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How to Obtain Financing for Your Restaurant

Learn how to find financing for your restaurant from restaurateur Paul Bolles-Beaven in this Howcast video.


So you've decided that you're going to open a restaurant and you have this great idea and you're extremely excited about it, and you need to find financing. So how do you find financing to bring this wonderful idea to birth? Well, the easiest place to find it is in your own pocket if you've got it, but if you don't, you need to think about other options.

So if it's in your own pocket and you want to use your own money to finance your own restaurant, you want to be thoughtful about the risks that are involved. It's been done where people have mortgaged their house to open their restaurant, but that's a dangerous thing to do because the restaurant business runs on tight margins and it can be very risky. So let's say you decide not to use your own money to finance your restaurant. What are your options?

Well, you could write a great business plan, a very detailed and thorough business plan, and use it to get people to invest in your restaurant and in your idea. And in exchange for that, they are appropriately going to want some ownership in the business. You can also get a business loan from a bank and you're going to end up with some debt that needs to be repaid, but you can use that business loan to start the business. You may have to start smaller than you want because of how much money you can get from a bank.

Another option is to explore being a franchisee and seeing if there's a business that you want to become a part of in that way. It is possible to start with a very small investment from a financing point of view if you can come up with a restaurant space that's fully equipped and ready to go that you can buy into for a reasonable amount of money. It's amazing what a coat of paint can do.

Now, if you're really lucky and you have a really great brand and it's something that building owners will find value in having within their building, you also might be able to negotiate a landlord contribution to help finance your restaurant.

The bottom line is, you need to make sure, however you finance your restaurant, you have enough money for your startup costs and for those lean, snowy Monday nights when nobody comes in.

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