“Small, emerging, growing businesses have few traditional sources to turn to. You have to get a little creative.”
That’s what Kenneth Walsleben told The New York Times in August 2012, and he should know. As a professor in Syracuse University’s Whitman School of Management, it’s Walsleben’s job to prepare future entrepreneurs for both the modern business landscape and the one that’s still to come in the days of tomorrow. So when he says something of that nature — that banks aren’t always the best option for small operations to look to for startup business loans — you can bet it’s sound advice.
But say you’ve been building toward opening a restaurant for years. Say it’s been your life’s goal that worked tirelessly to achieve, and now it’s finally within your sights. What exactly should you do to land that kind of business expansion loan to get your establishment up and running?
Relying on Cash Advances
In the same Times piece, the focus briefly shifts to restaurant owner Dennis Sick who financed some slow months entirely with a $45,000 advance on credit card receipts. Sick arranged a deal with the lender where the lender would take between 13 and 18 percent of all the restaurant’s credit card sales until a cap of $64,000 was reached. Sick ended up paying it back in only seven months. In similar situations, it’s not unheard of for prospective restaurateurs to extend their personal credit to fund their restaurant business loans.
Talking to the SBA or Private Investors
We really can’t talk about small companies without mentioning the U.S. Small Business Administration. The SBA frequently doles out small business capital loans in order to help burgeoning startups get off the ground, and that’s true for plenty of restaurants, too. If you want to try to find a more flexible lender that provides lower interest rates, look into private investors and equipment leasing companies to help cover the cost of your major expenses up front (kitchen supplies, real estate, etc.).
Banking on Banks After All
Despite what Walsleben says, banks are still a go-to option for restaurant business loans. They may not be on the same level as more creative methods, but they’re there. And they promise a bit more security than the more limber institutions can even dream of. The banking crisis is in the nation’s rear-view mirror (still close, but behind us entirely by now). If you’re not as comfortable with the aforementioned creative option, you’ll have to rely on banks to get your restaurant business loans and get started in the marketplace.
For more information, talk to a friend who’s been through the process before. Or talk to a proper financial institution. Either way, get a sense of the risks you’re taking before you actually get into the business. Learn more at this link: www.businessbacker.com