The restaurant industry is considered one of the most important and successful industries in the world today. In the U.S., more than half of the population eats out at a restaurant at least once a week, according to USDA. Busier lifestyles, longer hours at work, and growing family responsibilities have led us to turn to restaurants to save time. And with life getting more and more complicated and schedules becoming more and more hectic, the growth in this market is expected to continue in the years to come. With this success, it’s no surprise that more aspiring entrepreneurs today are choosing food franchising or restaurant owning as their business.
However, while the restaurant industry may seem very rewarding, it can be challenging. This is particularly true at the beginning when you have to borrow money to fund your business. As you know, applying for a business loan is not that easy. In fact, almost 90 percent of small businesses applying for loans are getting declined by banks. The requirements are tough, and many lenders are becoming smarter and stricter every year. But there’s no need for you to get worried even if you’re a start-up. There are many options out there to help you obtain the loan that you need. And here’s how to get started:
Determine the required cost.
Everybody knows that opening a restaurant isn’t cheap. Even if you only plan on opening a small café, you need to prepare yourself for the cost, which usually range from $400,000 to $500,000. It could be lesser or higher than that – it depends on what type of restaurant you choose, the food you serve, how you serve it, the location of your business, the equipment you use, etc. Of course, that’s not to mention the amount that you’ll have to spend for the opening, including business permits, business license, insurance, advertising, and opening event. Before you start writing your proposal and find different loan options, you have to determine how much you’ll need first to open the business.
Create a solid business plan.
All loan programs require a solid business plan to be submitted when applying for a loan. The right business plan includes all the important details of your business, including financial statements, location of business, your experience in the industry, your goals and how you plan to achieve them, the amount of money you need and how you will use it, your marketing strategies, if there are backup plans, etc. The lenders want to know if you have the capability to run a successful business. A poorly written business plan can hurt your chances of getting a loan approval; so be sure it is well written and all important information are included before you submit it to the banks.
Do your research.
Keep in mind that not all banks and commercial lenders provide loans to all types of businesses. Most of them are picky when it comes to choosing which businesses to support, and only accept certain applications. So before you waste your time writing and sending applications, make sure that the lenders you’re considering provide loan for the type of business you’re planning to have.
Work with a commercial mortgage broker.
The process of applying for a property loan is very confusing, complicated, and time-consuming. Even if you’ve already been in the business for many years, you would still not want to go through it alone. If you want to lessen your load, hire a local mortgage broker. If you’re opening a restaurant business in Australia, for instance, get the service of a mortgage broker Melbourne. These professionals know the current market in your area. They also have a great understanding on how the process of getting a loan works; therefore, they can give you sound advice on what to do to secure financing. Most mortgage brokers are also acquainted with a lot of banks, which increases your chance of getting the loan that you need for your restaurant.