Larkridge Funding Group, a small-business funding broker in Decatur, Illinois, explains how to approach opening a restaurant in an existing Macon County space: checking what equipment comes with it, sorting costs into categories, matching each to equipment financing, a term loan or working capital, and the order to settle them. Partners, not Larkridge, decide and set the terms of any funding.
The restaurant scene in Macon County, Illinois
Macon County had 165 restaurants and other eating places with employees in 2023, employing 3,088 people (U.S. Census Bureau, County Business Patterns 2023). Only 35 of them had fewer than five employees. In the office ZIP code, 62523, which takes in much of downtown, accommodation and food services had 21 employer establishments, and only 23.8 percent of them had fewer than five staff (U.S. Census Bureau, ZIP Code Business Patterns 2023). A restaurant here usually opens with a real crew, which means payroll starts before the first good week.
Owners searching for new restaurants in downtown Decatur, IL are looking at the same spaces you might be. A space that held a restaurant before is attractive for good reason, but it comes with questions of its own.
Step 1: find out what actually comes with the space
Walk the space with a list before you talk numbers:
- Who owns the equipment? The landlord, the previous tenant or a lender. Equipment left behind may still be under a lease or subject to a lien.
- What condition is it in? A hood, a walk-in cooler or a dish machine that needs replacing changes the budget.
- Will it pass inspection? Older equipment and older layouts may not meet current requirements once the space changes hands.
- Is the space zoned for your concept? A bar, a carry-out counter and a full-service dining room may not be treated alike.
The Decatur, IL zoning and commercial space checklist covers zoning, permits and lease terms in order.
Step 2: sort the costs into categories
Every opening budget is different, so this post gives categories, not figures. What matters for funding is which category each cost falls into, because each category suits a different structure:
| Cost category | Usually funded with |
|---|---|
| Lease deposit and first months' rent | Owner's own money |
| Repairs and changes to the space | A term loan or owner's money |
| Kitchen equipment, refrigeration, POS hardware | Equipment financing |
| Smallwares, opening food and drink stock | Owner's money or working capital |
| Payroll and training before opening, and the first slow weeks | Working capital or a cash reserve |
Step 3: fund the hard assets first
Equipment is usually the easiest piece to fund for a restaurant that has not opened yet, because the equipment secures itself. Partners will want quotes, and for used equipment, details of age and condition. If the space comes with some equipment, you may only need to finance what is missing or worn out.
Working capital is harder for a restaurant with no sales history. Many owners open with their own money covering the first weeks of payroll and food costs, then look for working capital or a line of credit once there are bank statements to show. Planning for that gap is part of opening; running out of cash in month two is one of the most common ways a new restaurant fails.
Step 4: test the payments against a slow month
Before you accept any offer, put the monthly payment for each piece of financing side by side and add them up. The restaurant loan calculator shows the payment, total interest and total repaid for a term loan; equipment leases and working capital offers need their own figures from the partner. Then ask whether the total still works in a slow month, not just a good one.
What partners look for in a new restaurant
- The owner's restaurant experience and a realistic opening plan
- Personal credit and the owner's own investment in the business
- The lease, including its length and any landlord contribution
- Equipment quotes and a list of what comes with the space
More on structures by cost is on restaurant financing in Decatur, IL. Other articles are on the Larkridge blog.
By Larkridge Funding Group · Updated