Best Business Loans for Restaurants & Bars

It’s no secret that restaurant owners have had a difficult time getting financing for their businesses over the years. But these are new times. With the growth of new alternative lending sources, restaurant financing has more access than ever before to get some small business loans.

Restaurant financing can be a tricky process. Traditional lenders see these investments as extremely risky, which means qualifying for loans is a serious burden. These lenders won’t give restaurant loans out to just anyone, they’ll likely require a great credit score, a robust business plan, and a significant amount of your restaurant loan in cash. Some could even ask you about your relevant hospitality experiences as well. We’re not your traditional route for restaurant loans. We offer financing options that you can take advantage of so that you can get the funding you need.

AdvancePoint Capital has been experienced in the funding of restaurant operations for years and can help you access those new alternative business lending products. We understand the difficulties of operating a restaurant and the need for business funding to support it. Our job is to effectively provide the best business funding products to you so you can effectively operate your business. Whether you’re looking to purchase equipment, need some working capital, or you’re expanding operations — we have funding solutions you can rely on.

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The 7 Best Business Loan Options for Restaurant & Bars:

 

Long-Term Business Loans for Restaurants

Long-term business loans are always the most desirable as they offer the longest terms to repay, typically from 2 to 7 years. Long- Term loans are a lump sum provided upfront with principal and interest rates that start around 7% with monthly payments. These loans require high credit standards for established businesses with at least two years in business and a significant amount of paperwork and can take up to a week for approval.

Benefits of Long-Term Business Loans::

  • Low rates starting from 4%
  • Terms from 1 to 7 years
  • Monthly payments

Short Term Business Loans for Restaurants

Short-term business loans are term loans that provide a lump sum of money that is repaid over terms of 6 to 18 months. When approved, you get a fixed amount for a fixed amount you have to pay back. The difference between is the cost, with a fixed payment auto-deducted from your business bank account monthly, bi-weekly, weekly, or in some cases daily out of the business bank account. Limited paperwork is required, and credit requirements are more lenient than that of banks or traditional term loans.

Benefits of Short-Term Loans:

  • Excellent to poor credit score considered
  • Lower monthly or annual revenue requirements than those of traditional business loans
  • Fast and simple process with the same day to next business day funding

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Business Line of Credit for Restaurants

A business line of credit is a type of small business loan that offers a flexibility feature that a short term loan does not. It works like a credit card in that it is a revolving line of credit and allows you to draw money out and then repay at any time with you only paying principal and interest on your outstanding balance. Lines of credit have a credit limit that you cannot exceed and is set at the time of consummation.

Highlights of Business Line of Credit:

  • Ability to draw money at any time from lines of credit
  • Allows borrowers to spend the money, repay it, and spend it again from a line of credit
  • Principal and interest rates starting at 5% for lines of credit
  • Lower costs and fees than most other business financing products

Equipment Loans for Restaurants

Restaurant kitchens are the core of the operation. The equipment in the kitchen is expensive and costly. Equipment financing usually comes in the form of leasing or term loans. The equipment is used as collateral, and decisions are also made based on the credit of the business owner and the health of the business financials.

Benefits of Equipment Financing:

  • Simple 1-page application
  • Limited financial paperwork
  • Repayment terms from 1 to 5 years
  • Monthly payments

SBA (Small Business Administration) Loans for Restaurants

An SBA (short for Small Business Administration) loan is administered by the Small Business Administration agency and sets the guidelines that must be followed to ensure the business loan for participating lenders. The SBA works with lenders to provide loans to small businesses and does not lend money directly. An SBA loan provides long-term, fixed interest rate financing at very attractive interest rates and terms. Although popular, the process is a lengthy process with extensive paperwork, may require collateral and high credit score standards.

