How to Finance a New Bakery

Financing a new bakery may require searching for personal investors.
Financing a new bakery may require searching for personal investors. (Image: Dynamic Graphics/Creatas/Getty Images)

Opening your own bakery is an exciting time and a stressful one. Figuring out how to pay for all the new equipment, new lease and ingredients can be overwhelming. However, the risk-to-reward payoff is worth it for most entrepreneurs. The old adage, "It takes money to make money," is especially true for start-up businesses. The truth is most lending institutions shy away from start-ups because they pose too much risk, according to Anne Field, author of "7 Great Ways to Finance a Start-Up." This leaves many entrepreneurs scrambling around trying to dig up many thousands of dollars.


Use your own equity. Tap into your personal savings. Refinance your house if you have benefited from increased property values and swipe your credit cards. William Bygrave, the Frederic C. Hamilton professor of free enterprise at Babson College in Wellesley, Mass., notes that the Google owners used their credit cards often to finance their start-up for the first two years. (see reference 1)

Ask relatives and friends for a personal loan. Although not an easy task at times, pooling funds from friends and family soon adds up to substantial amounts. Have a written payment plan ready when approaching them. Offering to pay interest may increase their willingness to lend money.

Request a bakery equipment loan from Allstate Capital by visiting their website. Click on the "search" link and type in "bakery equipment financing". Click on the link provided and use the "Apply Now" button to fill in the loan request information.

Inquire from your local Small Business Association about start-up bakery grants and traditional bank loans. Locate your local SBA chapter by using the website. The SBA will direct you to which local banks are open to lending to new bakery owners.

Use the Internet to find an online lender who advertises new bakery loans, such as Click on the "bakery financing" link. Fill in the required information on the ensuing pages. A representative will contact you if additional information is needed and with an approval decision. (see reference 4)

Tips & Warnings

  • Having a good credit score and low debt at the onset of funding your new bakery, will aid your efforts in acquiring outside financing.
  • A word of caution if you choose to use credit cards to finance your new bakery. Be diligent in making payments. It is easy to be downgraded in your credit score if you default. Pay attention to the high interest rates that credit cards carry, as is it easy to swipe and not realize the additional 18% that will be added on to the bill at the end of the month.

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