New SBA Programs: Standards For Restaurant Financing
The following Restaurant Financing Options Are Available For Immediate Implementation.
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Non-Franchise Restaurants
- Existing Restaurants Only
- Maximum loan to value of 75% on the acquired restaurant building
- Non-real estate business acquisitions are considered only if fully collateralized by a first lien position on other real estate using a 70% loan to value
- Borrower must provide evidence of verified liquid assets (after any capital contribution) sufficient to cover total debt service for six (6) months
- Historical debt service coverage of 1.3x for the past two years
- Direct experience in the industry is required -
Franchised Restaurants
- Must be listed on the SBA Franchise Registry
- Maximum loan to value of 80% for fixed assets, 75% for soft assets
- Advance rate for all start ups (regardless of collateral type) cannot exceed 75%
- Borrower must provide evidence of verified liquid assets (after any capital contribution) sufficient to cover total debt service for six (6) months
- Historical debt service coverage of 1.3x for the past two years (except start ups)
- Direct experience in the industry is required -
General Lending Policy
- Business principal(s) must be experienced in the industry
- Business principal(s) must have sufficient liquid assets [minimum reserve of six (6) months total debt service] available in times of temporary business downturns; and
- Business has demonstrated 1-2 years of historical cash flow to cover debt service 1.2X
- Business has demonstrated 2-3 years of historical cash flow to cover debt service 1.3X -
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