SBI Loan for Restaurants

State Bank of India (SBI) offers a specialised loan scheme to fund existing restaurants and startup of restaurants. State Bank of India offers a wide range of financial products and services for SMEs in India. With a network of over 579 specialized SME branches across the country, SBI has kept a special focus to develop an effective platform for SME lending. Further, single point contact through dedicated relationship managers have been put in place for medium as well as small enterprises. A Centralized Processing Cells (CPC) has also been created for quick turnaround time in sanction & disbursal for loans upto Rs 1 crore.

Restaurant Business in India

The restaurant industry in India is projected to grow to over Rs.4.08 lakh crores by 2018 at an annualised growth rate of 11% by the National Restaurant Association of India (NRAI). Majority of the restaurants (74%) are setup as Quick Service Restaurants (QSR) and Casual Dine-in formats, Cafés make up for 12%, while Fine Dining and Pub Bars Club & Lounges (PBCL) comprising the rest. Out of the total industry, chain and licensed restaurants are expected to contribute only about Rs.24600 to Rs.25000, leaving plenty of opportunity for Entrepreneurs to establish very good standalone restaurants.

Starting a Restaurant in India

There are various factors that must be considered while starting a restaurant like location, branding, staffing, equipment, model, investment, funding, etc., Capital expenditure of over Rs.50 lakhs would be required for setting up a small restaurant with nearly 80% of the capital expenditure being made towards interior and kitchen equipment. A mix of loan and promoter equity can be used for funding the capital expenditure. Know more about procedure for starting a restaurant in India.

Loan for Restaurant

SBI provides loan for starting up of restaurants or fast food chains or cafes. Loan for restaurant can be availed by individuals, partnership firms, private limited companies, limited companies and trusts. Loan under this scheme can be used for purchase of kitchen equipments, investment in interiors, purchase of furniture and fixtures and purchase of land and construction of buildings.

Amount of Loan

Loan for restaurants can be sanctioned as a term loan or overdraft facility for funding operational requirements. A margin of 25% must be contributed by the promoter towards the loan. Interest for loan is floating linked to the base rate of the bank. Loan for restaurants is sanctioned with a repayment period of upto 7 years when land and building financing is included in loan. In case of financing only for interior or kitchen equipment, the loan is sanctioned with a repayment period of 5 years.

Collateral Security

All the assets created out of bank finance must be hypothecated or pledged to the bank. In addition to primary security, collateral security in the form of immovable property or bank deposits may also be requested on a case to case basis. Personal guarantee of the proprietors, partners or directors would be required on all cases. Loan for restaurants can also be sanctioned without collateral under the CGTMSE scheme. SBI loan for restaurants of upto Rs.25 lacs are to be covered under CGTMSE scheme. Eligible loans above Rs.25 lacs upto Rs.1 crore can be covered underCGTMSE guarantee scheme.

Company Registration

OPC Registration