Opening another location
A new location is the largest decision most restaurant owners finance. Funders look first at how the existing locations perform, then at the new one: the lease, the build-out budget and how long it will take to reach the sales the plan assumes.
A common structure pairs a term loan for the build-out with equipment finance for the kitchen, and keeps working capital in reserve for the months before the new location carries itself. SBA 7(a) loans suit this when there is time to qualify, with terms of up to ten years, longer when real estate is part of the purchase. A tenant improvement allowance from the landlord can reduce what has to be borrowed.
Kitchen and equipment
Ovens, hoods, walk-ins and refrigeration can be financed on their own, usually over three to five years, with the equipment as collateral. That keeps the term loan for what has no resale value, such as the build-out.
Seasons and slow months
Many restaurants earn most of their year in a few months. A line of credit drawn in the slow months and paid down in the busy ones is the cleanest fit. Revenue-based financing, repaid as a share of card sales, moves with the business but costs more, and is best kept for short needs.
What helps a file
- Three to six months of business bank statements, and card processing statements
- Sales by location
- The lease, and for a new location the build-out budget and contractor quotes
- Equipment quotes, if equipment is part of the request
An engagement of this kind: A fourth location, financed around the seasons.