As new cafes open all the time, only a few people can finance them with their own money. Some potential café owners opt to sell their assets or use personal savings to get the venture up and running. Others look for business partners willing to invest in the enterprise. Securing a loan can also be an excellent option for starting a café.

The three types of loans for potential café owners include traditional commercial loan, business line of credit and small business loan. While small business loans take longer to process, they have lower interest rates. Though conventional commercial loans have lower charges and potential access to high loan amounts, they require you to have a high credit score.

Requirements for the Loan

Before asking an investor to invest a large sum of money in your café, you should have a proposal. The proposal should highlight the amount of the loan you are willing to spend on the café’s operations, marketing, and kitchen appliances. You need to decide the amount of the credit that goes to renovations, staff wages and benefits, license fees, insurance and commercial lease (if you don’t own the building). In addition, you should also opt for low interest personal loan. In effect, this will give you the leverage to pay back the money with less interest.

You should have a detailed business plan in place for the café when applying for any type of loan. The Shylock may ask for your personal history statement, personal financial statement, profit and loss statement, projected financial statement and ownership/affiliation documents. You also need to provide an original business license/certificate, application history, business overview, resume and income tax returns depending on the amount you need.

Putting the Loan into Productive Use

1. Find the Best Suppliers

You need reliable suppliers to enhance the growth and profitability of your venture. The supplier may offer the café with groceries, fresh produce, bread, milk, and coffee. They may also supply syrups, teapots, coffee stirrers, napkins and cups (porcelain and paper).

2. Procure the Relevant Appliances

A few options are at your disposal when it comes to sourcing appliances for your café. The most essential devices needed in a restaurant include a cash register, dishwasher, refrigerator, and commercial blender. You can buy or lease them using the loan.

3. Hire the Right People

The success of a café lies in the dedication and experience levels of the staff. You can use a portion of the loan as payday dues for your employees for the first few months before your café picks up. With the right staff by your side, you can easily make profits and manage to service the loan.

4. Market Your Café

Build your reputation once the café starts picking up. Post engaging and interactive content on social media platforms such as Instagram and review sites such as Trip Advisor to build up your online reputation. Use part of the loan amount to create online and offline marketing campaigns. You should also encourage the customers to bring their friends and relatives to your café.

Final Thoughts

Revenue generated from the café represent the months (or years) of your hard work. As an entrepreneur, pay attention to every procedure involved in getting the loan and setting up the café. Learn everything you can from the business to earn the highest returns.

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