Restaurant Owners Are Invested in Their Own Success
Owning a restaurant is a tough job. While celebrity chefs on those ubiquitous culinary channels make food prep seem glamorous and artistic, they never show you how much effort goes into prepping the food, cleaning up afterwards, processing payroll, ordering supplies, and the myriad of other duties required of a restaurant owner. With the average first year failure rate of a restaurant in the 50-60% range, it is critical that owners understand the true nature of their business, as well as the financial support systems that are available to help navigate through tough times.
Loans for Restaurant Owners Can Help at Just the Right Time
Restaurants require the constant expenditure of capital to continue day-to-day operations:
- Payroll happens on a weekly or bi-weekly basis.
- Food orders occur multiple times per week.
- Repairs can disable a restaurant for days if left unmanaged.
- Utilities can represent a significant portion of a restaurant’s budget.
These types of financial issues can strap even the most successful of businesses, and are deadly to those that operate on thin margins. What to do when faced with these situations, or others? Procuring financing that is specifically tailored for those in the restaurant industry is vital to ensure continued operation of your valued business.
Preparing For a Restaurant Loan to Ensure an Easy Application Process
A restaurant loan can help with meeting payroll, fixing broken equipment, or overcoming any momentary financial setback a restaurant owner may realize. Here are a few key tips to ensuring that your application for a loan for your business goes smoothly:
- Provide the lending organization with an overview of why you are taking out the loan and what the overall intentions are. This will help the lender tailor the loan to your specific needs.
- Gather some basic loan documentation that most lenders need. A good place to start is your last three months of bank statements, three months of credit card statements, and a business license.
- Have a business plan in place and talk about the strengths and opportunities of your organization.
The Benefits of Asset-Based Lending
Documentation for a new restaurant business loan is usually quite extensive. To eliminate the tedious paperwork and lengthy approval times normally associated with business loans, it may pay to consider an asset-based loan. These loans are structured to tailor the loan payments to the actual business results of the restaurant.
Here is how an asset-based loan works: by providing credit card merchant statements that show the daily receipts of the restaurant, the lender can determine how much revenue the business is seeing each day. This amount is converted into an approved loan amount, and payments are made on the new loan each day – based on the amount of the daily sales. That way, a slow sales day equals a lower loan payment. It works harmoniously with the natural ebb and flow of a restaurant.
No matter which type of restaurant loan you consider, the basic recipe is the same – paint a picture of your business, describe the reason for the financial assistance, and provide all of the required documents in a timely manner. The rest is up to the lender.