including ovens, freezers, etc.) to buy and keep the business going. For many restaurants that are now starting out or need additional funds to pay towards any issues that occur, such loans are also very attainable.

Advantages of Equipment Funding Loans:

Get access to the funds quicker than a traditional loan, it’s also a very good choice if you hold a poor credit rating as banks see this equipment as collateral just in case you can’t afford the payments (you need to keep in mind about not paying means you’re going to risk the equipment your restaurant uses to run on). Restaurant Funding is easy with USA Funding Pros, so give us a call for a simple guide and assistance.

Pros of Equipment Lending Loans:

• There is only a small amount of paperwork required
• Instead of your vehicle, home, etc., the equipment serves as collateral.

Cons of Equipment Lending Loans:

• If you do find yourself in a position where you can not afford payments, then the equipment running your restaurant business may be taken away.
• Your business will have to depreciate property, meaning you may not have the ability to subtract the entire expense every year.

Final Thoughts on why is finance so hard to find?

Firstly, it is not an easy job to open a new restaurant. You have to have a fantastic menu and outstanding customer service when reducing your costs.

Second, CNBC reports that nearly 60 percent of new restaurants fail in their first year, and by their fifth year, nearly 80 percent are out of business.

They didn’t receive their support for several of them because they didn’t know exactly what their needs were. Before they could make a profit, they burned off steam.