Board Topic: Small restaurant commercial loan
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Small commercial loan

Posted by: Melissa Sep 14 2004, 11:00 AM
My partner and I would like to open a small restaurant. We found a piece of commercial property priced under $100,000 that we could set-up as a restaurant downstairs with living quarters upstairs. We would just be buying the building not a business (the building has been vacant for several months). I've been searching the internet for companies that offer commercial loans, but I haven't been able to find any that offer such a small commercial loan. Does anyone know of any? Since we will be living in the building, are there any alternatives to getting a commercial loan?

Thanks for any help you can provide.

Melissa

Posted by: loanuniverse Sep 14 2004, 12:32 PM
Melissa:

Since you are going to be living in the property, have you thought of a residential loan?

The problem at approaching this from a commercial loan standpoint is that the source of repayment would be the cash flow from operations of a startup that probably does not even have a business plan with projections in place.

I would think of doing this as a residential loan first and only move into commercial financing when is needed.

Posted by: Commercial Lender Sep 18 2004, 04:09 PM
As admin said, depending on the zoning, residential may be an option.

Not to discourage you but Restaurants are tough. They have the highest rate of failure and you really have to know what you are doin in addition to having restaurant experience. My suggestion is to buy the property as a mixed use investment property (since that is what this sounds like). You will get the highest LTV and conserve your cash. You can either lease it to a retail tennant or should you continue with your dream of a restaurant, lease it to yourself and include the the restaurant rent an an expense (your accountant can expand on that). Biggest advantage is tha If your decide to get out of the business later, you will be able to lease the location to someone else.
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