How do I Find Financing to Purchase a Restaurant?

A restaurant purchase sometimes requires creative financing methods.

A restaurant represents one of the most difficult businesses for which to obtain financing from a bank. Generally, a bank sees a restaurant as a significantly volatile investment and may ask you to put up personal collateral valued at up to the entire loan amount. Creative and alternative methods of financing do exist however.

Existing vs. Start-up

You will have less difficulty purchasing a restaurant that is already a going concern than building the business from the ground up, according to Diomo Corporation. One of the main reasons for this is that you can enlist the assistance of the seller in your purchase.

Seller Financing

As many as 80 percent of all small business purchases include a portion of the financing from the seller, according to the Diomo Corporation. The seller is typically motivated to provide financial assistance to get the best possible price.

Buyer's Perspective

With the restaurant seller at risk in the transaction, you will have more assurance that all the information he provides is accurate. Because the seller is motivated, you may be able to negotiate flexible terms such as payment holidays or no interest during an initial period of time.

Small Business Administration

Look for information about financing the purchase of a restaurant in the Small Business Administration website. Although restaurant purchases have difficulty passing the requirements, your acquisition may qualify for grants and loan guarantees.

References

• Diomo Corporation: Financing The Restaurant Deal

Resources

• Small Business Admnistration: Small Business Loans & Grants