Benefits of Equipment Financing:

  • Interest rates from 4% to 7%
  • Terms from 1 to 25 years
  • A variety of acceptable business uses of money

Merchant Cash Advance for Restaurants

Merchant cash advance (also now as Future Receivables Purchase and Sale Agreements) provide an upfront lump sum of money to businesses in exchange for a fixed percentage of the businesses’ future sales. Repayment is typically made daily or weekly. Either an ACH payment auto deducted from a business’s bank account or the percentage is taken out of future credit card sales until the payback obligation is met. Terms are expressed as a future sale, so you are given a fixed amount and then responsible for paying back a greater amount through a fixed percentage of future sales. The difference between the amount given and the amount paid back to complete agreement is your flat cost of money. The estimated time to repay is typically 6 to 18 months, but there are no term limits as the repayment is based on future sales. 

Benefits of Merchant Cash Advances:

  • Flexible repayment terms attached to future sales
  • Excellent to poor credit score considered
  • Provides funds to owners with Sub Prime Credit
  • Payments fluctuate to future sales controlling the margin of profit

Business Credit Cards for Restaurants

A business credit card works the same as a personal credit card. They are a revolving line of credit with a credit limit with a minimum monthly payment requirement typically lower than that of a business loan. You are issued a plastic card with an account number that can be used online and in-person for any purchases. You only pay interest based on the current principal.

Benefits of Business Credit Cards:

  • Can be used 24 hours a day, seven days a week 
  • No limitations on use of funds
  • Flexible monthly payments payments 
  • Principal & Interest rates

Benefits of Restaurant Business Loans

Cash Flow

Operating a restaurant is a complicated venture that has a lot of moving parts to it. There are a variety of issues that can impact the cash flow of the business like seasonality, holidays, location, changes in food trends, and competition. Meeting payroll is not an option as well, so it’s essential to have a business credit facility in place to control the ups and downs of the business and stabilize cash flow. From working capital to seasonal needs, restaurant financing is a sound option.

Business Facility Expansion/Renovations

Your restaurant may need upgrades or repairs to the facility, spruce up the interior décor or exterior appearance of the restaurant to maintain or attract customers, and maintain a competitive edge. In some cases, a new concept or for an example outdoor deck may present the need for funding. With so many loans available, growing your restaurant can come in many forms. Small 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

The internet marketing landscape has become a must and has added additional costs to the restaurant owners. That’s why restaurant financing for advertising is so popular. Having a presence on the internet with various sources such as Google, Yelp, and Trip Advisor — as well as maintaining a website and work on search engine optimization, helps keep your small business on the top of google search. Also, additional costs for the growth of 3rd party delivery services (Grub Hub, Door Dash, Uber Eats) can be viewed as advertising costs and can eat into the bottom line. Additionally, more traditional sources like mailers and flyers are also advertising mainstay and costs to operate. So, restaurant loans can also be used to market effectively on a wide range of channels.

Point of Sale Systems, Software, and Technology Upgrades

The point of sales systems is continuously improving and providing efficiencies to restaurant operations. Eventual investments in this area are a foregone conclusion, and financing will be needed. A restaurant loan can be used to update systems and create more efficient processes within your operation. Restaraunt owners are always looking for new ways to keep their tables full, and improving the customer experience with easier processes and systems for staff can make a significant impact.

Maintenance and repair of Kitchen Equipment

Equipment financing allows restaurant owners the ability to repair and/or replace key equipment that is at the core of the business. These can be expensive endeavors, and a restaurant loan that improves kitchen equipment and costly parts is oftentimes needed.
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Applying for Restaurant Loans

There are a lot of options to consider, and with such a wide range of lenders and financing options available, it can be difficult to get started with the application process. Lenders will want some pertinent information, regardless if they’re an online lender or from a traditional financing institution. This information mainly serves to confirm the financial history and legitimacy of your small business — and restaurant owners should be informed about what information they should have on hand before applying for restaurant loans.

AdvancePoint Capital offers restaurant loans to a wide variety of business owners. For years, we’ve empowered small businesses around the country with financing opportunities and restaurant loan ventures that people like you can use to fund your operation.

Depending on the restaurant loans you’re looking at, each will have different requirements. However, there are some standard questions that you can expect to run across during your search for loan options.

What Type of Restaraunt Is It?

