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BUSINESS LOANS - LoanUniverse Community

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BUSINESS LOANS


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#1 Guest_EUGENIO_*

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Posted 19 October 2004 - 05:23 PM

We need help with a Restaurant project.
We need to expend 900k during the next 6 months.
We have 500k and we need 400k.

It is not a property it will be a lease.

What products can we get to finance this in up to 5 years?

Thank you.

Regards
Eugenio
eugenio@exdata.net

#2 loanuniverse

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Posted 20 October 2004 - 08:49 AM

Eugenio:

In the last couple of weeks a few people have asked questions about restaurant financing. Unfortunately, restaurant loans are one of the types of loans that all of my employers have refused to do as a matter of policy. This means that my experience in this industry is limited. In eight years, I have probably seen a couple of loans to restaurants.

You did not mention if this is going to be your first venture into the food service industry. Because if it is, then you will find it even more difficult. Knowing that traditional lenders or most any lenders will not be interested in the deal, you need to take steps to make it more appetizing. You do this by adding something that reduces the potential downside {after all the big gripe about restaurants is not only that they fail, but that when they do the equipment is worth pennies on the dollar } to the lenders in the form of an SBA guarantee.

You could also get some partial financing for big ticket items from the manufacturer of the equipment. For example, there might be a couple of walk-in cooler manufacturers that might offer financing. However, I would venture to guess that this is limited. The SBA does sound like the best option.

A few additional comments:

1- $900,000 is a big amount. Let me rephrase that, is a huge amount unless you are going after the top end of the market. Looking at it from the point of view of interest expense and return on investment, you are looking at a big chunk of money needed every year. Of course, there are other benefits from being your own boss. Still, it is a lot of money.

2- Having $500,000 puts you in a good position. There is substantial equity here. This would help.

3- Do you have a business plan? You will need one.

4- Experience in the industry is critical especially for this type of business. If you are lacking on one area consider adding someone even on a part-time basis to make the plan look better.


Suerte,

#3 Commercial Lender

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Posted 23 October 2004 - 10:15 PM

As u know and as admin said......restaurants are tough. They have one of the highest rates of failure and most lenders are nervous to touch them. The real estate that a restaurant comes with can sometimes be the saving grace but in this case i think ur only option me be either the SBA (504 perhaps) or a private lender /partner.





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