{"id":3148,"date":"2018-10-11T16:51:17","date_gmt":"2018-10-11T13:51:17","guid":{"rendered":"https:\/\/www.lending-express.com\/blog\/?p=3148"},"modified":"2021-08-22T20:48:47","modified_gmt":"2021-08-22T17:48:47","slug":"what-are-the-best-restaurant-financing-options","status":"publish","type":"post","link":"https:\/\/www.become.co\/blog\/what-are-the-best-restaurant-financing-options\/","title":{"rendered":"What Are the Best Restaurant Financing Options?"},"content":{"rendered":"

The restaurant business is cut-throat and might just be one of the toughest businesses out there. If you\u2019ve managed to fulfill your culinary dreams and open up, you\u2019ll know that only half the battle\u2019s won. Given the ongoing high operating costs, the permits needed, the unexpected costs not to mention the juggling of employees, finding new equipment and seasonal changes. The list is endless. <\/span><\/p>\n

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With restaurant failure within the first year estimated at 20% (<\/span>according to the SBA<\/span><\/a>) – the restaurant business is certainly tough, but not impossible. What\u2019s more surprising is the reasoning behind this failure – a lack of access to startup capital. Traditional lenders know that restaurants are risky business, and are less than willing to hand out their precious funds. <\/span>
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\n<\/span>So what\u2019s a restaurant to do? You need some money to make money. If a restaurant can\u2019t invest in itself and harbor enough financing to make their business profitable, they will become trapped in a vicious cycle. This is where Superman (in the form of alternative funding) comes to the rescue. <\/span><\/p>\n

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What types of restaurant financing options exist?<\/span><\/h2>\n<\/p>\n

Now, there are many types of funding options out there and it\u2019s imperative that owners look through all of the restaurant funding options carefully. By choosing the right funding solution for your restaurant business, you should be able to keep a steady cash flow and make sure that you don\u2019t just become another failure statistic. When it comes to your restaurant financing option<\/a>s, there are five main types that you can look into. <\/span><\/p>\n<\/p>\n

1. Equipment financing <\/span><\/h3>\n

Owning a restaurant, you\u2019ll know that there are all sorts of equipment you\u2019ll need, besides the table and cheers. Behind closed doors, you\u2019ll need big industrial ovens (especially for bakeries), perhaps a pizza oven, large fridges and stovetops and it all adds up. Some are lucky enough to be able to fund these costs from their savings, but what about when it comes to upgrading? When you need to make large equipment purchases, laying down large sums of money may be infeasible. And that\u2019s where <\/span>equipment financing <\/span><\/a>comes in, which as the name implies, is specifically for the purchasing of equipment. <\/span><\/p>\n<\/p>\n

The great thing about an equipment loan is that no collateral is needed. The equipment itself will serve as collateral.
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2. Restaurant lines of credit<\/span><\/h3>\n

A restaurant <\/span>line of credit<\/span><\/a> is a great way to finance your business due to the flexibility they provide. The best part is, you only pay interest on the funds that you draw, and you can choose when and how much that is. <\/span><\/p>\n

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Seasonal restaurants would highly benefit from this type of funding. Be sure to get your line of credit when your business is up, that way you can ensure you bag the best rates. The line of credit will quietly wait until you need it in the off-season, where covering your costs will become more difficult. <\/span>
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3. Short-term loans<\/span><\/h3>\n

Short-term loans, otherwise known as <\/span>unsecured business loans<\/span><\/a>, are ideal for restaurant owners seeking once-off business expenses. Perhaps you want to revamp your restaurant and redesign, maybe you\u2019re moving location, or perhaps you want a new marketing budget, whatever it is, if you need funds fast for a one-off payment then a short-term unsecured business loan is the way to go. Keep in mind that this type of financing is for purchases up to $500,000 – so if you need more than that, you\u2019ll have to look elsewhere. <\/span><\/p>\n

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An unsecured business loan has no collateral, the process is extremely quick (you could get your funds the very same day) and should you need additional funds, getting re-approved will be doubly as easy. <\/span>
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4. SBA loans<\/span><\/h3>\n

The Small Business Administration (SBA), provides loans with HUGE offers and long terms for restaurants looking to grow. In some cases, you could choose to take up to ten years or even longer to repay the loan, what\u2019s more, is that the interest rates tend to be much friendlier than other options. <\/span><\/p>\n

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If you have a big expansion project coming up and need a large amount of money, this could be a good option, seeing as SBA funding will allow you to receive up to a whopping $10 million! <\/span><\/p>\n

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Well $10 million may be a little over-optimistic, but the point is, you can borrow as much (or as little) as you please. SBA loans are one of the most common ways that restaurant owners get their hands on funds.<\/span>
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\n<\/span>SBA loans<\/span><\/a>, however, take a little longer than the other options mentioned here, though the low rates may just make them worth the wait. They usually it take up to a few months through the bank but with Become it can take just a few weeks.<\/span>
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5. Cash advances<\/span><\/h3>\n

A <\/span>merchant cash advance<\/span><\/a> isn\u2019t technically considered a loan – though practically speaking, it is. <\/span><\/p>\n

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It\u2019s an advance that you repay as a percentage of your daily credit. If you\u2019re a restaurant owner that can\u2019t qualify for other methods of funding, this could be a good option, as high credit scores aren\u2019t a make or break. Another big plus of merchant cash advances is that your payments will change depending on your number of sales, so if business is slow, you won\u2019t be caught out. \u00a0<\/span>
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\n<\/span>This is an exceptionally speedy way of getting funds, though there is a catch. The APR rates can range from 50 to 250% making this a relatively expensive way of financing your restaurant. <\/span><\/p>\n<\/p>\n

The best Restaurant business loans<\/span><\/h2>\n<\/p>\n

This is a very objective question. As outlined above, there are quite a few restaurant funding options and each type suits different needs.<\/span><\/p>\n

Here we\u2019ll sum-up which option is the best fit for different needs:<\/i><\/b><\/p>\n

\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
Finance Type<\/th>\nBest For<\/th>\n<\/tr>\n
Equipment financing<\/span><\/td>\nHeavy-equipment purchases<\/span><\/td>\n<\/tr>\n
Restaurant lines of credit<\/span><\/td>\nUnexpected costs <\/span>
\nand seasonal businesses<\/span><\/td>\n<\/tr>\n
Short-term loans<\/span><\/td>\nThose who need very fast funds for a one-off payment<\/span><\/td>\n<\/tr>\n
SBA loans<\/span><\/td>\nlarge projects with long terms low rates and those that don\u2019t need a fast loan<\/span><\/td>\n<\/tr>\n
Merchant cash advance<\/span><\/td>\nThose with low credit scores<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

How to get a restaurant business loan<\/span><\/h2>\n<\/p>\n

If you\u2019re wondering how to get funding for a restaurant, it\u2019s not as complicated as you may believe. <\/span><\/p>\n

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In fact, the application process is very simple. <\/span><\/p>\n

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At <\/span>Become<\/span><\/a>, we believe that \u2018<\/span>Every business is unique, funding should be too<\/span><\/i>\u2019. If you aren\u2019t sure which funding method is best for your restaurant or business, be sure to fill out our quick online application (it\u2019s free, with no hard credit check). Long gone are the days of going back and forth to your bank, you can complete an application within a few minutes, right NOW. <\/span>
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To <\/span>apply for funding click here<\/span><\/a> or simply begin filling in the form below:<\/span><\/p>\n