How to Get Approved for a Restaurant Bank Loan

The economic downturn of 2008 meant less loans received approval. This frustrated many restaurateurs and set the standards of approval much higher than in 2007. Of course, most ways to obtain restaurant loans, restaurant financing and restaurant equipment loans are still the same. Try to have stellar credit and no previous bankruptcies. With the wealth of quality startups, there are some lenders who specialize in startup restaurant loans. However, at this stage, it may be more on the strength of your personal credit than your ideas when it comes to securing restaurant financing.

  1. Have a mortgage
  2. Include all assets such as cash, property, shares, bonds, and vehicles
  3. Demonstrate a consistent work record
  4. Make your financial strategy clear

Have a mortgage

Most lending is already risky business. Many apply for restaurant financing and are turned down. Lenders want to see that you are reliable with paying back restaurant loans. A homeowner can volunteer to borrow against personal collateral, but most restaurateurs will not put up their homes if they are not certain of their idea. Secretly, it has not much to do with certainty and more to do with how willing someone is to work. Homeowners are less willing to default and are therefore considered safer.

Include all assets

Assets such as cash, property, shares, bonds, and vehicles demonstrate your security. These can be great options if you do not have a home, as lenders are risk averse when approving restaurant loans. This may be a solid option if there is more than one person applying and not all are business owners. Make sure to include what can help you, rather than offering what might be insecure, such as internet stock.

Demonstrate a consistent work record

Starting a business will significantly decrease your earning potential. This is because a business is all-consuming and it can take up to three years to see a profit. Having a consistent work record signifies that you are less risky, as you have demonstrated a strong work ethic.  You would prefer to hire wait staff with a solid work background and the same applies here. If you have been working in another business, but have felt your calling is in the restaurant industry, this may be challenging. The restaurant world has a high rate of defaulting. It is a risk to gamble on someone who does not know the business. Try to take courses and the like to prove knowledge.

Make your financial strategy clear

When you are applying for a restaurant equipment loan, chances it will be easier attained than restaurant loans because when a loan defaults, the bank sees what it can take to make money off of to offset costs. This can include items such as the equipment. Banks want to see that your exit strategy has been carefully thought out before they can label you reliable.  Restaurant financing should focus on inventory and equipment. Lenders can retrieve inventory.

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