Most lenders will want to know what type of restaurant you’re running or thinking about starting. This question should be fairly simple to answer, as your business plan should outline the type of restaurant — along with financial projections regarding. These financial projections should help paint a picture of how your restaurant plans to grow over the years. Simple questions regarding how your restaurant is unique, five-year projections, and anything that will give insight into how your restaurant will be successful over time.

How Long Have You Been in Business?

Time in business is a standard requirement for restaurant loans — or really any type of loan you plan on obtaining as a business owner. A young restaurant is far riskier than a seasoned restaurant. This shouldn’t be news to any business owners reading this, but it’s especially important for restaurant owners. Due to the high risk of the restaurant industry, it’s important that lenders know if you’ve been around for a substantial amount of time. This shows that you’re able to overcome obstacles and tackle challenges that come with time in business. If so, you’re in much better shape to obtain restaurant loans and get the financing you need.

How Do You Handle Money from the Restaraunt

There are some documents that many lenders will require so that they are able to assess their restaurant loan risk. Business owners planning on getting loans should always be prepared to offer up their business’s bank statements, personal and business tax returns, profit and loss statements, cash flow forecast, and perhaps, even more, depending on the restaurant loan itself. This information proves any revenue and profit — which is oftentimes a big player in whether or not you’ll qualify for loans. Now, what paperwork you’ll need ultimately depends on the restaurant loan itself. A merchant cash advance may require one thing, but an SBA loan is likely to have much harsher requirements. However, all of these documents we mentioned are fairly typical when attempting to obtain restaurant financing.

What are Your Borrowing Habits?

While many restaurant loan options have varying credit score requirements,  all of them will require some sort of personal and business credit score. Restaurant owners need to show lenders how well they manage loans. It’s all about trust and sound investments when it comes to restaurant loans. So, a credit score is a great way to show that your borrowing habits are indeed fruitful for the lender. Now, even if you have less than stellar credit, there are still restaurant loans that you can seek. However, the interest or terms may not always be what you’re looking for. That being said, they still provide financing opportunities that business owners can take advantage of for working capital or any other restaurant needs.

Types of Restaurant Operations We Serve

      • Coffee shops
      • Bars/Lounges
      • Fast Food Restaurant operations
      • Restaurant Franchises
      • Bakery & Pastry Shop
      • Café’s
      • Pubs
      • Nightclubs
      • Ice Cream/Frozen Yogurt Stores
      • Dessert Shops

Why AdvancePoint Capital?

Experience- with Restaurant Industry. We have been funding restaurant businesses for years.
Trust-Excellent reviews and feedback from Restaurant Companies
Loan Specialists –Experiences Business funding specialists who know the restaurant industry.
No cost, no commitment quotes for your restaurant loan
Products – A Variety of Restaurant Business Loan Products. We don’t just offer what we have; we offer what’s available in the marketplace.

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Frequently Asked Questions

Is it hard to get a loan for a restaurant?

The answer really depends on what type of restaurant loans you’re considering. Some restaurant loans are far easier to qualify for, such as a merchant cash advance. While other loan choices could be a little more difficult for business owners, such as an SBA loan. Credit score, time in business, and various financial statements will affect whether or not it’s difficult to obtain a loan for your restaurant. So, it’s up to the restaurant owners that are seeking financing options to research various options and determine which loan they can apply for with success.

How can I get a loan to open a restaurant?

Again, this really depends on which restaurant loans you’re considering. Different restaurant loan options will have different application requirements — so there’s not really a one size fits all solution to this question. However, there are some typical avenues that many business owners take to open up a restaurant. A sound business plan, projected financial statements, ownership and affiliation documents, business certificates or licensure, loan application history, income tax returns, and a resume could all play a vital role in opening up a new restaurant.

How much of a downpayment do I need for a restaurant?

Depending on your lender, you may need to offer up a downpayment for your restaurant loan. Typically, a down payment of around 10% is standard for restaurant equipment financing. However, that may change based on terms or other features of various loan options.  For example, an SBA loan has very low-interest rates. Additionally, they allow applicants to cover less than the 20% down payment. And short-term restaurant loans don’t usually require any down payment at all. So, depending on the loan option you’re seeking, you may find various loan down payments for each.

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.