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In January of this year I bought a "quick serve" restaurant (technical name) that was a national franchise, Baskin Robbins. We put down about 30% and could have done a little less but wanted to put more down to keep our debt service in line. The bank "valued" the business for us in the loan review and we were "right on" with the asking price and selling price. That "value" is based on equipment, assets, sales, and reported profits.
You said the owner wants $250k and you have $75k. I'd get a good idea of why its worth $250k before making a loan application. There is also nothing wrong with asking the seller to finance "his" price if its a fair price.
How can I buy a Restaurant?? Welcome
How do I get in touch with you?? Tell us more about yourself and this restaurant.
Where are you (like city and state??) Have you seen prior year tax returns??
Have you developed a Business Plan that I can read?? A Bus Plan is one of the first
items a bank or investor will want to see,
Do you know about SCORE?? SCORE is FREE and can help
Restaurants are a prohibited industry for many banks, so you may have some trouble with the bank loan. It's very common in these situations for the seller to hold the note, especially with the amount of cash that you have to put down. There are many advantages to having a seller note - less fees, faster closing, less ongoing monitoring, less collateral etc. Aside from that, having the owner keep some skin in the game will keep them available to help you if needed, as he wants to ensure that he gets paid.
If you can find a bank that will look at the deal, you need to make sure that the historical financials show the ability to repay a term loan of $175k over 5 to 7 years.
Based on your experience in the business and the amount of cash you have to put into the transaction, I think you have a good chance of succeeding!
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I'm a restaurant manager and, I'm interested in buying the restaurant that I work for, the good thing is that the owner wants to sell it at about 250K, I have saved 75K, I don't know if the bank could finance the rest, if it does it would be great because the the business is doing good it has lots of customers,