Financing your Specialty Coffee Shop
Recently I finalized financing for my shop and I wanted most of you who are currently in the process to be aware of 2 major items; experience and collateral. We were face with these 2 major obstacles and it really made an impact on our ability to get a loan. The collateral bar has been raised HIGH, almost to 100% of the loan, this will make or break many of us. The experience side, well lets just say i had 6 years experience in the restuarant business (8 years ago) and it meant nothing to them. Beware of what your getting yourself into, when it comes down to it the bean counters are the final decision makers of your loan, so have all your espresso's in a row before your present the package.
I would suggest anyone adding to this, especially those that have had some experience with decent banks still willing to do 30-70 split when it comes to the down payment.
I would suggest anyone adding to this, especially those that have had some experience with decent banks still willing to do 30-70 split when it comes to the down payment.
Replies to This Discussion
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Permalink Reply by Denise Smith on
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We just discovered the more professional you and your proposal are the easier it is. Bean Business Basics has a great chapter on the two types of business plans and hop important they are.
We went knocking on four banks plus a mortgage broker. Two of the banks required a full financial disclosure form. One already had our info from our business property loan. and the others felt what we provided in our Biz plan was enough.
We put all pages in a three ring binder in plastic sleeves with a table of contents and numbered pages. We left one of these impressive notebooks with each bank. Several of the loan officers commented on how professional they looked. Note Bellissimo also provides this service if you need help. Check out http://espresso101.com/coffee_business_plan.html.
They can also provide the cold hard truth about if you are financially ready to take on a shop of your own.
With all the legal, health, and financial things to consider (just to name a few)... Opening a business is Not something to rush into. It is easier and less expensive to make your mistakes on paper then when you have deadlines and customers. Like the Boy Scouts say, BE PREPARED!
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Permalink Reply by Wilson Hines on
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Absolutely horrid, mate. Horrid.
They I bet you had to have an 800 beacon to get that out of them. I am here to tell you, it takes an investor. Forget the banks. Now, how hard is it to find an investor? Very, I would say. To make it attractive to them, you must have goals of multiple locations, and that just means degradation of quality.
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Wilson, I'm in a small TN town. The University my son goes to (MTSU) has more students then we have citizens here in town. We have a bunch of banks so they must all compete and two of them less then 2 years old. ~80)
While they are still looking for collateral you have to realize we have been paying on our mortgage for our property for a year and a half. We are using it and the new property as collateral and it has appreciated in value. We will then need a separate loan for the coffee house. We have invested about 25% of the total needed already. These bankers know we are in this for the long haul. We don't want multiple location and they know it. We want to be the best Coffee place in Tullahoma, Coffee County and all of Middle Tennessee. (I'll settle for that!)
I guess it's different everywhere you go. Good luck with your business.
(typo in previous post: hop important should be How Important)
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Yes, your in a good situation. So your right up under Middlesboro, TN? I have friends there...too many, in fact.
I wish things were better here. There is a bank here that started about six months ago. Actually just been bought out. In fact, they change the sign as often as people walk in and out of it. They say they are loan friendly and all that, but they loan you the money, sell the loan, and then leave. When and if things go South, the guy who loaned you the money and was understanding...is gone. They rent more deposit boxes than make loans.
Denise Smith said:Wilson, I'm in a small TN town. The University my son goes to (MTSU) has more students then we have citizens here in town. We have a bunch of banks so they must all compete and two of them less then 2 years old. ~80)
While they are still looking for collateral you have to realize we have been paying on our mortgage for our property for a year and a half. We are using it and the new property as collateral and it has appreciated in value. We will then need a separate loan for the coffee house. We have invested about 25% of the total needed already. These bankers know we are in this for the long haul. We don't want multiple location and they know it. We want to be the best Coffee place in Tullahoma, Coffee County and all of Middle Tennessee. (I'll settle for that!)
I guess it's different everywhere you go. Good luck with your business.
(typo in previous post: hop important should be How Important)
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Permalink Reply by Steve on
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Denise,
Thanks for the feedback, sounds like your in a great situation!!! I wish you the very best in your new coffee shop and be sure to keep us all informed!!!
Denise Smith said:Wilson, I'm in a small TN town. The University my son goes to (MTSU) has more students then we have citizens here in town. We have a bunch of banks so they must all compete and two of them less then 2 years old. ~80)
While they are still looking for collateral you have to realize we have been paying on our mortgage for our property for a year and a half. We are using it and the new property as collateral and it has appreciated in value. We will then need a separate loan for the coffee house. We have invested about 25% of the total needed already. These bankers know we are in this for the long haul. We don't want multiple location and they know it. We want to be the best Coffee place in Tullahoma, Coffee County and all of Middle Tennessee. (I'll settle for that!)
I guess it's different everywhere you go. Good luck with your business.
(typo in previous post: hop important should be How Important)
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