Secure Financing for Your Restaurant
Starting up a restaurant is a dream of many people. Like most businesses, failure to plan adequately means planning to fail. The inevitable factor is failure and debt. In this article, we will be discussing about restaurant financing in Canada.
Owning and running a restaurant successfully involves mapping out a clear strategy. There are two major processes business owners are to be concerned with here; Starting up a business and sustaining it. You can’t start-up a restaurant without planning on how to sustain it. It simply means that in a matter of weeks or months, it is up for a shut down. That is the reason behind most businesses failure. Business owners only think of starting, rather than focusing more on how to sustain it. The difficult part is not starting, but being able to sustain it for a long time. Failure is something every aspiring restaurant owner will like to avoid.
Starting up and sustaining a restaurant is tedious. 60% of new restaurants fail within few months of opening. A further 80% leave the business by their third to fifth year. However, one important factor connects these two major processes is finance. How do you secure financing for your restaurant? If you understand your financial needs better, and the power of restaurant financing, you are more likely to succeed.
Restaurant finance is the biggest problem restaurant owners face. How a restaurant thrives depend majorly on your financing. That is because a lot of planning is involved. From budgeting to choice of financial lender, and to the type of loan that you need. If you are just starting out, you need to be inventive with your financing strategy because you may likely not qualify for taking a business loan from banks. They would like to see your business track records and business documents that will prove you have been in the business.
If you are looking towards expansion and are opting for a lender, you must make sure you do some background research, and check their BBB rating (Better Business Bureau). It is important you develop a business plan and be certain how much you think you will be earning to be able to repay your loan without adverse effect on your business.
Most resraurant businesses fail, because owners under finance their businesses. Restaurant financing is your power and road to your success. You will need to spend on many things to keep your restaurant up and running. You will need to buy equipment, pay staff, and run some promotions to attract customers. You will need to pay for leasing as well if the property is not yours.
Funding Options for Restaurants
There are quite a number of funding options for restaurants in Canada.
1. Loans From Banks
Bank loan is the most common way of financing a business. For restaurant owners who are looking to expand their business, this method may be the best restaurant financing in Canada. However, most of these banks are skeptical lending to restaurant owners because of their high rate of failure. So, discuss your options carefully with the bank officials.
2. Crowd Funding
There are many community or crowd funding forums and sites that cater for the financial needs of small businesses like restaurants. These crowd funding sites comprises of friends, families, customers, general public that contribute small amount of money, based on your request.
3. Personal Savings
If you don’t want to deal with all the bustle and hustle of paper work, accured interests, and be in debts, you can use your savings to finance your restaurant.
Its the best way to avoid going into debts, but has its downsides. The problem is, you might not save sufficiently to fund your restaurant adequately, which is awful. Also, you wouldn’t want to use all your savings to start-up a business. You might need to set aside some for emergencies, and personal upkeep. However, you can use your personal savings and combine it with another funding option.
4. Home Equity
This is another option for financing your restaurant. This funding option simply means using your home as a collateral for your business. This option is usually not advisable because should you miss out on paying at when due, you forfeit your house and lose your restaurant.
Whereas you can’t find a more suitable option to finance your business, you can go finding investors to fund your restaurant.
Highly-rich investors, who are looking for businesses to invest in can help you invest in your restaurant. All you have to do is pay it back at an agreed time and ensure you will earn the money to do so. Otherwise, you may end up losing your restaurant to such a person.
6. Loans From Family
You can ask for loans from your family and friends, if they agree to your restaurant proposal. This is easily the most accessible type of loan.
They are investing in your business because they know you and believe in your business plan. You need to be cautious so that you don’t jeopardize the relationship. Write everything out on paper and ensure all parties agree to the terms.
7. Small Business Administration Loans (SBA)
SBA ensures minimal risk for lenders such as banks and business owners, who wants to access capital. This means that your bank bear the risk of your restaurant. SBA work with lenders to provide business owners loans to cater for their businesses.
It isn’t difficult to find the right restaurant financing option for your restaurant, if you understand your financial needs and security. We have listed a good number of funding options for restaurants and other small businesses. The costs of starting up and running a restaurant can be overwhelming. So, you need to ensure you have the finances onboard. Do ensure you stick to deadline and pay up your loans. These are what you should know concerning restaurant finance