Case: Prime Cap: Options For Financing Your Restaurant

Opening a restaurant sounds like a great plan, and you have prior knowledge of how the business run help with success of the restaurant. There are so many factors to keep in mind with a restaurant not only keeping the guest happy to come back again, hiring the right staff is also the key. I think people forgot what it takes to run a successful restaurant so having working general ledger and keeping it up-to-date will help. Thus, allowing owner to review and see how the business is doing at any giving time. Furthermore, using your past experience from previous restaurant worked and learning from their mistakes would help improve your business.

This company, a retail clothing store with three suburban locations in Atlanta, Georgia, is incorporated, with each of the three Boudoir sisters owning one-third of the outstanding stock. The company is profitable, but rapid growth has put it under severe financial strain. The real estate is all under mortgage to an insurance company, the inventory is being used under a blanket chattel mortgage to secure a bank line of credit, and the accounts receivable are all being factored. With total assets of $7 million, the company now needs an additional $450,000 to finance a building and fixtures for a new outlet.

par. 3). Start-up capital plays a vital role in putting up a business. How are the owners will operate the business without the finances? How are they going to pay all the expenses like salaries, taxes and materials they need for the business without the money? There are several ways on how to finance the business. Canada Business Network (n.d.) enumerates these ways like government grants, private sector financing, financing from non-government organization, equity financing and personal assets (par. 1). In Canada, there is a government owned financial institution that supports the finances of small businesses which is called The Business Development Bank of Canada (Williamson, 2008, p. 33). Most small business owners do not realize that there are several pathways to finance their businesses that’s why they end up frustrated and unsuccessful. It would be beneficial for the small business owner to know that there are resources available for

Although the restaurant industry is perceived to have high risk of failure, the risk of a restaurant failing is not too different from other small businesses. Parsa et al. quantified the risk of failure at 26% in the first year and 57% by year 3. He also described several factors that can influence the risk of failure. Those include physical location, firm size, speed of growth, differentiation from other restaurants in the market, adapting to external trends, and management experience. In terms of location and differentiation, Paul’s bar will be located in a new development designed to attract affluent customers and with very few competitors. Paul’s small firm size increases risk because of barriers to attract partners (i.e. suppliers and bankers are prejudiced against smaller firms) and growth that may be too rapid to manage. On the other hand, Robert already has experience in the restaurant business and should know how to run the bar and subsequent restaurant. Their choice of a piano bar may be in response to local trends that favor success.

Bubba, I am writing this memo so that you can further understand the problem that you are encountering. You want to receive further funding in order for your restaurant to grow and expand across the country. The issue that the bank is having with you and the restaurant is that you are not supplying sufficient evidence for them to decide whether or not they want to grant the loan to you to expand your restaurant. Before the bank can decide on your loan, they require financial statements documenting the revenues, profits, and assets of your restaurant. These statements show the bank if you possess enough funds in order to pay back the loan but they also use it to measure the amount of potential for the restaurant because whenever a bank grants a loan to a business or business owner, they are making an investment in that individual or business.

As competition increased between savings and loans, banks, and credit unions, banks were eager to attract loan applicants in order to increase revenue and compete with other financial institutions. Jack S. Light, the author of Increasing Competition between Financial Institutions, said in his book that “commercial banks are diversifying their assets toward higher percentages of mortgages and consumer loans, and thrift institutions are seeking authority to diversify their loan structures. Moreover, mounting pressures are working toward, and have partially succeeded in, changing the authority of thrifts to include third-party payment accounts similar to commercial bank demand deposits.” (Light) Because of this eagerness to bring in new clients, they were willing to give out loans without checking into the financial stability of the borrower or the business that was requesting the loan. Unfortunately since the banks didn 't look into their clients’ financials adequately, many clients defaulted on their loans because they could not afford the payments, especially when balloon payments started.

There are many key aspects to owning and operating a successful restaurant in a competitive market with little or no room for error. A restaurant’s

For most small business seeking SBA loan programs, the SBA 7a and the SBA express will probably meet their needs. However, if you are needs are greater, you should go directly to the SBA website and read up, as there is a wealth of information that needs to be carefully considered prior to applying. If you are a business who has been turned down by the SBA, or in need of quick working capital flexible credit terms, click here.

