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How To Secure A Loan For Your Restaurant Business?

There’s no doubt that the F&B industry of India is one of the few industries in the country that has been hit by the current economic downturn, with many restaurants closing as a result of COVID-19.

However, by 2022 it’s safe to say that the curfews, restrictions and rules for the F&B industry operations have been eased as the spread of COVID-19 is curbed. In fact, The Indian Food Services Market is expected to grow at a CAGR of 7% in the coming 5 years according to a forecast issued by FICCI, reaching Rs. 5.52 crore by 2025.

Most entrepreneurs who wished to open their own restaurant but were unable to do so due to the growing pandemic-induced financial crisis can now fulfil their long-lasted dream by securing a loan for their restaurant business.

Don’t let the tedious bank procedures and bank applications make you feel overwhelmed. We are here to help…

Here’s How You Can Secure A Loan For Your Restaurant Business In India In 2022

An MSME loan might work as a saviour, providing you with the funds at cheap rates, that help you to reignite your entrepreneurial goals.

But What Is An MSME Loan For Restaurant Business?

MSME stands for Micro, Small, and Medium Enterprises. MSME loan refers to a business loan offered by various banks for helping fund business start-ups like restaurants. These loans can be taken to set up your restaurant, purchase the required equipment, expand your restaurant and so on. This type of funding helps small businesses that are the backbone of the Indian economy to thrive. Instalment payment financing and customized advice are key features of MSME loans.

Eligibility Criteria of MSME Loan For Your Restaurant Business

  • Micro enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees
  • Small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees
  • Medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.
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A person checking credit score on a tablet | How To Secure A Loan For Your Restaurant Business

How To Get A Loan For Your Restaurant Business In 2022?

1. Create a Business Entity

Decide on a business format and partnership type. Whether you want to build a dine-in restaurant, cloud kitchen, food truck or bakery in sole ownership, Private Limited or Private Partnership. Once, you decide on this application for registration and get all the legal approvals to start your food business.

2. Decide the objective of your loan

After approvals and registration, make sure you lay out a solid business plan for your restaurant business. When you are looking for a restaurant loan, first consider the reasons for acquiring the loan like the acquisition of furniture, kitchen equipment, working capital, renovation and related reasons. The amount of the MSME loan will be dependent on such requirements and your capability to repay the loan. 

3. Get a bank loan sanctioned

Once your business plan is ready and your objective of loan and repayment method is clear, gather your financial documents and apply for the loan. Only registered MSMEs are eligible for an MSME loan so make sure to be registered. You can register from here

4. Documents Requirements For An Msme Loan For Restaurants In India

MSME loan eligibility requirements may vary from lender to lender. Common eligibility requirements are highlighted below:

  • Proof of address required
  • Proof of identity required
  • Proof of income required
  • Average annual sales of an entity
  • Credit history is relevant, as having a good credit score is a requirement
  • Additional Reading: Access your Business Health Report
  • Popular Types of SME Loans for Restaurants

MSME Loan for restaurant business in India  | How To Secure A Loan For Your Restaurant Business

List of all the Indian Banks Providing a Business Loan For Restaurants 

With the simplicity in which a loan can be obtained these days, opening a restaurant, cafe, cloud kitchen or even a dhaba can be a very lucrative business opportunity in the F&B industry of India.

Don’t forget to follow us on Instagram for more restaurant trends and updates!

Fatema Rasiwala
Fatema Rasiwala
Content writer at Petpooja

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