Because starting a business requires a lot of money up front, taking out a loan is the only way most people can afford to open a restaurant. Before applying for a business loan, it's important to create a solid business plan that includes all short-term and long-term costs. If this is your first business, you may need to rely mostly on your own credit history and creditworthiness to obtain a loan with the best interest rate.
In addition to business loans from lending institutions, you can also ask friends and family to invest, or you can find private lenders or investment groups willing to lend you the money needed to start your restaurant business.
Instructions
1. Gather all financial statements, including a recent copy of your credit report, loan statements, credit card statements, mortgage loans and other lines of credit you currently have. Being able to prove you are responsible with your credit is important when applying for a loan to start a restaurant business. If you've taken out a business loan before, you can cite the responsible repayment of this loan when applying for a new business loan.
2. Create a business plan that outlines your restaurant business. Include a description of the type of restaurant, the amount of retail space required, start-up costs, monthly estimated overhead costs, number of employees you want to hire and how much you expect to earn in the first three years. You should also include a monthly and yearly budget, equipment costs and monthly utility costs.
3. Visit local banks, research larger banking institutions online and contact investment groups or individuals that specialize in restaurant creation. Compare interest rates, maximum loan amounts and loan terms, including interest repayment and length of the loan.
4. Consider using your home and other assets as collateral if lending institutions require you to invest some of your own money. Being able to put up 10 to 20 percent of your funds as a down payment may also help secure your loan.
5. Review all loan paperwork before signing any documents. Make sure you understand the repayment terms. If your restaurant fails, you will still be responsible for repaying the loan.
