Bank Loan Proposal Template
Attn: [Lender.FirstName] [Lender.LastName]
PandaTip: The introduction section should be treated like an executive summary with a human touch. Explain who you are, your background and qualifications, the type of business you want to start, and where the loan money will be used. Be concise but informative. And include a photo of yourself to personalize your proposal.
Dear [Lender.FirstName] [Lender.LastName],
I have been in the restaurant industry for more than two decades, holding positions from the front of the house to the back of the house. I’ve worked in several major U.S. markets, including New York City and the San Francisco Bay Area, and overseas in South America and Europe.
I first started out in my grandfather’s restaurant busing tables and doing dishes, and for the past 5 years I have been the manager of a highly acclaimed and popular destination restaurant in San Francisco. I also hold a Bachelor’s Degree in Food Business Management from the Culinary Institute of America.
Since those early days in grandpa’s kitchen, I have wanted to run my own restaurant. I believe my time is now, as I have the necessary experience, industry relationships and connections to make this happen. With help from those industry connections, I’ve created a sound business plan that borrows from established ventures but takes things a step further.
The following proposal will show [Lender.Company] why I need a loan to launch my restaurant and how the money will be used to complement my existing capital.
PandaTip: Give the lender a sense of your business’s history and where it stands today, along with your market, target clientele, and overall industry. This will show your lender that you are qualified to do business in your desired industry. Also include applicable photos, such as your logo or an interior shot of your business, your staff members, or renderings you might have created.
At its core, a restaurant is a gathering place to relax, refuel, and commiserate with others. The world is full of different cultures, but one thing we all share are meals together. I’ve taken this ethos to heart, and it is the driving force behind my concept for a restaurant.
In San Francisco, it’s not enough to just serve good food; you are selling an experience as much as a meal. The city is one of the top markets for restaurants in the country. It was one of the first two regions, along with New York, in the U.S. reviewed by Europe’s esteemed Michellin Guide, and it contains the most restaurants per capita of any U.S. city. In essence, San Francisco is a trend-setter in the food world.
My restaurant is currently in the buildout phase, with an anticipated opening date of six months from now. We have secured a lease in a space in a neighborhood that has steady foot traffic, is popular with tourists and locals, and does not have any similar restaurants already. The space will be bright and open, with an exposed kitchen in the rear to show off food production and a 360 degree bar in the center with ample space to wait for a table and have a drink. We are aiming for seating of up to 50 at a time in order to give patrons a more personal experience.
We envision a younger clientele, with plenty of out-of-towners due to the neighborhood being popular with tourists. Our prices will be very competitive in order to attract customers, but I also believe in living wages and benefits for our employees. To this end, all tips generated by the service staff are pooled together and dispersed equally depending on each employee’s function in the overall operation of the restaurant.
There are two more investors in my restaurant, in addition to myself. We each bring something unique to the concept, all having spent our careers in the restaurant industry.
One investor is a veteran in beer, wine, and spirits who runs a bar consulting business in San Francisco. He has helped open some of the cities most popular and well-respected establishments. He has also won numerous industry awards. His focus is on using fresh ingredients to craft cocktails that pair well with food.
The other investor is a seasoned chef who has worked for some of the finest restaurants in the U.S. for two decades. He studied cooking in France, and held two apprenticeships in Spain. His food has been lauded as “cutting-edge California cuisines.”
I bring to the team the front-of-house experience, handling the direct contact with customers and managing the service staff. I have over 10 years of direct restaurant management experience at high-volume locations in San Francisco and New York.
PandaTip: Tell your potential lender how much you need and why. Give specifics about how the money will be used and how you arrived at that particular figure.
Our budget for the restaurant is $250,000. Of that, the three investors including myself have raised $125,000, meaning we need another $125,000 to launch the restaurant. Our existing investment is being used to pay lease costs on the space while it’s built out and construction expenses to renovate the interior. It’s also going toward city and state permit and licensing costs associated with restaurant and bar operations. As stated previously, we anticipate an opening date of six months from now.
The money we are requesting from [Lender.Company] will go toward the following needs:
- Kitchen equipment, $75,000: We believe quality food comes from good products. We need to purchase general cooking utensils, tableware and silverware, a new industrial-size oven with a 10-top burner, and refrigeration equipment.
- Bar equipment, $25,000: Our bar will use only the finest ingredients and spirits available, in addition to a small and well-curated beer and wine list. We have established relationships with beverage industry distributors for these products at competitive rates.
- Food, $25,000: No restaurant is complete without its menu. Through our years of experience and vast connections, we have established relationships with food purveyors around the state of California and elsewhere in the U.S. to supply the restaurant. These products will be the last items ordered before opening.
PandaTip: Tell your lender what kind of loan you desire and the terms for repayment, such as the interest rate. You also want to show how you will repay the loan based on sales and cash flow projections. If you are unsure of what to expect, do some online research and expect to negotiate with the lender.
We are asking [Lender.Company] for a loan of $125,000 to be repaid over one year at a rate of 6% interest, making payments of $11,041.67 monthly.
Our estimates for revenue are an average of $6,000 per day over 22 operational days per month for a total revenue stream of $132,000 a month. After factoring in staff costs of $25,000 per month and operational costs of $75,000, we are left with enough money to comfortably repay a loan under those terms.
PandaTip: Lenders will ask for security for your loan. Collateral is essentially insurance for the lender in case cash flow projections don’t materialize. You and your business partners will need to put together assets that can be used as collateral. This can be done in a simple Excel-style spreadsheet and should be attached to your loan request proposal.
Spreadsheets for each partner are attached showing various forms of collateral we are putting up as security for our loan request. Among them are mutual fund investments, equity from ownership of two separate residential properties, and savings accounts.
PandaTip: These are more documents that you will need to attach with your loan request. Each partner/investor in your business who has more than a 20% stake should include personal financial statements that are less than 90 days old. You also might be asked for tax return documents for up to three years. As for the business financial statements, if you are asking for a loan for an existing business, then include balance sheets, income statements, and reconciliation of net worth for a three-year period. If you are requesting a loan to launch a business, then include projections of income and a balance sheet.
Attached to this loan request are personal and business financial statements for each partner.
PandaTip: You should give your potential lender income and cash flow projections if you’re requesting a loan for a new business, or existing documentation showing that if your loan is for an existing business. You will also want to show your lender how you will adjust operations in the event your projections do not materialize
Other documentation attached to this request includes income and cash flow projections for the restaurant, and alternative operational structures in the event our projections do not materialize.