Eliminating the Drama & Stress In Restaurant Financing In Canada restaurant financing

OVERVIEW – Information on restaurant financing options in Canada. Loans for restaurants in the hospitality sector come with challenges without expertise and knowledge of these basics in the hospitality finance sector


Restaurant financing options / choices in Canada often come with a significant amount of stress and drama. Why do loans for restaurants in as successful a sector as Hospitality in Canada come with a significant amount of ‘ angst’ for the borrower , and can those stress factors be successfully eliminated? Let’s dig in.

Probably no business segment in Canada is as attractive and appealing as the restaurant sector. That might be either an independently owned operation, or it might also be a part of a successful franchising chain. By the way, we think it’s pretty clear that simply being part of a franchise program is not a greater guarantee of success in financing in the hospitality area, because the majority of the criteria for lending and business success are in fact the same. That’s our story and we’re sticking to it!

One major factor in restaurant loans is the need for the owner/entrepreneur to have ‘ financial savvy ‘, with a strong knowledge of costs, profit generation , and the ability to manage assets.

Restaurants often go through various financing needs in stages. Initially there is that start up / turnkey financing that allows for the acquisition of a business. In some cases this can be the purchase of an existing location – with some rebranding or other management skills needed.

As the business starts and grows some level of operating financing is needed. This again becomes a challenge because traditional lenders such as banks view the business as an ‘ all cash ‘ business. So why would ‘ all cash ‘ businesses require financing. Arguably it’s not the same level of financing required as many other businesses, but there is still an investment in inventory, vendor payables, and payroll and fixed costs. All of these in a fluctuating or seasonal sales environment!

In certain aspects of the economy some business segments are constantly somewhat out of favour. This often pertains to restaurant loans, franchise or independent. Banks will focus significantly on the personal credit history and financial bench strength of the owner. Making matters more complicated is that lenders place significant emphasis on ‘ experience ‘, so if the purchaser has little or no experience in hospitality finance and operations that becomes an immediate negative.

Restaurant financing options require the same basics in any loan application. That includes a strong executive summary or business plan, owner bio, and industry issues that are properly covered off such as location, revenue potential, etc. A reasonable profit and loss and cash flow is absolutely required.

Actual financing options include the Government small business loan which can be properly tailored to either build a new restaurant or acquire an existing one. That loan typically maxes out at 350k but recent amendments to the program suggest higher limits possible. Specialty franchise finance firms can provide a total solution if the owner is part of a franchise system.

Other options include equipment leasing, working capital term loans, and merchant advance financing – the latter being popular but expensive.

If you are looking to eliminate drama and stress involved in a restaurant loan seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can ensure all options are ‘ on the table’!

Author: Stan Prokop
7 Park Avenue Financial :


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


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