Our tips and steps for financing your restaurant

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Vanessa Auge

La Fabrik

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Drawing up a financial plan for your restaurant

Before you do anything else, you will have to draw up a detailed financial plan, listing all your restaurant project expenses. For example:

Acquisition or rental of a commercial property or acquisition of the business if you want to take over a restaurant
Energy costs (gas, electricity, etc.)
Premises fit-out works
Purchase of furniture and decor
Procurement of kitchen equipment
Legal and administrative procedure costs (drafting of articles of association, professional fees such as accountant or solicitor, company registration, legal publication, obtention of licence and operating permit, etc .)
Insurance costs
Initial inventory costs
Restaurant management costs (staff wages, employer contributions, etc.).

This forecast budget will allow you to clearly define the capital required to finance the opening of your restaurant.

To find out more about a restaurant financial and commercial strategies, see our article: The complete guide to writing a restaurant business plan.

Types of restaurant funding

The following types of funding can be used :

Bank loans
Crowdfunding
Microloans
Leasing
Business angels
Love money
Brewery loans.

Financing your restaurant with a bank loan

Applying for a business loan from a bank is the most common method of financing a restaurant.

However, in order for your loan request to be accepted, you must first convince the bank of your project’s viability.

Loans granted to restaurant owners usually have a term of two to seven years, or 15 to 20 years if you are purchasing a property. The required equity is usually around 30% of the loan amount (source: Bpifrance.fr).

According to Banque de France, the average interest rates for loans to purchase equipment stood at 1,22% at the end of 2021, and at 1,19% for property loans.

To maximise your chances of obtaining a loan, take the time to put together a solid financial dossier, including a detailed business plan and financial forecast. These documents are crucial for convincing the bank of your project’s potential and the seriousness of your application.

In addition, banks are more likely to grant a loan to an experienced restaurant operator. If you have no previous experience in the restaurant sector, it may be helpful to undertake specialist training or an internship (in addition to the mandatory training required to obtain your restaurant licence and operating permit). This will give your application even more credibility.

You should also be aware that various measures can be used for facilitating your loan application, such as a bank guarantee or an interest-free loan. To find out more about this, see our article on financial aid for opening a restaurant.

Financing your restaurant through crowdfunding

Crowdfunding – or collecting funds from individuals via an online participatory financing platform – is also a potential source of restaurant financing.

In exchange for donations, you can offer recompenses (promotions, free meals, etc.) or offer to repay the loan (crowdlending). Individuals can also become shareholders in your business (equity crowdfunding).

Crowdfunding has the advantage of being accessible to everyone. On the other hand, it requires a lot of work to raise funds, so you will have to spend time to it. In addition, the amounts received are generally small.

Some examples of participatory funding platforms are Ulule, KissKissBankBank, We do good or MiiMOSA.

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Financing your restaurant with a microloan

Microloans are small loans (less than €10,000), intended to finance business creations. Several organisations offer microcredits, including France Active and l’Adie.

A microloan may not be sufficient to cover all your restaurant opening expenses, but it can help you finance part of them.

Although microloans are easier to obtain than bank loans, you should be aware that the interest rate is generally higher (around 5% or more). The average repayment term is four years.

Financing your restaurant through leasing

With leasing, a financial organisation purchases your business or premises. You then become the lessee and pay a monthly rent to the lessor for a defined period. Leasing may include a purchase option, enabling you to own the premises (usually at the end of the contract). A leasing contract usually last between eight and 15 years.

Business angels

Another way to finance your restaurant project is to use private investors, or business angels, who will contribute capital to your business in exchange for shares in your restaurant.

To obtain restaurant financing from business angels, you will need to present a solid business plan and a detailed market study to convince these investors of the feasibility of your restaurant project.

Business angels are usually former entrepreneurs, executives or managers with a strong background in business creation. They will offer valuable advice and support for starting up and expanding your business.

These investors usually contribute up to 20% of the company's capital, with amounts ranging from €10,000 to €20,000 per year, on average. To find a private investor, you can contact France angels, Euroquity or Femmes business angels.

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Love money

Love money is money invested by your friends and family in the form of a donation, a loan or in exchange for shares in the restaurant.

This form of financing can be used to increase your equity, enabling you to obtain a bank loan. The advantage of love money is that investors are not looking to make a profit, but rather to support the project owner.

Brewery loans

Brewery loans – or the practice of obtaining or loan or equipment (chairs, tables, coffee machine, etc.) from a drinks supplier to help finance a restaurant’s working capital – are very common in the restaurant sector.

In general, a brewery loan exclusively ties the restaurant owner to the brewery, meaning you are committed to buying only from them and to ordering a minimum volume of drinks each year for a defined period up to five years. This type of loan can be taken out directly with the brewery or via a lending institution.