Creating a restaurant: how to finance your project?

Do you want to open a restaurant but are having difficulty obtaining a loan from your bank? There are alternatives to bank loans for financing your project. Launch a crowdfunding campaign, get the support of a Business Angel, call on an investment fund...

Discover all the financing solutions available to you and make your restaurant opening project a reality!

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What financing solutions are available for opening a restaurant?

Self-financing and bank loans are the traditional financing solutions for opening a restaurant. If you're having trouble getting a loan from your bank, don't panic! There are plenty of other ways to obtain financing. Here's an overview of financing solutions for setting up a restaurant.

Bank loans

To begin with, you can approach your bank to see if you qualify for a bank loan. To apply for a bank loan, you need to be able to present a business plan for the creation or takeover of a restaurant.

This file must include your company's business plan, together with a financing plan. The purpose of these documents is to demonstrate the financial reliability of your project, as well as to describe the strategy you intend to deploy and the expected return on investment.

Even if each bank has its own criteria, acceptance of a bank loan is generally based on several conditions: 

• the financial reliability of your project (realistic business plan, needs, resources, etc.),
• the balance between equity and debt (ideally, a contribution of around 30% of total capital),
• diversification of financing sources.

The honor loan

You don't have enough money to get a bank loan? You can boost your capital by applying for an interest-free, collateral-free, 0-interest loan, which you promise to repay "on your honor".

How to obtain an honor loan? In France, there are several national networks that can grant you honor loans after your file has been examined by a committee of experts made up of company directors, bankers, etc. :

• Initiative France
• Réseau Entreprendre
• Raise

The amount of the honorary loan varies and depends on your needs, ranging from €3,000 to €50,000 depending on your project. 

Fundraising

Why not get a helping hand from those closest to you? Don't hesitate to ask family, friends or other acquaintances for financial support. These funds, also known as love money, offer tax advantages such as tax exemptions or reductions.

As part of a family gift, you can receive up to €31,865 free of inheritance tax, subject to the following conditions:

• the donor must be under 80 years of age,
• the beneficiary must be the donor's child, grandchild or great-grandchild (or nephew or niece if there are no descendants),
• the beneficiary must be an adult or emancipated.

To benefit from these advantages, the donation must be formalized by a notarial deed, a private deed or a declaration of donation. In addition, the beneficiary must inform his or her local tax office within one month.

Microcredit

Microcredit is ideal for restaurant owners who have difficulty obtaining bank financing. Its aim is to support the creation, takeover or consolidation of a business, enabling project owners to generate or secure their own employment. In addition to the financial loan, this scheme includes personalized support for beneficiaries, with help with administrative procedures, cost management and business development, among other things.

Microloans are generally offered by non-profit organizations. For example, Adie offers a financing plan of up to €20,000, combining a microcredit (up to €10,000) with an honorary loan or public assistance.

The granting of a microcredit is based on several criteria, including :

• the project owner's profile: motivation, experience, skills, etc,
• the project itself: location, potential, sales forecasts, etc,
• repayment capacity.

Participatory financing

Also known as crowdfunding, participatory financing is an alternative way of raising funds from the general public to finance a creative or entrepreneurial project, mainly via the Internet. 

Crowdfunding is aimed at all restaurateurs, especially those who find it difficult to raise the funds they need to implement their projects using traditional financing methods.

To guarantee success, a crowdfunding campaign requires the ability to communicate well about your project, capture attention and convince potential "investors". Social networks (Facebook, Twitter, Instagram, etc.) and your personal network (friends, family, future customers, etc.) are important to kick-start funding right from the start of the campaign.

Business Angels 

Angel investors, or Business Angels, are entrepreneurial enthusiasts looking to invest some of their personal money in innovative companies and businesses. 

Business Angels provide you with financial support, but not only... Thanks to their experience in the world of entrepreneurship, they also provide guidance, advice and support throughout your project. They take a minority stake in the financed company, to give you maximum freedom and help you prepare for future financing.

Who are the Business Angels? Business angels are generally former or current company directors, passionate entrepreneurs and senior executives with a certain wealth, who are able to invest time and money - between €10,000 and €500,000 a year - in your project.

Investment funds

Like Paris-based foodtech Not So Dark, which raised €80 million in 2022 for its new virtual restaurant platform, restaurateurs can call on private equity funds to finance their projects. Investment funds are made up of professional shareholders who take a majority or minority equity stake in companies that are generally not listed on the stock market. 

In France, there are some 300 investment funds grouped together under the umbrella of theAssociation des investisseurs pour la croissance. 

Venture capital

Does your catering project have high growth potential? 

A venture capital fund is an investment product that enables investors to participate in the capital of a company with strong growth potential. In return for this capital investment, the company transfers shares to the investors.

State aid

There are a number of public assistance schemes that can help you make a substantial contribution to your restaurant start-up financing project: 

• the Creation Guarantee, granted by BPI France,
• Nouvel Accompagnement pour la Création et la Reprise d'Entreprise (NACRE ),
• regional aid.

Did you know? The aides-entreprises.fr database lists over 2,000 types of financial assistance, classified by need, geographical area and sector of activity. To find out which grants you're entitled to, visit aides-entreprises.fr. 

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How to obtain financing for your restaurant?

Before contacting investors, make sure you've got every chance on your side! You need to show them that your restaurant project is sound, with a business plan and financing plan. Your profile will also be of interest to investors, who will study your experience and that of your associates. 

A realistic business plan

The business plan is a document that sets out the restaurant's creation project and how it will evolve over the first few years of its existence.

The financial forecast, an integral part of your business plan, is an analysis that forecasts your restaurant's cash inflows and outflows. The aim is to evaluate the financial profitability in order to estimate your financing needs. When applying for financial assistance to open a restaurant, you should always draw up a financial forecast. This is where you present your financing plan, showing the capital you need for your business and how you're going to raise it.

👉 To find out more: 7 steps to a restaurant business plan

Your profile under the microscope

Beyond your track record, investors also want to know who you are. They'll be looking at your experience, motivation and skills in the restaurant business or in entrepreneurship, as well as those of your associates. They want to know that they can trust you, and that you'll be able to carry out your project from A to Z. 

Before meeting them, prepare for the interview and practice pitching your project.

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What are the other options for setting up a restaurant? 

Depending on your ambitions and your situation, financing your start-up project can be complicated. Here are some other financially advantageous solutions for setting up a restaurant:

Buying an existing restaurant 

Buying a restaurant can offer advantages such as an existing clientele and an established reputation. This can enable you to implement your vision more quickly and at lower cost than setting up a new restaurant from scratch. However, it's important to conduct a thorough investigation and consider the potential challenges before finalizing the purchase. 

👉 To find out more: How to take over a restaurant in 7 steps

Joining a franchise 

Joining a restaurant franchise represents an opportunity to benefit from an existing brand image, support and access to resources and suppliers. Before committing yourself, take the time to evaluate the obligations and limitations associated with the franchise. A thorough evaluation of the franchise and its contractual conditions is essential to making the right decision!

Choosing auto-entreprise

Auto-entrepreneurship offers a number of advantages linked to its simplified system, which can make it easier to set up and run your restaurant. Accounting and tax obligations are generally simplified, reducing the administrative burden. For example, as an auto-entrepreneur, you pay social security contributions and taxes on the basis of your actual sales. This means that if your business is just starting up and your sales are low, you will pay little or no charges. A great financial advantage at the outset, but with certain financial limits after a certain period of time, notably sales ceilings.

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Are you opening or taking over a restaurant? Contact an Innovorder expert to get personalized advice for your restaurant!