Hello all, new to this site, found it tonight while on Google. Hoping maybe I can get put in the right direction and get some help on helping me achieve one of my dreams (owning my own restaurant).

I currently work for a local South Florida restaurant chain (8 locations). I have been working there for a year now and have gone and acquired my state certification for management. I was approached by the owner of the franchise and offered a great opportunity to open up one of my own.

He has offered me help as far as advertising, workers, and helping me get started with the food suppliers. As with any new business money is the hold-up for most. I have sat down and priced out equipment with him as well as average monthly expenses. I found a great location, with no restaurant of it's kind in the area, and have his approval.

Between getting the equipment put in and money set aside for unforeseen costs, we have come up with a total of $150,000-$200,000. The dollar amount would be based on whether we decided to buy or lease all of the equipment up front ($50k worth, company will lease for $680/month)

I started out with the normal bank route, until I found out they do not give loans for new restaurants. The chain is a profitable one and the owner has figures to back it up. I was wondering if anyone could help point me in the right direction as to where I might be able to find investors or loans for start up restaurants?

Thanks greatly in advance,
Joseph
LSonDubz@aol.com

Joseph:

When reading your post, I did not see any mention of the amount of money that you were bringing into the deal. Please take in consideration that this would be on the mind of any lender that might consider the deal. It will also mean the difference between your request being looked at or not even considered.

Now lets get to who those lenders could be:

As you have recently found out, most bank lenders consider restaurants bad credit risks. In addition, lenders in general consider startups bad credit risks. This means that you have two strikes against you to begin with. Therefore, the lender is going to look for something to mitigate this risk. That can be accomplished in several ways, the most usual are as follows:

1- A strong personal guarantor.

2- Additional collateral.

3- A guarantee from a governmental agency {think SBA or similar state/municipality organization}

4- A combination of those three

Even bank lenders will look at this request if they feel that one of those four brings enough mitigation.

Taking into consideration that #1 and #2 are the most difficult to get, I would work towards obtaining the backing of an SBA. Normally this is done with the help of a bank lender that would submit your request to the SBA during their process, but nothing prevents you from contacting the SBA yourself. Being that this is a startup, your package will have to include a business plan and projections. However, you have a leg up on everyone else because this will be a “franchise-type” restaurant then you can use the information that an existing restaurant has as the backbone of your presentation. Bringing in this boss of yours as a partner would add weight to it since he already owns one.

If your financial skills are not there, you will need someone to help you write the plan as well as preparing the projections. There is a great organization of retired business professionals that offers this type of advice. Look for the chapter in your area in their website score.org


Good luck