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May 14, 2012

Financing a new restaurant

Filed under: Entrepreneurship,Finances — Tags: , , , — Mike Van Horn @ 10:55 pm

Where can I get financing for my start-up restaurant? Asked on LinkedIn by Tom Leach.

MVH: Restaurants started by inexperienced restaurateurs have one of the highest mortality rates in business. Thus nobody wants to invest in them, not even your mother! Certainly not a bank.

financing fine diningOne of my clients who runs a very successful restaurant, and who now has financiers offering to invest in his new locations, got his start by buying the restaurant where he worked out of bankruptcy for a very small sum. So then he had a restaurant with a location and a lease, all furnishings and equipment and permits, an established clientele, and employees including a chef. Financed totally from his savings built up while working there. He made it work by improving operating efficiency and customer service.

The likely sources of financing for this venture:

— Your own savings

— 2nd mortgage on your house

— Family, even though it’s very risky even asking them

— A private backer who strongly believes in your skills and concept

— A bank loan with a personal guarantee

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