PRESENTATION OUTLINE
Do Restaurant Loans Cover Fast Food Franchises?
Short answer: Absolutely! Start-up restaurants and fast food franchises are a highly popular enterprise for new entrepreneurs, yet it can also be one of the most expensive. Figures can range from the tens of thousands and on up to seven-figure digits depending upon what type of operation you choose.
However, whichever fast food franchise and location you choose, it’s likely you won’t have all of the cash you need to succeed up front and already in the bank. Not only is that OK, it’s perfectly normal! Most new business owners will require some additional funding. Thankfully, there’s a whole host of borrowing options available.
Topics of Discussion
- When Will a Restaurant Loan for My Fast Food Franchise Come in Handy?
- Exploring Your Financing Options
1. Initial startup costs tend to be the most expensive, but they likely won’t be the only time you’ll seek outside financial assistance. New fast food franchises should expect to throw a ton of cash at new equipment, staff training, licensing and other related fees. Working with a good franchisor can help keep many of these start-up costs to a minimum. But remember that this won’t be the last time you’ll likely need to consider a restaurant loan. Be prepared for slower seasons to occur, during which you’ll need the necessary funds on hand to cover staffing costs. Restaurant and fast food financing offers you that working capital your business will need, when you need it, to enable you to be successful and competitive.
2. The following is a breakdown of some of the more common options for the owners of fast food franchises who are looking to fund a new or existing location.
Traditional Bank Restaurant Loans. Commercial banks and local credit unions are the most common form of startup funding for every type of aspiring business. However, you should note that securing such a restaurant loan can be a challenge as banks will often see restaurants as a large risk. (More than 24 percent of new restaurants fail within their first year.)
Banks also tend to be skeptical of first-time business owners, which is why going into the bank with a franchise proposition can give you a big advantage, since successful franchises are the best proof of concepts.
SBA Loan Programs. In recent years, more government guaranteed loans have gone to food industry businesses, including fast food franchises, than any other industry. Even if you’ve been turned away by a commercial bank, that same commercial bank may grant you an SBA if you go through the proper channels.
Disclaimer: This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of or want to locate a franchise in one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. Franchise offerings are made by Franchise Disclosure Document only.
