Financing for escape rooms:
When it comes to financing a new entertainment project, proper planning is crucial. Securing funds for start-ups can be challenging because lenders have limited information to base their credit decisions on. To improve your chances, it is important to present a strong business case that highlights the project's merits.
The business case should include an independently conducted Market Feasibility Study and an internally prepared business plan. An independent market feasibility study provides unbiased findings for lenders to rely on, instead of relying solely on the borrower's beliefs. Since 2008, federal bank examiners have required banks to provide a practical basis for granting commercial loans, making an independent review valuable in gaining lender confidence.
Commercial loans for entertainment facilities often have ten-year amortization periods for leased structures and twenty years for wholly-owned structures. These extended amortizations help new businesses manage payments and stabilize cash flows more quickly.
Many loans in the entertainment sector benefit from the support of the Small Business Administration or U.S. Department of Agriculture. These government guarantee programs can provide the issuing bank with a repayment guarantee of up to 75% of the loan amount, offering substantial support for loan applications and influencing the bank's decision-making process.
In the bank's underwriting process, developing a suitable collateral package and obtaining personal guarantees from the business owners are important considerations. Banks often assign liens to business assets and may also apply liens on existing real estate or other assets held by the borrower. Additionally, lenders often request personal guarantees to ensure the business owners remain committed and responsible for the loan, preventing them from abandoning the business during challenging times.
Structuring financing for a new business takes time. When considering an entertainment business concept, it is important to plan how the business will be financed. Developer equity plays a vital role, and new business owners should aim to contribute 25% of the total project costs as equity. This provides lenders with confidence, knowing that the owners have made a substantial investment that can protect the business from excessive leverage.
It is crucial to align the size, contents, and scope of the business concept with the business's ability to service the intended debt load. "Right-sizing" an entertainment project is key to its success, ensuring that the market opportunity, development costs, and financing structure are well-matched.
Proper planning upfront can lead to solid and sustainable results. An effectively structured financing model can make the difference between a business that thrives and one that struggles to meet its financial obligations. By following a well-defined path, you can remove uncertainties and secure financing for your next entertainment project.
The business case should include an independently conducted Market Feasibility Study and an internally prepared business plan. An independent market feasibility study provides unbiased findings for lenders to rely on, instead of relying solely on the borrower's beliefs. Since 2008, federal bank examiners have required banks to provide a practical basis for granting commercial loans, making an independent review valuable in gaining lender confidence.
Commercial loans for entertainment facilities often have ten-year amortization periods for leased structures and twenty years for wholly-owned structures. These extended amortizations help new businesses manage payments and stabilize cash flows more quickly.
Many loans in the entertainment sector benefit from the support of the Small Business Administration or U.S. Department of Agriculture. These government guarantee programs can provide the issuing bank with a repayment guarantee of up to 75% of the loan amount, offering substantial support for loan applications and influencing the bank's decision-making process.
In the bank's underwriting process, developing a suitable collateral package and obtaining personal guarantees from the business owners are important considerations. Banks often assign liens to business assets and may also apply liens on existing real estate or other assets held by the borrower. Additionally, lenders often request personal guarantees to ensure the business owners remain committed and responsible for the loan, preventing them from abandoning the business during challenging times.
Structuring financing for a new business takes time. When considering an entertainment business concept, it is important to plan how the business will be financed. Developer equity plays a vital role, and new business owners should aim to contribute 25% of the total project costs as equity. This provides lenders with confidence, knowing that the owners have made a substantial investment that can protect the business from excessive leverage.
It is crucial to align the size, contents, and scope of the business concept with the business's ability to service the intended debt load. "Right-sizing" an entertainment project is key to its success, ensuring that the market opportunity, development costs, and financing structure are well-matched.
Proper planning upfront can lead to solid and sustainable results. An effectively structured financing model can make the difference between a business that thrives and one that struggles to meet its financial obligations. By following a well-defined path, you can remove uncertainties and secure financing for your next entertainment project.
If you're looking to expand or renovate your facility and need a loan, we have connections with reputable lenders who specialize in assisting established businesses with a solid cash flow. These lenders primarily focus on working with businesses that are already operational and can demonstrate a stable financial position to support their loan applications.