The demand for restaurant financing is significant. There are many people aspiring to own their own restaurant, and then there are the franchise restaurants that must be financed. Unfortunately, most restaurants are difficult to finance.
Restaurant financing is easier to do under $2 million. Over that amount, the sponsor should have a substantial track record as well as other collateral. An existing building is often considered special purpose in that its best use without alteration is another restaurant. Then there is the extensive equipment required.
The single most important factor influencing the size and quantity of loans is the fact that restaurants have a very high failure rate. The sponsor's experience in business and the food service industry counts a lot in determining the feasibility of these loans.
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