Thinking of opening a sports bar - NEED HELP!!! (credit, lending, borrowing)
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Im in the process of opening up a sports bar in Texas. The building size is 2,500 sq. ft. off a semi busy highway and the area is doubling every few years in population. A business plan is in the works, but not exactly sure what a bank is looking for to give out a loan. Therefore, I have a couple of questions:
1) How easy is it to obtain a loan ($300k to 500k) these days?
2) What are the qualifications needed to obtain this size of a loan?
Im in the process of opening up a sports bar in Texas. The building size is 2,500 sq. ft. off a semi busy highway and the area is doubling every few years in population. A business plan is in the works, but not exactly sure what a bank is looking for to give out a loan. Therefore, I have a couple of questions:
1) How easy is it to obtain a loan ($300k to 500k) these days?
2) What are the qualifications needed to obtain this size of a loan?
Any advise is welcomed!
You are opening a bar in this economic depression? Whataya nuts? No area in Texas or any other area in the USA is doubling anymore. You can say it but those who loan money will just point and laugh. Which leads to your biggest problem. There is not a bank on Gods green earth that will give you $300K-$500K for a bar. If you had a chain of 5 bars that were successful you might have a fighting chance with a track record.
Banks are not loaning any money today. Forget qualifications. They just ain't lending despite the billions in gifts......oops sorry I mean stimulus money for the purpose of lending to get this economy going. Instead banks used all that stimulus money to buy more banks in China and to give all the management big fat massive raises and bonuses (and to hell with the Tellers, CSRs and other low life employees). None used to make loans.
Sorry that is not what you want to hear. It's a fact of life and a sign of the times. In an era of great fear about drinking and driving, bars are starving a slow death.......unless of course you put go-go girls on stage, then you can't fail. But banks don't care if you have nude dancing, they just ain't lending for high risk businesses.
The easiest way to find out what your local banks want is to head on it and ask.
You'll find that getting this amount of money will require a good credit history, a good business plan, some experience in the hospitality business, and some means of fully collateralizing the loan independent of the bar business with your personal responsibility. In other words, if the bar business goes bankrupt, the bank will still have assets to seize/sell which will pay off the loan you've received. Of course, the collateral has got to be worth a lot more than the loan so that the bank has a reasonable expectation of being able to sell the collateral and get their money ... they're not in the bar business, they're in the lending business and they don't want your bar or the hassles of trying to sell a failed bar business.
Oh, they'll also want to see a substantial amount of money of yours going into the business, too. If you're setting up a new bar business around my location, they'd probably want you to invest about 50% of your own money into it ... to assure that you have more than a passing interest in making the business work. So, if you forecast that it will take $500K to open the place and have operating capital, deposit monies (utlilities, etc), business insurance, leased equipment, and so forth ... figure on investing $250K of your own money before a banker will even be interested in your venture.
To put this in perspective, I've been working on opening up a new manufacturing plant in a very high demand business in my area ... and my friendly banker is thrilled over my business experience, business plan, and the fact I've got the marketing worked to a point where the demand for my finished product far exceeds my ability to supply it from my modest business ... and they want to secure any loan I get either with a real estate line of credit, or by cash assets in my retirement funds. Dollar for dollar ... they will be completely secured, there's no risk on their part and they get interest on the money they'd "loan" me. What a deal ... and then the prospect of new taxes thanks to the recent legislation appears to be such a burden upon the business model that I don't see how it can be profitable. I've got the banker consulting his in-house tax/legal people to see if they can estimate the tax burdens I'm looking at, to decide if the business is even worth pursuing at this point.
Another avenue of approach for a sports bar (or any business) is getting private funding which in some cases is much easier if properly done.
Before I go into the “hows” of how this can be done, can you give us more details such as do you have a business plan and personal money for the investment?
@Sunsprit,
Please contact me privately; I am interested in learning more about your venture
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