Financing Your Restaurant

Financing Your Business

Most banks and lenders require you to put some of your own money into the business and contrary to popular belief, they do lend money for businesses.

The more experience you have in the field, the better so take a part time job in a restaurant and/or take some classes to help you succeed in getting the funding you need.

Places you can get financing are

  • Small Business Association
  • Personal resources - Savings, Ira accounts, Credit cards, home mortgages, and personal assets, family or friends.
  • Private investors - also known as "angel investors". Go to for more information. "Angel investors" are the largest pool of capital in the United States. Typically entrepreneurs find "angel investors" through net-working with people across the industry.
  • Commercial finance companies, such banks and equipment leasing companies.
  • Friends and relatives (be careful to arrange the loan in a business-like manner. Draw up papers stating the loan repayment schedule and interest to be charged.
  • Real-Estate assets. You may have enough equity in your home to finance your business.
  • Life Insurance - You may carry a life insurance policy that has a loan value. You can borrow on the cash value at a low interest rate.
  • Housing and Urban development - Sometimes the Federal Government's HUD will provide loans to restore and rehabilitate buildings in certain areas. They won't finance your business, but may provide renovation funds.

The basic loan application includes a written statement in which you describe your business plan . You will need to include how this business will generate income, define at what points you will need an injection of cash and explain how you will use the requested loan proceeds. Also, include an explanation of how the loan will be repaid. There are many business plan software programs you can use.

It is best to have the money in place about six months before you need it, including in it enough cash to carry you through two months of business.


1. Shop around for the best interest rate and terms.

2. Get your financing before you negotiate your lease.

3. Get your loan agreement in writing.

4. Hire an accountant or lawyer to review your agreement before signing.

5. Make sure there is no prepayment penalty.

6. If you choose a venture capitalist, make sure you maintain control running your business.

7. If you get a construction loan, make sure you only pay interest on the commitment as you use it.


Best Banks for Entrepreneurs

Business Funding Directory - Check current interest rates and order credit reports before registering to receive a loan quote. - US Small Business Administration -Complete site covering starting, financing and expanding your small business. Addresses disaster assistance, legislation and regulatory fairness. Small business owners can obtain financial services from this institution. Visit the Question and Answer section to see examples of solutions.

Venture Finance Portal


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