Start a Restaurant

Examining options on a restaurant loan? Due to the current credit crisis you might want to take a look at the SBA programs first, as they are currently the most reliable programs. Not only do they have the highest probability of closing, they also boast some of the lowest rates, highest leverage, and longest fixed rate financing around for restaurants.

Rates right now, for restaurants, are in the 6%’s to low 7% depending on the particulars of the deal. Combine that with 90% to 85% financing, meaning you only have to come out of pocket 10 to 15%, it’s easy to see the benefits of these programs. Compare that to traditional bank financing, rates are about the same, but you would have to come out of pocket 30 -40% down. On refinances loan to values are also very conservative with banks at 60 – 65%. While with the SBA you can go up to 80% on restaurants refinances.

In terms of fixed rates it depends on the structure of the loan. With the SBA 504 you can easily get 10 year fixed, 25 year amortization loans. With the SBA 7a most are floating though we have a program that is fixed for 5 years and amortized over 25 years. Again, as a comparison most bank financing would not exceed 3 -5 years fixed and will often not have amortization schedules beyond 20 years. (more…)

A restaurant business plan has a simple outline which any restaurant can take advantage of. Being in the restaurant line, you’ll know that you can write and read a bunch of things, but what works best for you is the service you offer to the customer. The basic business model could be anything, it could be a spa or a coffee shop, but the core motto remains the same, which is that of excellent service, nothing more and nothing less. Do engrave that in the first slide of your business presentation plan.

What do people expect in a restaurant? Good food and drinks, excellent service, comfortable ambiance, friendly staff and a place where they can unwind and have a good time. (more…)

The first step in opening a successful restaurant business is writing a comprehensive restaurant business plan. Almost everybody has a rough idea of what basically constitutes a restaurant business plan sample. But there are many things which you need to pay attention to, as most people often miss to include them.

So here’s a head start on crafting your restaurant business sample-

In general there are five things that all restaurant business plans should have. They are Executive Summary, Market Research, History and Position to Date, Operations and Business Strategy.

Speaking about executive summary it should address some vital issues like mission and objective of the company, description of the company, products and services offered, finance requirements as well as financial forecasts. An executive summary is often regarded as the foundation of any business. All the information that you will provide in the plan will be like a guiding path as to what your restaurant will do and how they will do it.

History and position to date is the second vital thing in a business plan sample. This part of the business plan will take you a step further in running your restaurant business. Here you require to include some vital things- such as, the key personnel and the management team of your business, history of your restaurant and also the structure of your restaurant business. (more…)

As you may have guessed restaurant loans are taking a serious beating in the current credit crisis. A year ago, and even 6 months ago there were many options. In fact, 30 year fixed programs on restaurant loans where an option, stated income commercial loans where available, borrowers with very low and or no net income could still get decent restaurant loans. Even borrowers with other issues like bad credit could find restaurant loans.

Now almost all of these creative options have frozen up and or are simply gone. What’s left are traditional loans. Primarily SBA commercial loans and a few, scattered, and only for very strong borrowers, conventional commercial mortgages. With these types of options, restaurant owners are going to have to start planning for the future and be more conscious of playing the traditional game. In other words, you’ve got to show some income! If you don’t show any income on your tax returns you’re not going to get a loan.

If for example you know you have a loan ballooning soon or if you’re in the process of expanding locations you’ve got to tell your CPA now to start showing some income. Yes you might increase the amount of tax you will have to pay but the alternative could be much more expensive. (more…)

Restaurant owners have limited options for commercial mortgages, relative to other businesses and building types. One of the most common options is the SBA loans. Although not perfect, they can be a viable option. For one, they are still reliable and are still closing. Two, they do offer some of the lowest fixed rates available and the highest level of financing for restaurant loans.

Interest rates for restaurant loans are currently in the mid 6%’s to mid 7%’s depending on the particulars of the transaction. Combine that with 85% financing on purchases AND 85% financing on refinances and it is easy to see why the SBA has had such a huge impact on American Small Businesses.

Compare that to traditional bank financing, rates are about the same, but you would have to come out of pocket 30-40% of the purchase price. Refinance financing is more limited and harder to close and loan to values are normally capped at 50-60% as well. Again with the SBA programs you can go up to 85% loan to value on refinances on restaurant loans.

The SBA programs have received a lot of criticism over the years, some of it warranted, some of it not. One of the biggest complaints is the time frame and bureaucratic process. A key to avoiding the long delays is to work only with PLP lenders. If you do not your loan will have to be underwritten and approved twice, once by the funding bank and secondly by the SBA. If you work with a PLP lender the loan will only have to be underwritten once, and you will avoid at least one month of delays. It is common to close SBA loans in 60 days which is right in line with all commercial loans. (more…)