What are restaurant business loans?
Restaurant business loans can come in the form of many different financing products such as business term loans, business line of credit, small business administration loans, merchant cash advances, equipment financing and other alternatives as well. Your need and qualifications will dictate which product is best for your restaurant.
How to Get the Best Restaurant Business Loans?
To obtain the best business loan for your existing restaurant, there are several steps you can follow. First, evaluate your financial situation by reviewing your restaurant's financial statements, cash flow, and credit score. This will help you understand your borrowing capacity and the loan amount you can comfortably repay. Next, research various lenders, such as banks, credit unions, and online lenders, to compare interest rates, loan terms, and repayment options. Look for lenders with experience in the restaurant industry or those offering specialized loan programs for small businesses.
Prepare a comprehensive loan application package that may includes your bank statements, financial statements, tax returns, and any other relevant documents that demonstrate your restaurant's stability and growth potential. Finally, negotiate with potential lenders to secure the most favorable loan terms and consider seeking advice from financial professionals at advancepoint capital to ensure you make informed decisions throughout the process.
How Do I Qualify for a Restaurant Business Loan?
Restaurant financing options can be a tricky approval process. Banks or traditional lenders see restaurants as risky, qualifying for business loans or lines of credit won't be easy. They won’t give restaurant loans out without a thorough and comprehensive review. They’ll likely require a candidate with a great credit score, financials, and a significant amount of collateral for your restaurant loan to qualify. Banks and business will take a deep dive and require alot of documentation to qualify. However, at AdvancePoint Capital, we’re not your traditional route for restaurant loans. We offer the best financing options that restaurant owners can take advantage of to get the funding you need.
AdvancePoint Capital has been funding restaurant for over 10 years and and understands how restaurant owners can find the best alternative business lending products. We understand the complexities of operating a restaurant and the need for financing to support it. We pride ourselves on finding the best business funding products that fits your business need so you can operate your restaurant effectively. No matter what the need, whether you need working capital, or purchase equipment or need to expand your restaurant — we have some of the best funding solutions you can rely on with our business lender network.
Business Loans for Your Restaurant
Long-Term Restaurant Business Loans
A restaurant owner looking to expand the existing location or new location will need to get long term business financing option to spread the costs so not to negatively impact short term cash flow. The loan amount for long term loans typically exceed $100,000.
- Terms that range from 3 to 10 years
- Access to capital for large expansions
- Attractive rates and terms to achieve affordable payments
Short Term Restaurant Business Loans
Short term loans offer restaurant business owners with impaired credit or other eligibility requirements that a traditional lender would not accept, an opportunity for funding. A short term loan is easier to get approved for because of shorter duration to repay. Loan terms are short in duration to repay to reduce the risk to the lender. Short term loans are available through alternative lenders.
- Fast, simple and easy application process
- Higher approval rates than traditional financing
- All Credit types considered
Business Line of Credit
Restaurants sometimes need money on the fly due to cash flow situations and a line of credit can come in handy as you can draw on command without talking to the lender. Business lines have great interest rates and you only pay interest on your outstanding balance but this restaurant financing option has strict credit approval requirements. A line of credit is only for an existing restaurant with cash flow.
- Flexible credit facility with a draw feature
- Rates starting at 1% per month simple interest
- Revolving credit line, only paying interest on outstanding balance
Restaurant Equipment Financing
Equipment costs can be high so equipment financing is a must. Restaurant equipment financing comes in the form of either equipment loans or equipment leases and the financing is collateralized by the new equipment you are looking to purchase. Interest rates vary depending on credit and down payment. If you attempt to buy equipment that is used you may have to seek an alternative lender. Restaurant equipment loans and leases may except bad credit history but interest rate and loan terms will be impacted.
- Uses collateral of equipment to obtain financing
- Terms that range from 2 to 7 years
- Equipment financing can be a lease or a loan
Merchant Cash Advance
Merchant cash advances are actually future sales receivables agreements that offer funding to businesses with bad credit, issues with financial statements, industry, time in business or reasons that traditional business loans don't accomodate. Merchant cash advances are set up for shorter lengths of time to repay and may cost more but there approval rate is much higher than that of a traditional loan. A Merchant cash advance is not a small business loan, but an advance of future receivables. this is a popular restaurant financing product in the restaurant industry as its has no personal guarantee and repayment is attached to future sales.