Plaintiff, Suzie Starr (“Plaintiff”), brings suit against Fullback Steakhouses, Inc. (“Fullback”) and Fullback’s CEO, John Ritchie for damages arising out of a commercial run by Fullback in August of 2016. The Plaintiff is a prominent health food and lifestyle guru. Fullback Steakhouses, Inc. is a chain of sports bars located and incorporated in New York. John Ritchie serves as CEO of Fullback Steakhouses, Inc., and resides in New York. The commercial advertisement in controversy features a cartoon robot dining at one of Fullback’s dining establishments. The Plaintiff contends that the cartoon robot that appears in the commercial advertisement produced by Fullback misappropriates her likeness and violates New York’s statutory right of privacy. The Plaintiff seeks injunctive relief; compensatory damages; punitive damages, to the fullest extent permitted by law; an award of interest, costs and attorney’s fees; and such other relief as the court deems appropriate.

As the U.S. economy continues its struggle to climb out of a deep recession, personal loans remain very difficult to secure. Having shouldered much of the blame for the financial hardships that have befallen consumers across the nation, many banks now require potential borrowers to meet strict criteria for an approval. With the financial institutions being more selective about who they assist, Detroit locals like Ashley Wright are learning that consumers with excellent credit and decent paying jobs are the most likely to make the cut. "Getting an approval was definitely a journey," said Wright, who was in search of a personal loan to help out with school and living expenses. Wright found that a private bank was the best place to turn for

Mr. Paul Mackay, a sole proprietor, has approached the Commercial Bank of Ontario in order to obtain an additional $194,000 bank loan and a $26,000 line of credit. Paul owns and operates a general merchandising retailer in Riverdale, Ontario named Lawsons’. The bank loan is needed for Mr. Mackay to reduce his trade debt that has a sheer 13.5 per cent interest penalty. The line of credit is needed for sales seasonal downfalls so that Mr. Mackay could properly manage those tough months. Jackie Patrick, a first time loans officer, has been appointed to Mr. Mackay’s request. Although anxious to finish her first loan, Ms. Patrick knows that this particular case is a difficult one.

One of the many financial resources that the SBA has available is their loan program. This program offers various loans to help businesses in times of need. The most common loan is a basic 7(a) loan. The 7(a) loans are available for eligible borrowers who need help to start, acquire or expand a small

One of the first options that an entrepreneur will explore for financing is debt, usually through a bank loan. Before appearing on Shark Tank, Miller applied for a $40,000 business loan, but was rejected. Another financing option is a line of credit, but this can be costly as a result of fees and interest payments. For either of these options, Element Bars would almost always be rejected because the company has very little assets or collateral.

McDonald’s has extremely strict rules when it comes to awarding franchises. First, it is very costly to open a new location or purchase an existing location, with the median startup cost being $300,000 (Kalnins & Lafontaine, 2004, p. 750). As well, the company does an extensive background check on a variety of issues including credit history, business management experience, and the acceptance of the contractual agreement that the company provides. Because of these strict rules and the large amount of capital needed to purchase a location, “rates for franchise applicants are 1% for McDonald's” (Norton, 1988, p. 204). This is an extremely low acceptance rate and is even lower than McDonald’s chief competitor, Burger King, who accepts 1.5% percent of applicants (Norton, 1988, p. 199). These low numbers are understandable in the context of the business and risk that is involved. Though the franchise purchaser must pay a large amount of money to gain the rights to the restaurant, they truly have nothing to lose besides money because they are simply running another company’s business model as well as using their trademarks and logos. McDonald’s on the other hand, has a great amount at stake because they place the well being of an entire restaurant into the caretaking of an individual who simply purchased the rights for the store. If the store does poorly or if there are issues with customer service, it reflects

Banks issue credits to organizations seeking funds for there ventures. The bank usually “prefers a self-liquidating loan in which the use of funds will ensure a built-in or automatic repayment scheme” (Block & Hirt, 2005, Chapter 8, p.