7 Things to Keep In Mind Before Applying for a Restaurant SBA Loan

It is no hidden fact that obtaining a restaurant loans is a tough task, and there can be nothing worse than getting the loan rejected just because you were not fully prepared with all your documents and a proper plan of action.  

It is extremely important to:

• Keep all the documents ready
• Know about the key selling points on your finger tips, and
• Be all set to converse, and give a prompt reply to whatever is asked.

All lenders look our for 3 important points before lending a small business loan. They are:

• The borrowers ability to repay the loan
• The ability of the business to sustain during tough economic times, and
• Your undertaking in making your small business excel

What to Be Prepared With?

Keep Your Financial Documents Ready
Keeping all the relevant financial documents ready is of utmost importance. Make sure you are prepared with break-even analysis, balance sheet, cash flow projection, income statements and statements of your profit and loss.

Have Relevant Business Experience

You might have been running a business for a long period of time, but when it is time to apply for a loan, make sure you have relevant business experience in the industry for which you are applying the loan. The SBA Program expects the borrower to have complete knowledge about the industry for which the loan is being applied. If you think you do not have relevant business experience, postponing the plan of taking a loan will be a great thought.

Check your Business Credit Report

Entrepreneurs already running a business need to submit their company's credit report. One of the best things to do is to review the credit report before applying for the application form. Businesses who have a credit score of 650 and above, can easily secure loans, whereas businesses having a credit score of 600 and lower might face difficulty in securing finances from a bank.
Tip: If you have a poor credit score history, you can clear out all your past-due debts, pay the monthly balances of the opening business credit card – this are a few tried and tested ways of improving your company's credit score.

Keep Cash

The bank offering you loan will expect you have around 20-30% of the loan amount ready with you in cash. If the loan you ask for is high, this amount can even go up to 50%. The more amount you show as cash-in-hand, more will be your eligibility to apply for a greater loan amount.

Having a Strong Business Plan

An entrepreneur looking for a SBA Restaurant loan, must be ready with a strong business plan. Make sure that you create a comprehensive business plan that is inclusive of:

• An executive summary that explains what your business is all about, your goals, the way you will operate and your revenue model.
• Next, give a brief description about your company.
• Define your target audience.
• Explain the working of your products and services.
• Highlight your marketing strategy.
• Introduce your management team.
• Provide the company's complete financial data.
• Provide information on investment.
• Lastly, you can include any research that you might have conducted.

Prepare a List of your Preferred Banks

Prepare a list of all the potential lending institutions, so that do not end up wasting time on banks that do not lend to restaurants. Furthermore,conducting a thorough research is the best way to know which lending institution can best finance you according to your industry and target market.

Get Ready with Some Local Funding

Getting ready with some local funding can help you earn brownie points. If you are ready with a certain amount of funding from your local community, banks will be impressed.