- Revenue based Financing
- Flexible repayment based on future sales
- High approval rates, all credit considered
Small Business Administration
(SBA) Loans for Restaurants
A SBA loan has favorable loan terms with great fixed percentage interest rates. It is important to note that they are not easy to get. SBA loans require good personal credit, financial documentation, business assets and a personal guarantee. Some Small Business Administration loans will require commercial real estate for collateral or personal assets. Loan amount plays a role in what loan option you can qualify for. Its important to work with a business financing originator who understands SBA loans and there requirements and guidelines.
- Rates starting at 9%
- Terms that range from 3 to 25 years
- Comprehensive application process
Business Credit Card
Most restaurants will need a credit card to help pay for things that come up in day to day operations. Credit cards are a great restaurant financing option as they have have no origination fees and variable interest rates but you only pay the interest rate based on your outstanding balance.
- Revolving credit line via a card
- Can be used for purchases and pay expenses
- Intro rates starting at 0% , up to 29%
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AdvancePoint Capital makes the loan application process a simple, straightforward experience.
Benefits and Most Common Uses of Restaurant Business Loans
Cash Flow/Working Capital Loans
A restaurant may require a business loan for working capital to address short-term financial needs and maintain smooth operations. This loan can be used to cover ongoing expenses such as payroll, inventory replenishment, marketing campaigns, equipment maintenance, and unexpected costs, ensuring that the restaurant can continue operating effectively and meet its financial obligations. By securing working capital through a loan, the restaurant can bridge cash flow gaps and maintain stability during periods of fluctuating revenue or unexpected expenses.
Facility Expansion or Renovations
Your restaurant may need upgrades, repairs to the facility, sprucing up of interior décor, or exterior appearance remodeling of your restaurant to maintain or attract customers and keep a competitive edge. In some cases, a new concept or project, for example, an outdoor deck installation may present the need for funding. With so many loans available, growing your restaurant can come in many forms. Restaurant business loans offer a lot of diversity and access to expansion and renovation opportunities. These restaurant loans can be used to purchase additional inventory, lease more space, expand marketing efforts, buy new equipment, or even open up another operation.
Advertising & Marketing
A restaurant may need a business loan for advertising and/or marketing to boost brand awareness, attract new customers, and increase sales. Investing in strategic marketing campaigns can help the restaurant reach a wider audience, promote special offers or events, and differentiate itself from competitors, ultimately driving customer traffic and revenue growth. Additional costs for the growth of 3rd party delivery services like Grub Hub, Door Dash, Uber Eats can be viewed as advertising costs, which can eat into your business’s bottom line. By securing a business loan specifically for advertising and marketing purposes, the restaurant can allocate funds towards targeted advertising channels, online marketing initiatives, social media campaigns, and other promotional activities that can have a significant impact on business visibility and success.
Point of Sale Systems, Software, and Technology Upgrades
A restaurant may need a loan for Point of Sale (POS) systems to enhance its operational efficiency and customer experience. POS systems help streamline order processing, inventory management, and payment transactions, improving overall productivity and accuracy. By acquiring a loan for POS systems, restaurants can invest in modern technology that enables them to stay competitive, improve sales, and provide a seamless dining experience for their customers.
Restaurant Equipment, Maintenance and Repair Costs
A restaurant may need a business loan for equipment repairs and maintenance to ensure the smooth functioning of essential kitchen equipment, prevent operational disruptions, and maintain food safety standards.
Restaurant Equipment Purchases
A restaurant may need a business loan for equipment purchases to upgrade outdated equipment, expand operations, improve efficiency, and enhance the overall quality of food preparation and service.
Food Costs or Inventory Financing
A restaurant may need a business loan for food and inventory purchases to maintain a consistent supply of high-quality ingredients, stock up on seasonal items, and meet customer demand while managing cash flow fluctuations.
Refinance Existing Debt
A restaurant may need a business loan for debt financing to consolidate existing debts, manage cash flow, and reduce overall interest expenses, providing financial stability and flexibility for the business.
