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SBA/Bank Loans - Business Proposals

L

locoarts

New member
Hello,

I was wondering when you guys & gals started out did you go out of pocket OR did you try to get a Loan? What are the chances of getting a Bank or SBA? I was talking to a friend who owns 4 restaurants and he kept bringing up a SBA, when he starts new restaurants, but Im thinking he might have forgotten how hard it might be to get something when you start.

Or and I wrong???
  • If you were to go for a SBA what kind of loan would you go after for a Restaurant?
  • What are the chances of getting a Bank Loan?
I have all my information in computer folders and I havent ever written a business propsal, my first restaurant I am seeing was allot of luck and we did it out of pocket. I do have some money, but I was hoping to get some kind of loan and just make monthly payments.

Does anyone have a generic business proposal I can see or know of a link where I can use it as a blueprint? OR can you give me the bullet points of what mine needs…

Thanks so much!
 
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For an SBA, or any ‘large’ loan, property is going to have to be attached, whether its the building of the restaurant or your house. No one is going to float you a $100K to start a pizza delivery out of a delco thats leased.
 
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SBA money is quite tight…without experience, a lot of your own $$$ and property, many banks won’t even look @ your loan docs…the bank has 2 be in b4 the SBA climbs on board these days…if you don’t have a relationship w/a banker now, its nearly impossible…remember…banks prefer 2 lend $$$ to those who don’t need it…as a Vet & an established biz owner…I can’t get squat…

On a side note…the Gov’ment seems more interested in bailing out everyone else in the world EXCEPT the small biz owner in the USA
 
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I’m gonna keep this short and sweet…

I recently got a substantial SBA loan:
  1. for a pizzeria in a leased spot
  2. I have no prior restaurant/business experience
The only downfall is the process is slow (ie 3 months for me) and alot of paperwork (projected P&L for 1st 3 years, projected start-up costs, business plan, & homeland security stuff just to name a few). The bank sends everything to SBA for approval. Once SBA approves you, the bank most likely will approve you; because SBA will cover 50% of the loan if your business fails (up to 90% if there’s real estate purchased with the loan). Its a win/win for the bank whether you succeed or fail. Like buying a house, you’re required to put 20% down.

seaplus
 
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I have had two clients do SBA loans in the last 15 months. One was for a new location and expansion of an existing business, the other was the purchase of an existing business. In both cases the process was around 120 days.

Some one mentioned that bank relationships are key. They certainly are!!
  1. Find out if the bank you currently do business with does SBA loans. Not just in theory, but how many have they done in the last 12 months? If the answer is not a least a few, move to another bank that does more small business work.
  2. Open a safe deposit box, add a savings account with a meaningful balance, Take out a CD for a few thousand dollars… in other words add dimensions to your relationship with the bank.
  3. Even if your plans are a couple of years away, ask to be introduced to a commercial banker. Tell them you plan to open a business at some time and want to become an important customer of the bank.
  4. Make absolutely sure that ALL you financial transactions are above board, on time, delcared etc. If you are working somewhere for cash, go find a legit employer and be able to show declared income.
  5. If at all possible, be a home owner!
  6. Talk to a SCORE counselor about business plans, cash flow projections, pro-formas. The business plan for a bank should not be longer than THREE PAGES!!
  7. Work with a commercial broker and an attorney when considering a lease!! I can’t tell you the kinds of stupid things I have seen agreed to in leases!
 
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I had a very unpleasant time trying to secure financing, even with the SBA doing 90% guarantee.

We both have credit ratings in the high 700 range, we own our home outright, and we own and operate 2 other profitable business’s. Our only financial liabilities are for our taxes, utilities, and food.

BUT! the words; Restaurant, Tavern, Bar, Nightclub, or anything else having to do with serving food or drink to the general public made loan officers run and hide under their desks. My SCORE rep and my SBA rep could not figure out why the banks would not even look at our business plan. As soon as the word “restaurant” was uttered, we got “I am sorry, we are just not interested”

Well, it turns out that all the banks in my area are in debt hundreds of millions of dollars to the federal govt., they all took TARP bailout funds and they are heavily regulated under the TARP deal.

I hope you have a better experience with your area than we had up here.

We are still going forward with our plans, but just scaled back a little bit because I am self-financing this venture.
 
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