The handbook · Before you open
Loans and money
Nobody has the whole sum in the mattress. Here are the ways in, and this is how you avoid the expensive ones.
Summary
Many finance a restaurant with three parts: own capital, a bank loan and leasing on the equipment. The bank wants to see 20 to 30 percent of your own money, a budget and a cash flow plan. Almi lends when the bank thinks the risk is too high, but takes a higher interest rate. Pure grants for a restaurant are rare.
Numbers to plan with
- 20 to 30 %
- of your own money is what the bank normally wants to see before it lends the rest
- 5 to 7 years
- is a common term on a loan for kitchen equipment
- 10 to 30 days
- of credit the wholesalers give once you have built up trust
- Personal guarantee
- is required of almost every new owner, even in an aktiebolag
What the bank really looks at
A bank does not lend to a dream. It lends to a calculation it believes in and to a person it believes can run the place. Come prepared, and you get both better answers and a better interest rate.
Bring the documents on paper to the first meeting. The case handler has to be able to pass them on inside the bank without calling you again.
- A budget for the first year, month by month, with careful revenue
- A cash flow plan that shows when the money really comes in and goes out
- What you put in yourself and where that money comes from
- Your own experience of kitchen, till or leading people. If you have worked in a restaurant, say so.
- The lease or a draft of it, plus a quote for the rebuild
- Count on a personal guarantee. The bank wants you to share the risk.
Almi and others who lend
Almi is state owned and works in the whole country. They step in when the bank thinks the risk is too high, but rarely on their own. The usual setup is that the bank takes one part and Almi the rest.
The interest rate at Almi is higher than the bank's. That is the price for someone taking the risk the bank does not want.
- Talk to the bank first, then Almi. They will ask what the bank said anyway.
- Almi has advisers who read your calculation for free. Use that even if you do not borrow.
- Partner loans and micro loans exist for smaller amounts
- If the family lends you money: write a loan note with interest and a plan. Verbal deals ruin relationships.
Leasing, instalments and supplier credit
Equipment does not have to be bought for cash. Leasing spreads the cost over the years and leaves more money in the till, which is often what you need the first months.
Work out the total anyway. Leasing over five years costs more than buying, sometimes thirty percent more.
- Fridges, freezers, ovens and dishwashers can nearly always be leased
- The coffee machine and the drinks fridge are often put in for free by the supplier if you buy their goods
- A cash register system and terminal can be rented by the month instead of bought
- Wholesalers give credit after a few months of payments on time. Ask for it.
Grants and support that really exist
There are few pure grants for restaurants in Sweden, and anyone who promises you a big state grant for a fee is someone to walk away from. What actually exists is mainly two things.
- Support for starting a business through Arbetsförmedlingen, if you are registered as a job seeker. Apply before you start, not after.
- Regional business support in sparsely populated areas, applied for at the county administrative board or the region. The rules differ a lot between counties.
- The municipality sometimes has a rent discount or start up support in towns where shop premises stand empty. Ask the business office, it costs only one phone call.
Common questions
Can I get a loan without putting in my own money?
Rarely from a bank. Without your own money you need other security, for example a guarantor or a home. A common setup is that the family puts in the equity and the bank lends the rest.
What does a business loan cost?
The interest rate is set by risk and security. A newly started restaurant lies well above a mortgage rate. Ask for the effective interest rate and the arrangement fee, not only the monthly cost.
What happens if I cannot pay one month?
Call the lender before the due date, not after. A three month break from repayments is sometimes possible if you get in touch in time. Whoever says nothing and misses the payment gets worse terms.
How much is the restaurant worth if I want to sell later?
A small place is often valued at two years of profit plus the value of the equipment. If the bookkeeping is in order and the lease can be taken over, the price goes up. Sloppy bookkeeping lowers the value at once.