How to Find Investors for Your Restaurant Idea

Contributed by Holly Tomlinson

Mount Airy Bistecca Restaurant

Have an amazing restaurant idea? You’re not alone. Opening a restaurant is a popular entrepreneurial endeavor, and it’s no wonder. With the allure of consistently filled reservation books, gorgeous plates of your most fanciful creation, and the benefit of always have a table reserved for you and your loved ones, opening a restaurant is an enticing deal. However, this particular venture is one of the most stressful, and definitely doesn’t come cheap. If you’re seriously considering a foray into the restaurant industry, you’ll need the right financing. Consider the following options and make your dining dreams come true.

Preparing for a Loan for Your Restaurant

You won’t get a loan from any source without a great deal of preparation first. First, you’ll need to become educated on the industry, especially if you have limited prior experience. Investors want to know that their money is in capable hands. This means taking business courses, attending seminars, and working with restaurateurs who have already made a successful go in the industry.

You’ll need to do quite a bit of research before approaching a lender. Look into venues, vendors, equipment, and any other projected costs in order to come with a viable estimate for your loan needs. You’ll likely find you need a lot more than you might have originally anticipated. Liquor licenses can be hard to find, and often cost thousands of dollars. Generally restaurateurs must purchase a permit through a brokerage service like License Locators, Inc. Securing a lease in a populous area could see you blowing your intended budget within the first month. Also, finding great restaurant software could set you back a few thousand dollars. It’s important to take your time and consider all the costs that come with such an endeavor. It’s essential to come up with as accurate and complete a picture as possible before approaching an investor.

You’ll need to put plenty of thought into a concept or theme for our restaurant and flesh out the idea (including décor, design, and the like). This is likely what’s going to help sell your idea to a waffling investor. Once you’ve got this research complete, you’ll need to aggregate the information into a solid business plan that you can present to lenders and investors. This is essentially a blueprint that will quickly and thoroughly explain how you plan to be successful during your first few years of business. Forgoing a business plan means forgoing a loan, so take your time and make it great.

Traditional Loans

Banks and other traditional lenders have reduced the amount of small business loans they’re willing to give out thanks to the recession of years past. However, there are certain cases in which an entrepreneur could secure the right loan from a local or national bank. If you can show proven success in the restaurant industry, have great credit, and a good relationship with the bank in question, you may have a better shot at qualifying. If you don’t fit these parameters, you may need to pursue less conventional loan methods.

Hard Money Loans

If you don’t qualify for a loan from a bank or other traditional financial institution, consider hard money lending. These loans are easier to qualify for, but they come with steep interest charges. They also compound the longer it takes you to pay off your loan, so this type of loan is only ideal for short-term periods of time.

Crowdfunding Options

Many restaurateurs are looking to crowdfunding platforms to get their restaurant ideas off the ground. Sites like GoFundMe allow you to create a campaign. You can then share it across multiple social media channels to entice investors to throw in a bit of money. If your idea is eye-catching and well thought out with a sound business plan, crowdfunding can be a quick and easy way to raise money.

Financing a restaurant means putting in a great deal of work and getting creative with your loan options. Take these tips and strategies into consideration and make your restaurant idea a success from the onset.

 

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