If you’ve always had a dream of owning a restaurant, it is about to become a reality. It is expensive to set up one and you may not have the initial startup capital needed, but you can always apply for a restaurant loan.
Here are 5 tips to getting a loan to open your own restaurant:
Consider Applying For SBA Loans
The United States Small Business Association (SBA) gives loans to small new businesses, restaurants being among them. SBA can be an easy alternative to get a loan for your restaurant since they offer a small business loan against default guarantee.
As such, there is a high likelihood that your bank will take up your restaurant’s risk. There are a variety of competitive loan programs available through SBA. You will, however, be required to add some of your own money upfront in order to get the loan.
Apply For Credit Union Loans
Credit unions are another source you can use to get a loan for your restaurant. What makes them unique is that they usually charge an interest on your loan’s balance. As such, if you pay off your loan early enough, you will not pay so much interest.
If you already have a written business plan for your restaurant and you’ve done a solid market research, a credit union loan can come in handy for your restaurant business if you predict success in the first days upon startup.
Get A Home Equity Loan
A home equity loan enables you to borrow money as per your home’s value. You get access to large sums of money and it is easy to qualify for this loan because the security for it is your house.
Bear in mind however that this is a very risky type of loan to take up and you must give a lot of thought to it. In the event that the restaurant fails and you are not able to pay back the loan, you will end up losing your home and the restaurant as well.
Getting A Loan From Family And Friends
You can present your restaurant business concept to your family and friends and request for a loan from them. It won’t be much of a struggle getting a loan from them judging by the fact that they know you on a personal level and they are interested in your success.
The fact that these people are family and friends can easily destroy the good relationship you have with them. As such, when getting a loan from them, it is important to set parameters for the terms of the agreement as to how you will repay the loan.
Apply For A Bank Loan
You can get a loan for your restaurant from your local bank. If you have a good banking history with your bank, they will consider your loan request and finance your business. They may require that you have substantial assets to act as collateral to offset the loan in case the restaurant business fails.
These five tips will help you get a loan to open your restaurant. Here’s how to access restaurant loans even with a bad credit record.