Avia Collinder, Business Writer

The business of food has many facets, but not too many complexities.

It's easy to begin. After all, every home has a kitchen, and a good cook can always find a willing clientele, and grocery stores are often just a stone's throw away.

But the serious entrepreneur will start by registering a business name, creating a business plan that determines risks and rewards, revenues and costs, and seek those all-important permits.

But even more important, the source of financing is key.

Loans of up to $350,000 are available for the small business, but be prepared to pay interest of up to 52 per cent per year.

Such loans, however, are serviceable on a weekly basis, which might make payments easier to manage.

Advising start-ups

Winsome Armstrong, business development officer of the Jamaica Business Development Corporation (JBDC), an agency in the business of advising start-ups, suggests that the business operator separate personal accounts from those of the business when running a restaurant or any business enterprise.

Even if it is making money, the business might, at some point, hit turbulence and even face closure, she points out, if used as an unlimited source of cash for personal use.

And, you should not use personal funds to finance the operation.

Your salary should be an expense for the business, just like the utilities and other overheads. How much you pay yourself depends on what the business can afford, balanced with your needs.

Prepare to face disaster

However, once the determination is made as to pay, do not dip further into funds which are needed to run and improve your business.

Be disciplined or prepare to face disaster.

You could, for example, find yourself dipping more frequently into personal savings to keep the business going.

That creates the danger of the business not only folding, when you run out of cash, but also, the likelihood of personal bankrupcy.

A loan may be what you need to ensure that your operation remains viable until it is well established.

It might be time to seek a low-interest business loan, for which there are many sources in Jamaica.

The JBDC offers loans between $50,000 and $500,000, at 10 per cent per annum on the reducing balance for productive purposes - not for service or trade.

This may well be your cheapest source of funding; but there are several others.

The Jamaica National Self-Start Fund sells loans at one per cent per week, or 23 per cent per annum on the reducing balance for amounts ranging from $50,000-$300,000.

EXIM Bank's loans are quoted at 12 per cent annually, or one per cent weekly for up to J$1 million.

Micro Enterprise Financing Limited loans are priced at four per cent per month, or 1.5 per cent weekly. Loans range from $10,000-$300,000.

Access Financing sells credit at one-three per cent per week on the reducing balance, or 10 per cent annually for loans of $5,000-$350,000.

Collateral needed

Churches Credit Union offers three per cent per month on the reducing balance, on loans ranging from $30,000-$100,000. You are required to provide a car, land or house, or other collateral.

JBDC's services include pointing small businesses to the right places for loans. Local commercial banks also have small business loans, points out JBDC business development officer Terry-Ann Clahar.

She notes as well that most loans are collateral-free up to $100,000. After that figure, you may have to produce security for the loan.

Clahar is coordinator of the Building Youth for National Development Programme, which provides loans of $50,000 to young people ages 17-35 .

avia.ustanny@gleanerjm.com