Restaurant Financing Sources

Family:

Attaining small business working capital from your friends or family is the second most popular source of business start up money. Despite the popularity of this funding alternative, there are many debates (and horror stories) on whether choosing this route is in fact a good idea. When borrowing from a family member there is a huge chance that there will be strings attached and it is difficult to determine at the time of borrowing how tight these strings will be pulled throughout the venture. Click here for more information on Family as a source financing for your restaurant business.

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Venture Financing:

The definition of venture capital has changed somewhat over the years and even varies from firm to firm, but it is generally understood to be capital provided to new ventures. Investors pool money for investment in growing companies, just as other investors deposit money into mutual funds. The investment funds are actively managed by venture-capital firms, which evaluate potential investment targets, disburse funds, and monitor the progress of investments. Venture capitalists provide large amounts of cash to new and growing companies that might otherwise be unable to obtain financing, owing to the youth of the company or the risk associated with its products or markets.

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Angel Investors:

An angel investor, also known as a business angel or simply an angel, is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors are organizing themselves into angel networks or angel groups to share research and pool their investment capital.

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Equity:

Equity funds come from personal moneys of the partners (such as savings, inheritance or personal borrowings from financial institutions, friends, relatives and business associates) and from stockholders of the shares in a corporation. These funds are normally unsecured and have no registered claim on any of the assets of the business, freeing those up to be used as collateral for the loans (debt financing). Higher equity creates " increased leverage." Leverage reflects the business ability to attract other loans and investment. An equity position of $30,000 may enable the business to obtain debt financing of up to three times that amount, $90,000. A fully-leveraged business has no further ability to borrow money.

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Loans:

A loan is a type of debt. All material things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.

Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.

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Cash Advances:

Unlike traditional loans, Merchant Cash Advances have no fixed payments, timeframe or interest rates. It is the purchase of future debit and credit card sales at a discount and it is repaid directly through a small percentage of your daily sales transactions. In order to obtain the Bank Card Advance, customers must have a relationship with an approved merchant service provider, for your Interac and Credit Card Processing. To apply for cash advance financing, click here.