If you are planning to open your own chain of restaurant and do not have adequate fund for the same, you can opt for startup loans to fund it. To start with, open a single restaurant first and once when you find that the restaurant is running successfully, you can think of starting another joint and so on. In this article, let us find out more about restaurant startup loans. Apart from borrowing from friends, relatives, and peers, this is the best alternative you can think of.
What will be the approximate cost of starting a restaurant?
When you first approach a bank or any other financial institution, you may not get a positive response especially when the amount involved is huge. Opening a restaurant is no child’s play. So, read on and find out more about the topic in the paragraphs the follow.
- Restaurant startup costs
Taking both into account, namely, the loans as well as the personal funding amount, you must see that the following expenses are covered-
- Loan repayment and interest – You can negotiate the rate of interest when you are talking to the lender about the loan amount. You will be required to pay the principal and the interest amount on a regular basis for a period that is predetermined or before you sign on the dotted lines.
- Loan guarantee fee – This is the amount you are required to pay to the lender in the event you are not able to make the loan repayment fully. This is usually in form of a certain percentage.
- Restaurant insurance – This is an insurance that offers coverage for your restaurant in the event your business incurs losses during the course of running your restaurant business. This also includes coverage for damage to property, injuries, accidents, crimes, and for paying off workers’ compensation.
- Benefits for staff and their wages –This will cover the mandatory payment that has to be made to the workers.
- License fees – You have to keep provision for paying for certain permits that include liquor licenses, Food Service Establishment Permits, and overall general business licenses.
- Kitchen set up – This is an important aspect that you have to take into account. Prior to signing on the dotted lines, make sure you talk to the lender about equipment you will require for your kitchen.
- Repair and revamping premises – This holds particularly true for the kitchen alongside the sitting arrangement meant for guests.
- Working and marketing capital –You have to be prepared with working as well as adequate marketing capital. This is the amount that you have to be prepared with that you might require when your business has still not achieved break even. And as far as marketing capital is concerned, it is the money that you will need to promote your business and expand in the later stages. For more information on the loans that you might opt for, click here.
What are your options for different restaurant loans?
Just applying for restaurant loans is not enough. There are many aspects that you have to take into account for the same. These include the down payment that you will have to shell out, the type of collateral you are using, rate of interest, repayment period, and loan term and cost.
Types of restaurant loans
You have the option to choose from the following types of restaurant loans. These include the following-
- Traditional Commercial Loans – They have lower rates of interest and amount you can get access to is high.
- Business Lines of Credit –The main advantage is that the interest starts being calculated only when you borrow the money.
Apart from the above 2 main ones, you can also opt for Small Business Loans.