Getting a Business Loan for a Thai Restaurant

Business loans for Thai restaurants are moderately easy to obtain. Most banks and lenders are willing to put up the needed capital for a Thai restaurant business provided that the owner has a 20% capital infusion that is going to be injected into the company in order to commence revenue-generating operations. Generally, the entrepreneur or founder of the business is expected to put up the necessary capital in order to finance the working capital operations of the business. The proceeds from the business loan are typically geared towards furniture, fixtures, equipment, build out, and opening inventory. In the event that real estate is being purchased in conjunction with the development of the restaurant and the overall capital requirement may be somewhat less as it relates to the down payment. However, a 10% to 20% down payment is still going to be required even if real estate is going to be included as part of the overall startup costs.

One of the key things to show to a financial institution if you’re applying for a business loan specific for Thai restaurant is the gross margins are going to be generated on a daily basis. Most restaurants have food costs that represent 20% to 30% of the underlying overall costs of operating the restaurant on a day to day basis. Additionally, one of the key things are going to want to see as well as a very high transactional volume. For Thai restaurants, this includes a combination of dining-in revenues, takeout and delivery revenues, and the occasional catering order.

One of the nice things about Thai restaurants is that they are very popular in most markets given that more people are now becoming accustomed to eating ethnic cuisine. As such, the competition most markets for a Thai restaurant is considered to be moderately low with the exception of major metropolitan areas where these restaurants are pretty common. Within the documentation or business plan that is going to be prepared specific for Thai restaurant, a discussion regarding how an online website will be used in order to generate takeout and delivery orders should be included as well. Most financial institutions are going to want to see that the entrepreneur is going to be maximizing revenues by drastically expanding the market size in which they can operate outside of their standard retail location.

As part of the documentation that would be presented to a financial situation, an overview of the marketing is going to be required as well. Specific to a Thai restaurant, a broad-based local and regional marketing campaign should be developed in order to ensure maximum visibility from the restaurant from the onset of operations. Many loan officers place a significant emphasis on the marketing plan that is developed and usually is included within the business plan war as a stand-alone document.

Within the documentation, a full examination of all assets to be purchased with business loan proceeds should be included as well. This includes the make and model number of the kitchen equipment required coupled with an overview of what vendors will be sourced as it relates to tables, chairs, inventory, and vendors for other soft goods relating to the day-to-day operations of the restaurant. This is something that most financial institutions want to see in order to make sure that the borrowed funds are going to be allocated appropriately towards these expenditures.

Additionally, an overview of the ongoing cash flow of the restaurant should be included as well. This is important to note as many Thai restaurants to run a loss for several months before they become popular within their target market. As such, by providing a bank with an understanding of the business is cash flow needs they will feel more comfortable and extending credit for the development of a Thai restaurant. Most importantly, a full profit and loss statement should be provided to the bank so that they understand exactly when the business will go profitable. As with any type of lending, financial institutions want to make sure that they are going to be able to receive their monthly interest and principal repayments in a timely manner.

In some cases the entrepreneur may be able to negotiate interest-only payments for the first six months to 12 months of operation. However this is somewhat of a rarity – and as such – it is important that the entrepreneur be able to immediately begin to repay the financial instrument or debt obligation once revenue-generating operations commence. Usually there is a slight lead time that allows the entrepreneur to establish the location and commence revenue-generating operations before the repayment period begins. These are all things that are subject to negotiation when working with a loan officer at a bank, credit union, or specialty loan financing company.

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