Pre-opening funding vs. working capital

pectopahpectopah subscriber Posts: 2
edited November 2007 in Startup Funding
Hi all! I`m currently working towards opening a high-end cafe/coffeeshop and I have a question about funding sources. 
As I understand it, in order to qualify for an SBA loan, I`d need to inject 10 - 20% (or more) of the total startup amount myself.  So, if I need 200k, I`d need to put up 20 - 40k myself, and get a loan for the rest. 
My question is, how does working capital figure in?  If I need 200k to open the doors of my cafe, and I want another 150k in working capital, do I have to lump this all into one big loan, or can working capital be separate somehow, since ideally, most of it will sit in an account and not be spent? 
I believe I could qualify for a loan for the amount needed to get the doors open, however, I don`t want to fall into the common trap of being under-capitalized.  If I have to add the large amount of working capital to the loan and put op 20% of that larger amount, I could be in trouble. 
Thanks in advance for your help!


  • pectopahpectopah subscriber Posts: 2
    That number is based entirely on having 6 months in reserve.  I`ve read so much about startups, and especially food service startups being under-capitalized that I`d rather err on the side of too much than too little.  However, if it looks like that number might stop me from moving forward, I`ll need to look at something smaller.  Thoughts?
    Thank you so much for your advice regarding the 7(a) Express program.  This is exactly what I`ve been trying to learn about.
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