YOU'RE LOOKING FOR RESTAURANT FINANCING!
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Financing & Cash flow are the biggest issues facing business today
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Restaurant financing in Canada. If it's your choice to enter the hospitality industry lets examine how you can increase your chances of success, from a business plan to that most important element... Approval!
Quite frankly we can' think of any industry that seems to be growing more quickly, and we're of course talking about both franchise restaurants as well as independents, both of whom seem to have a solid chance of success these days.
It's not ours to judge or offer up why this industry is growing so quickly or is so popular, - reasons in fact might be that we ' seem ' to be out of a recession ( keyword = seem!), the economy is getting better, and those restaurants that didn’t make it now seem ripe for the pickings vis a vis locations, etc.
Pricing is of course critical in your overall strategy. While prices of franchise restaurants are of course fixed relative to franchise cost and turnkey cost to build many non-franchise restaurants can be purchased for a great price - sometimes it’s just the cost of assuming the lease from a cooperative landlord.
That of course brings into play the question of equity - just how much do you need to put together proper financing, i.e. the classic mix of debt and equity... more simply put... a combination of borrowed money and your own money. In Canada that seems to range from anywhere from 10 - 50 percent. depending on a number of factors that we will discuss.
One of the most popular methods of financing a hospitality venture is utilizing the Canada BIL/CSBF loan program. While it requires a 10 percent permanent equity injection you must be in a position to demonstrate additional access to working capital, which just makes sense as your venture ramps up on sales and working capital needs.
It is also important to demonstrate that you have some industry experience, as that seems to be a key factor in the ' KEYS TO SUCCESS ' column for this industry.
It all starts with a solid business plan of course - we tell clients not to worry if they don't feel they can complete a proper plan, as that assistance can come from a Canadian business financing advisor, their accountant, or any other qualified part. And these plans have a relatively speaking nominal cost relative to the risk and importance you place on getting your venture financed properly.
Key elements of the business plan are your own bio, industry info, financial projections, and an overview of your business model, whether its franchise or independent, and some info on the local competition. It's really as simple as that. Demonstrating how you will run and grow the business is also important.
Typical restaurant financing includes the finance of equipment, leaseholds, working capital, and in some cases real estate. That brings up the point of lease negotiations, which must be completed prior to your financing... for some reason lenders like to know you have a location!!!
The double-edged sword of the hospitality industry is risk and reward, the ability to be your own master.
What you don’t want to do is to be part of the falling wounded when it comes to restaurant finance in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your needs.
