How to Get a Grant to Open a Restaurant

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Starting any business requires time and money, and restaurants are no exception. In fact, the average cost of opening a restaurant is close to $500,000. While it is possible to cut costs, you still need a significant amount of money to get your business off the ground. One way to obtain financing without drowning in debt is to apply for restaurant grants.

The government does not offer restaurant grants, but you may apply for minority grants or small business grants to obtain financing. Small tweaks such as using locally sourced ingredients and recyclable materials in your dining venue can increase your chances of success.

Restaurant Startup Costs to Consider

First, try to determine how much money you need to open a restaurant. Consider the rent and utilities, employee wages, kitchen equipment, furniture, decorations and inventory. Decide whether you want to lease or buy commercial space and what renovations you'll need to make.

For example, the average restaurant rent in Manhattan's best neighborhoods was $120 and up per square foot back in 2016. That's a whopping $240,000 a month for a 2,000-square-foot venue plus a security deposit for the first three to six months. If you decide to purchase a building, be prepared to make a down payment of 15% to 35%. Other expenses you should factor into your budget include:

  • Business licenses (liquor licenses, food service licenses, live entertainment licenses and more)
  • Food establishment permits
  • Food safety certifications
  • Zoning or construction permits
  • Signage permits
  • Insurance
  • Kitchen supplies
  • Bar equipment
  • Lighting and decor
  • Point-of-sale systems
  • Employee scheduling software
  • Payment terminals
  • Cash drawers
  • Marketing and PR

A liquor license, for instance, costs anywhere between $300 and $14,000 depending on where your restaurant is located. Expect to pay around $40,000 to $200,000 for kitchen and bar equipment. Based on these factors, the total cost of opening a restaurant will be $175,000 to $750,500 and up. However, there are ways to reduce your expenses, such as purchasing used kitchen equipment, advertising your services on social media and getting food supplies from local farmers.

Consider Applying for Restaurant Grants

Although there are no grants for restaurants, you may apply for small business grants to fund your project. The U.S. Small Business Administration, for instance, connects entrepreneurs with private organizations offering grants. Most funding programs are designed for companies engaged in research and development, but you can book a meeting with an SBA counselor to discuss your needs.

Another helpful resource is Grants.gov, an online platform featuring grants in nearly every industry, from arts and education to food and nutrition, health, commerce and legal services. Some funding programs are aimed at small businesses or individuals, while others provide grants for nonprofits. To qualify for small business grants, companies have to meet the size standards established by the SBA. These guidelines vary by industry and are based on the median annual revenue and the average number of employees.

Research your options thoroughly. For example, if your restaurant works directly with farmers and co-ops, you may qualify for a grant offered by the Department of Agriculture. Another option is to open your restaurant in a rural area. In this case, you might be eligible for grants that support economic growth in developing areas. However, that doesn't mean you need to open a dining venue in the middle of nowhere; your restaurant could be just a few miles away from the city.

Search for Minority Grants

Minority-owned companies generate more than $1.8 trillion in revenue each year, according to The Business Journals. Furthermore, they employ over 6.3 million people, supporting the local economy. The number of African-owned businesses increased by 34%, and the number of Asian-owned companies grew by 22% over the past decade. Considering these facts, it's not surprising that minority grants are widely available.

If you fall into any of these categories, consider applying for a minority grant. The Minority Business Development Agency, for example, provides customized business development solutions and connects entrepreneurs with government agencies and private investors. Members can also enter grant competitions in nearly every major city. Make sure you also check Grants.gov, which features dozens of funding programs aimed at minority business owners.

Another example is the First Nations Development Institute, which has offered over 1,600 grants worth more than $34.9 million in 2019 alone. The organization has been around since 1980, providing grant opportunities for native Hawaiians, Native Americans and Alaska natives. Candidates are required to submit a detailed summary of their organization, including its mission, accomplishments and projects. They must also prove their ability to run a sustainable business and use the grant to make a difference in their communities.

Small Business Grants for Women

A small business grant may not cover all of your expenses, but it can make things easier when you're just starting out. Female entrepreneurs have access to several grant programs designed specifically for women. The Amber Grant Foundation, for instance, helps women grow their business or start new ventures. Successful candidates receive a $2,000 grant and have the chance to win an additional $25,000 based on the number of votes received from the public.

You may also want to check out Eileen Fisher, which offers grants for women-led businesses. Projects with a positive social and environmental impact have the highest chances of success. For example, if your restaurant serves as a social hub for women entrepreneurs and hosts business events, you may qualify for a grant. The guidelines change each year, so make sure you follow the organization on social media to stay up to date with its grant programs.

Another great opportunity is the Cartier Women’s Initiative Award. Applicants who qualify for the grant receive $30,000 to $100,000 plus a scholarship and ongoing business support. The grant is awarded to 21 candidates each year. Be aware that your business — a restaurant, in this case — should generate sufficient revenue to support its daily operations and bring in profit by the time you apply for the grant, and additionally, it should meet one or more of the United Nations Sustainable Development Goals, such as using only energy-efficient light bulbs and appliances, repurposing old materials or recycling glass, plastic and paper.

Increase Your Chances of Success

As an entrepreneur, you may also apply for small business grants from private foundations. FedEx, for example, has awarded over $778,000 since 2013. Each year, the company offers grants to creative entrepreneurs who are not afraid to stand out from the crowd and bring their vision to life. In 2018, the bronze prize winner was a small coffee shop that donates money to charities for every bag of coffee sold, employs young people and uses environmentally friendly products.

What most winners have in common is a unique project and the desire to make positive changes in their communities. Think about how you could make your restaurant stand out and then come up with a solid business plan. Consider using recyclable materials or locally sourced food ingredients, for instance, or you could only offer vegan dishes made with seasonal ingredients bought from local farmers.

Most grant applications can be submitted online, but you do need to provide documentation and demonstrate your ability to successfully implement and manage your project. Check the grant’s requirements and eligibility criteria, write a detailed application and be prepared to submit quarterly reports in case you receive the money. If you don't qualify for restaurant grants, consider applying for small business loans or reach out to private investors.

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About the Author

Andra Picincu is a digital marketing consultant with over 10 years of experience. She works closely with small businesses and large organizations alike to help them grow and increase brand awareness. She holds a BA in Marketing and International Business and a BA in Psychology. Over the past decade, she has turned her passion for marketing and writing into a successful business with an international audience. Current and former clients include The HOTH, Bisnode Sverige, Nutracelle, CLICK - The Coffee Lover's Protein Drink, InstaCuppa, Marketgoo, GoHarvey, Internet Brands, and more. In her daily life, Ms. Picincu provides digital marketing consulting and copywriting services. Her goal is to help businesses understand and reach their target audience in new, creative ways.