Many people dream of owning a restaurant and naming it after a loved one or coming up with a theme that allows them to share their passion with others. Deciding on these things before you try to get business financing is good since a name and a theme are two important factors that banks or finance companies consider when evaluating your request.
Before you seriously approach a lender, it’s also a good idea to have an established menu for your restaurant in addition to solid ideas for the interior design. Most importantly, you must be prepared to explain why diners will choose your restaurant over that of a competitor.
Choose a Prime Location
If you apply for a business loan without even knowing the location of your future restaurant, it’s not likely to make a favorable impression on potential lenders. It says that you haven’t researched the neighborhood and you have no way of knowing if the design you chose is realistic for the space. Ideally, you should choose a location for your restaurant that can handle plenty of foot traffic and has ample space for parking.
If you have chosen a location already, be sure to explain if you plan to make an offer to purchase it outright or you plan to negotiate a monthly contract with the business owner. This information is essential for the lender to set the terms of your loan.
A Business Plan is Essential
A business plan is a detailed written document that includes the following:
Organization Chart & Management
Service or Product
Marketing & Sales Plans
Your appendix should include at least three years of tax returns, bank statements, reference letters, and a personal financial statement. This document should include a list of your assets, such as stocks and real estate investments, and liabilities, such as student loans and your home mortgage.
Honesty is the Best Policy
It may be stating the obvious, but don’t list anything on your loan application that isn’t true. Lenders verify everything, including previous employment, your educational background, and especially how you have handled other lines of credit. If there is anything that may reflect unfavorably on you, come to the appointment with an explanation already prepared. Loan officers know that applicants may have blemishes and appreciate honesty much more than trying to conceal something.