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Tips on Financing A Restaurant Business

A number of options are available to finance a restaurant business. Obviously the more restaurant skills that a potential owner possesses, the easier it is to obtain financing. A record of success in a previous business heightens the chances that successful financing can be acquired. However, passion, enthusiasm and creativity are critical components of acquiring any loan and the individual that possesses those characteristics will be rewarded. It is important to note that the familiar proverb, "when one door closes, another opens" did not become acceptable without many examples of persistence by those that had a passion for a particular cause, so it is important not to accept the rejection of a loan application as the final word. Creativity, persistence and recognizing an opportunity are the keys to success in any endeavor. Enumerated below are a number of options available for the entrepreneur that wishes to become involved in the ownership of a restaurant.

  • Franchises - there are a myriad of national restaurant chains that offer the education, training and financing necessary to own a restaurant. Usually these franchises require an investment on the part of the potential owner, but one would really be naive to believe that no economic risk would be involved in an endeavor of this sort.

  • Small Business Loan - the government provides more than $12 billion annually in loans to small businesses and will make available assistance from retired business people that have expertise in this area.

  • Local bank or lending institution - local banks and lending institutions have an investment in the community and a strong plan and acceptable financial statement could easily win their approval of a loan to finance a restaurant that has a future or a record of success.

  • Acquire partners or offer opportunities to family members - many families are involved in restaurant businesses, and the pooling of talents and resources may provide the initial investment necessary to start a successful business.

  • Financing from the seller - frequently the seller of a restaurant business will offer the financing as part of an incentive package to a potential buyer.

  • Involve local investors - often a local investor may be interested in the return on investment that can be provided by a successful restaurant business.

  • Approach the owner of a small local shopping center or small mall in a location where a restaurant business could be supported and does not currently exist. A restaurant offers a draw to potential customers of the small shopping center and financing might be obtained in this manner.
Remember the key to acquiring financing for a restaurant depends on the ability of the borrower to present a viable vision to the potential lender. A well-presented financial plan that convinces the lender that a borrower has considered the opportunities and roadblocks, and possesses the expertise to successfully negotiate any obstacles to success will be the one to secure acceptable financing.

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