Entering the world of entrepreneurship in the hospitality industry is an exhilarating journey filled with promise and potential. However, one of the fundamental steps to turning your vision into reality often involves securing the necessary funding. It’s important to understand your financials and potential borrowing capacity. These are some of the key things to consider why apply for a business loan and how to apply.
Understanding your financial needs:
Start by evaluating your business objectives. What do you hope to achieve in the next few years? Are you looking to expand your operations, invest in new equipment, or hire additional staff? Having a clear understanding of your goals will help you determine the amount of funding you’ll need to support these initiatives and should all be included as part of your business plan.
Have a solid business plan:
Having a business plan is one of the key aspects we recommend at Kode Finance to help successfully approved for a loan.
Your business plan needs to document what you are selling, your business strengths, analysis the business and its competition, don’t be afraid to include what makes your business different. The lender wants to see that you have experience, you understand your numbers and know the market. Your business plan and financials should consist of the list below:
- Your experience (business only) – the best thing to do is to talk yourself up, you are essentially pitching yourself to the lender to invest in the business.
- Any other past or current business interests and your successes out of it.
- Why did you choose to buy the business?
- What your plans are for the business for the next 12 months? Which would include any changes to the existing business, (new fit out, rebranding, upgrading equipment etc)
- 12 months projections for:
– Profit and loss (revenue, expenses and profit)
– Cashflow statement ( Profit and Loss and Cashflow statement (inflows, outflows, and cash balance) - Vendors/sellers last 2 years of Profit and Loss and Balance Sheet (Only for existing businesses)
You will also have to provide your personal assets and liabilities to the lender.
Know your limits when applying for a loan:
Once you have set a business plan in place, you will have a better understanding of how much you need to borrow to grow your business. It’s important to understand the type of loan and the possible additional fees you may be subject to. Calculating the overall costs and how much you can afford to repay is critical to the viability of the business. Even when purchasing an existing hospitality business, you need to be able to afford repayments.
At Kode finance, we’ll walk you through the essential steps of applying for a business loan tailored to your hospitality venture. I work with many clients who are unsure where to start and this can make the process lengthier than it needs to be.
By following these steps and being prepared, you can increase your chances of securing the funding you need to start or grow your hospitality business. If you are unsure of where to start, the Kode Finance team would love to chat with you. Click here to book an appointment.
