Mortgages for Restaurant, Bar and Lounge
Stated income programs suspended.
Do you want to
apply for Bar / Restaurant financing loans
for purchasing or refinancing a business? It's a tough industry. The failure
rate is high. If you're a successful restaurateur, congratulations on your
management prowess. If you are looking to start your own business, read on.
Are you are presently a
restaurant or bar owner? If so, you know bar restaurant financing loans are hard
to qualify for. Banks and commercial lenders decline as many as 90% of these
applications. To be approved for bar and restaurant loans and financing, most
commercial lenders require you to have been in business at least a few years and
require you to have assets to secure to get working capital. This is know as
If you've never owned your own
business, don't despair. There are many options to explore when attempting to
obtain new loans or financing for a new restaurant or bar. Factors such as your
experience in the industry as a manager, the size of your current or projected
business and the amount of loans needed determines what type of program is most
appropriate for you.
Whether you're starting up your first bar restaurant operation, remodeling your
facility, moving into a better or larger facility or even adding a new facility,
you'll need funding. Unless you're cash rich, you'll need to seek out others to
help finance your project.
Funding mortgages and financing loans on restaurants and bars can be
challenging. Commercial lenders are nervous about the high failure rate. Be
prepared to prove to the lender that you're a good risk..
Let's get started
You should explore some different
options. Factors such as your experience, the size of your business and the
amount of funds needed determine what type of financing loans for your
restaurant or bar is most appropriate for your specific request. Here are some
options to look at.
Seller Assisted or Seller
Carry Back: If you're buying an existing business, one option is
to ask the seller to finance all or part the sales price after your down
payment. There are two main benefits to seller assisted financing.
A.) It's a good choice when other sources are unavailable or unwilling.
B.) If the seller is willing to finance the buyer, it shows the seller has
faith in the past and continued success of the business.
Commercial lenders or
banks. First-time restaurateurs will usually find it difficult to get a
commercial bank loan, but it is still be worth a try if you have strong
experience in managing restaurant / bar businesses. Mortgage financing loans
depend on the lender and your ability to prove that you're qualified. The
banks closely scrutinizes restaurant applications. Their responsibility is
to protect the assets of the lending institution and to strive to meet the
needs of clients. If the applicant is not convincing that he or she can make
a success of the business, they have no choice but to reject the application.
Don't quit just because one lender says no. It doesn't mean another lender
won't say yes.
If for whatever reason, you're not able to get a commercial lender loan by
yourself, an option is to get another individual with the qualifications to
guaranty it. In exchange, you may want to compensate them with equity in
your business or a percentage of the monthly profits.
Administration - SBA. An alternate method of getting a
commercial lender loan is to obtain an SBA
business loan. This is where the SBA guarantees the loan to
the lender. The most popular SBA program is the 7(a) Loan Guaranty Program.
Through this program the private sector commercial lenders grant funding,
and the SBA guaranties that up to 85 percent of the principal balance will
be paid back to the lender. About 5,000 U.S. lenders grant SBA programs. In
fact, the same bank that turns down a restaurant - bar for a traditional
loan may be able to approve an SBA loan.
A 7(a) loan can be used for most businesses. It is offered at market
interest rates and usually is financed over seven or eight years but
amortized over a longer period. The extended financing means lower monthly
payments, however, you will pay more interest over time. In order to qualify
for a 7(a) loan, you must first be rejected for a traditional program, and
you must operate your small business. Individual franchisees of large
corporations also may be considered. The SBA also looks for evidence that
you'll be able to repay the loan as agreed.
We at MFI are committed to
providing loans for financing
restaurants-bars at fair rates and terms for all applicants.
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