How to Get Small Business Loans for Restaurants & Bars?
There are many options to consider, and with such a wide range of lenders and financing options available, it can be challenging to get started with the application process. With loan for bar and restaurant, lenders will want some pertinent information, regardless if they’re an online lender or from a traditional financing institution.
Finding a small business loan for your existing restaurant and/or bar can be done through various sources. Here are a few options to consider for a new restaurant business loans:
- Traditional Banks: Local banks and national financial institutions often offer small business loans. Reach out to several banks to inquire about their loan programs, interest rates, and eligibility criteria. Prepare your financial documents and business plan to present to the banks during the application process.
- Credit Unions: Credit unions are member-owned financial cooperatives that may offer competitive rates and flexible terms for small business funding. Research local credit unions that cater to businesses in the hospitality industry and explore their loan offerings.
- Online Lenders: Online lending platforms have gained popularity for their convenience and accessibility. Online lenders have streamlined application processes and quick approvals. Compare different online lenders to find competitive rates and favorable terms.
- Business Loan Brokers: Business loan brokers have access to a wide range of products and terms that best fit your qualifications and needs.
- Restaurant and Bar Associations: Some restaurant and bar associations or industry-specific organizations may have resources or partnerships that can help connect you with lenders specializing in the hospitality sector. Reach out to us and inquire about any loan programs or recommendations they may have.
Remember to carefully review the terms and conditions of any loan offer, compare interest rates, and consider seeking professional advice from financial experts or business advisors to make an informed decision.
Restaurant Operations We Serve
Some of the restaurant operations we serve includes:
Bars and lounges
Fast food restaurant operations
Ice cream and frozen yogurt stores
Bakeries and pastry shops
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AdvancePoint Capital makes the loan application process a simple, straightforward experience.
How to apply for a business loan for my Restaurant
The following are the most common step's to applying for business financing for your restaurant.
- Determine your need- Your need may dictate the best restaurant financing option for your business. The need and amount you need to borrower matters.
- Select the business loan originator- Choose the business loan originator who can offer you the best products and terms based on your need and qualifications. What's best for you may be different than others whether it be traditional banks, credit unions, business brokers, online lenders or other financial service companies.
- Interview- Discuss with your business loan originator your needs and qualifications to determine which business funding product(s) would be best to apply for.
- Application- Complete an application along with the necessary documentation to secure a pre-qualification. Business funding products have different document requirements and may also dictate product you can qualify based on what you can provide.
- Offer(s)- Receive business loan offers and compare product features, rates and terms. Make sure to shop around so you can be assured you are being offered the best products at the best terms.
- Acceptance- After you have shopped and compared offers, and you have found an offer that makes sense for your needs, you will need to sign an agreement and provide the necessary conditions to fund. Conditions vary based on product selected and the lender.
- Restaurant Funding- Once agreement and conditions have been cleared by the lender, you get funded by wire or ACH usually that day.
Step's to apply for business funding for your restaurant can vary based on the lender and the product you choose, but the above is a good standard for the application process.
The Pro's and Cons of Restaurant Financing
The restaurant business can be a tough industry with heavy competition, seasonality and constant change. Restaurant financing can be a great way to keep up and maintain the business for the long run, but can have it's pitfalls if abused. Always balance cost verses benefit when looking to get a business loan for your restaurant.
- Supports cash flow during fluctuations in business sales
- Allows you to purchase necessary equipment
- Necessary for business expansion and growth
- Important for upgrades and enhancements to restaurant
- Saddles business with debt
- Increases monthly expenses with debt payments
- Risk of abuse by overleveraging business in debt with multiple financing products
- Delinquency or default can create bad business credit
Why AdvancePoint Capital?
We have experience with the restaurant industry and have been funding restaurant businesses for years.
We have excellent reviews and feedback from restaurant companies
Our team is made up of experienced business funding specialists who know the restaurant industry.
A variety of restaurant business loan products. We don’t just offer what we have; we give you everything available in the marketplace.
Advancepoint has access to a network of lenders that offer unique restaurant financing options
Fast & Easy
Easy application process with fast approvals and fundings.
We offer no obligation free quotes, with no upfront costs for terms to consider
*AdvancePoint does not fund
California finance lender loans