Alternative / Specialty Lenders These lenders may offer more flexibility, especially if your credit isn’t perfect — but often at higher rates. Good for business debt, equipment, or short-term loans. Step-by-Step: How to Execute a Restaurant Refinance Audit Current Debt & Financials List all loans, credit lines, advances, terms, rates, payments, collateral, and covenants. Set Clear Goals What is your primary objective? Lower monthly payment? Cash-out? Simpler structure? Growth capital? Get a Property Valuation / Appraisal For real estate-backed refinancing, the lender will require an appraisal to assess property value and equity. Shop Lenders / Get Multiple Bids Don’t accept the first offer. Compare rates, terms, fees, flexibility, and lender reputation. Good Lenders & Loan Programs to Explore Here are some of the most viable routes for restaurant refinancing in the U.S.: Bank / Commercial Lenders Traditional banks can refinance both property and business debt. They typically offer more competitive rates for strong borrowers. SBA 504 Refinance Program A government-backed program that lets restaurant owners refinance existing commercial mortgage or fixed-asset debt with favorable, long-term terms. It can also provide cash-out up to certain limits. Cash-Out Commercial Refinance Replace your existing real estate loan with a larger one and take the difference in cash. Useful for reinvestment or paying down high- cost debt.
Sample Scenario (Hypothetical) Current Situation: Restaurant property loan at 8% fixed, 10-year term, monthly payment high. Business has multiple credit lines at 12–16%. Refinancing Move: Refinance property with an SBA-backed 504 loan at 5% fixed for 25 years, take cash-out (if equity available) to pay off high-interest debt. Consolidate business debt under one lower-cost term loan. Result: Lower monthly debt service (improving cash flow), debt simplification (less administrative burden), and better funding for capital improvements or growth. market conditions. If rates drop again or your business strengthens, you might refinance again. Refinance Follow-Up Monitor the new loan’s performance and Perform Break-Even Analysis Calculate how long it will take for the savings (or benefits) to cover the costs of refinancing. Review Loan Documents Carefully Look for hidden costs, prepayment penalties, restrictive covenants, or cross-default clauses. Close & Fund & Move Debt Over When the refinance closes, the old debt is paid off and you begin repayment under the new terms.
HOSPITALITY NEWS OCT | Page 65
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