How Much to Borrow

Don't borrow more than you can easily afford to pay back. Many assume that they can take out a large loan because their restaurant will be a smashing success which will generate tons of cash to repay a loan. Don’t make this assumption.

Don't rely on borrowing from your credit cards. This is a dangerous strategy which can put you into expensive, heavy personal debt and ruin your credit rating. Get money instead from commercial loans, outside investors and/or friends and family.

1. Bank

2. Small Business Administration - Contrary to what many think, the SBA does not lend money directly. Rather, it guarantees loans on your behalf, so that the bank will be more comfortable lending you funds. SBA loan guarantees require tons of information, from personal asset inventories to full business plans for the restaurant.

3. Friends/Relatives/Outside Investors

Lessons Learned

It’s better to start smaller than to open your first restaurant in a big space requiring lots of money. The larger the space, the more expensive it will be to run.