Pat Walsh

Once A Restaurateur Now A Business Banker Speaks Outside The Box

Do not plan on traditional banks to finance your project, even with the best-written business plan.

Getting a loan for a startup restaurant is difficult if not impossible through traditional banking channels.

You need a well thought out and written business plan just the same.

Most banks do not lend to startup businesses and a restaurant especially considering it is a very risky business.

Lending banks want to see three years of tax returns showing a profit before they will consider giving you a loan.

It also depends on your total personal as well as business income debt and a specific ratio to qualify.


You also need to think outside the box to secure the money you require for your restaurant venture at startup.

Do you have a friend and or relative as a possible investor or lender?

As your business grows, for example, offer to pay interest, just as if you were borrowing from a bank or offer percentage ownership based on what they bring to the table.

Do you have savings established? Do you have 401k?  You may consider taking a loan against your retirement savings but keep in mind this has to be paid back in full when you leave your job.

I also highly suggested that you set up a credit facility before leaving your current job and embarking on your new venture?

Outside The Box

If you have equity in your home, consider establishing an equity line of credit.

Most banks offer NO CLOSING COSTS and with good credit, a minimum monthly payment of interest only based on your outstanding balance.  Very flexible payments, the way you need and want it at the beginning of your restaurant project.

Now, you may be thinking, why use my home?

You believe in yourself right, so why not?  Be sure you are ready to move forward with your business before you take that step!

Tip and Hints:

SBA financing may be available for you to purchase a turnkey, already successful restaurant if you have experience with managing a restaurant.

It is also essential to work with a CPA experienced in the restaurant business.

You should have 6 to 12 months of personal and estimated business expenses, set aside, when you open your restaurant business, on top of your restaurant startup costs.

My suggestion is to go towards the high side of these costs, even in the most well thought out plans; something can be missed.

If you have any questions, please contact us.

We can help you avoid many costly mistakes, invest in gaining additional knowledge it will pay off in the long run.

Learn from people who have been there!