Forums: Discussions for entrepreneurs and small business.

Well, I had a second meeting with a counselor from SBA today and my bubble has been burst.  My 1st meeting went well, they went over my business plan and gave me some tips to tighten it up.  They thought my numbers were good and we set up another meeting to go over some loan proposal paperwork. 

Well something changed between the 1st meeting (2 weeks ago) and this meeting.  Now they say to wait a year, maybe two, before I try to get funding.  They said banks aren`t giving money for start up restaurants right now because of the economy and it would be a waste of mine (and theirs) time to try. 

I`m crushed. 

Is this true?  Are banks not giving to risky businesses like restaurants?  Do I have any other options seeing as I don`t have the funding to do this myself?

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Joe F. Clark
Senior Principal
Start-Up Smart, LLC. - the clever way to accelerate your business
jclark@startupsmart.net

I`m sorry to hear about your counselor`s opinion (not advice). Some quick comments:

1. The loan proposal paperwork was probably for an SBA guaranteed loan, which is actually processed by a bank.
2. It`s been my experience that when SBA counselor`s think about capital they think SBA loan.
3. Banks have long considered start up restaurants as high risk for loans - especially without collateral.
4. There are several possibilities for acquiring capital - depending upon many factors specific to your situation.
5. There is no question that the "traditional" lending community is in chaos right now - but solid deals (which are Capital Ready) are still getting done.

I can`t comment as to whether your deal is possible or not since I don`t have any information. It will likely be more challenging and possibly more costly than a few years back - but with preparation and persistence, it probably can be done.

 

 

 

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Can you reduce down the concept from a restaurant to perhaps a "shack" kind of thing? I`m thinking of Portillo`s, who literally started with a hotdog stand on wheels, in a corner of a parking lot. Also the many gyros places around Chicago, some of which I watched start as an almost-falling-down wooden shack, and went on to buy the entire lot and build a large restaurant?

The key here is your BBQ. If that`s good, you`ll get customers no matter how it`s presented (obviously, in context). You might start with a very limited menu, focusing totally on exceptional barbeque. If it was small enough, you might be able to get a loan using some sort of collateral?

Again, I`m thinking really really small, but with the focus on the food. If you can build the word-of-mouth, I`m thinking you can reduce the risk to the financial people by showing them an existing business, some trend data, and so forth. Would that work?

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Craig,

While starting "small" may seem to reduce risk, because one doesn`t put as many "chips in the pot" - in some situations, starting small means staying small. Every situation is different and I advise my clients to make an informed choice after considering all the implications.

 

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

While I like your idea, and have actually considered it in the past, in a town like the one I live in, I`m not sure it would go over well.  We have "fast food" joints, (which is kinda how I consider a BBQ Shack) but they are never as busy as the real dining places.  We`re a town (and State) of leisure.  Take your time deciding, ordering and eating.  A bbq shack, even with picnic tables outside (and in 100 degree weather, eek) I just don`t see here.  But I do appreciate the idea.  Maybe I need to just try this myself (going to bankers) with my business plan, as someone mentioned above that it was really just an SBA workers opinion that I wait.
My business plan is done, it could probably use a little tightening up, but it is basically ready for viewing. 

I`m not particularly recommending starting small, I`m only thinking of ways around the lack of an SBA loan. If there`s another way, that`s fine too. :-)

Talking to bankers can be helpful. Just remember, they have their own "template" for lending. Just because your situation doesn`t "fit" their template - doesn`t mean it`s not possible. There are a number of ways to bring capital into a business.

Good luck - send me a PM if you have questions.

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

You may want to consider leasing the equipmet you need for your restaurant.

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Dave Lambert
FC Financial L.L.C.
Tel 727-233-1111
http://www.fcfpayment.com
dave@fcfpayment.com