What you need to know about cafe commercial loans
Cafes are an attractive business option and we have many clients who have successfully applied for a commercial loan for a cafe. Our brokers have extensive experience sourcing the best loan product for our clients. Read on to find out more.
Am I eligible for a café commercial loan?
In order to be eligible for a commercial loan for the purchase of a café, banks will want to see:
- Good trading figures
- Good security profile
- A business plan detailing cash flow
- Prior experience managing a café- usually more than 3 years
- Excellent credit
Depending on the type of loan that you require there will also be differences in the allowable Loan to Value ratio:
- For a freehold loan (where you buy the actual premises) you can borrow 80% of the value of the property or 100% using the equity in a residential security.
- To purchase a café business, you can borrow up 50% of the value of an existing business, or up to 100% if you have property security to back you up.
What income documents do I need to show?
- The last 2 year’s balance sheet for the person selling the café.
- In some situations their last 2 year’s tax portals and BAS.
What type of security will I need?
- Typically banks will want cash or residential property as security for your commercial loan.
- Lenders also accept commercial property as security.
- There will be a bill of sale or a fixed and floating charge placed over assets held by the business.
- You will need to provide a guarantee, as a director of the business.
- As mentioned above, depending on whether you are buying physical premises or a business, will be what determines your allowable LVR.
Let us do the hard work for you, so you can focus on getting your café up and running! Speak to one of our café loan experts today!