Restaurant entrepreneurs often struggle to get funding for their establishments. Unfortunately, one of the most common causes for restaurant failure is a lack of launch funding and operating cash. There are now more choices for restaurant owners than ever before, thanks to the development of alternative lenders and new methods for entrepreneurs to obtain business financing.
We’ll look at the 12 top sources for restaurant loans in this article, as well as the many kinds of finance you may use to establish or expand your restaurant. We’ll also address some commonly asked concerns regarding obtaining restaurant finance.
Restaurant Loans’ Top Lenders
Obtaining a business loan is difficult for any small company owner, but getting restaurant finance is much more difficult.
Fortunately, today’s small business lenders may offer restaurant loans to those in need.
The following is a list of the most well-known restaurant loan providers:
Capital of Apple Pie
This lender may be able to help you get franchise finance if your restaurant is a franchise.
Apple Pie provides monthly payback plans for conventional term loans, SBA loans, and equipment loans.
Furthermore, Apple Pie Capital will assist you in locating the best restaurant loan for your new or current company, with flexible collateral choices, no prepayment penalties, and low fixed and variable rates.
This lender’s terms vary from five to ten years, and the money may be utilized for anything—from buying your first franchise to expanding into numerous units, renovating, or acquiring existing franchise sites.
Financing via the ARF
The financial institution that provided the loan ARF Financial focuses on the restaurant sector, providing working capital loans, lines of credit, commercial bridging loans, and equipment financing to restaurants.
You may get an immediate online quotation from ARF, as well as approval and financing, in as little as three days. ARF claims that their procedure is easy and requires little paperwork, and that collateral isn’t required for loans up to $750,000. The length of the contract may be anything between 12 and 36 months.
Furthermore, while you don’t have to be a franchisee to borrow, this business works with a broad range of restaurant franchises.
Balboa Capital is the third most important city in the Balboa Islands.
Another franchise lender, Balboa Capital, offers restaurant loans up to $1 million and credit lines up to $500,000 for acquisitions, renovations, furnishings fixtures, and equipment.
Balboa Capital makes a decision on your loan application in as little as one hour, and they often finance their restaurant loans in only a few days.
Is an alternative small business financing company that makes it simple to apply for a merchant cash advance or a short-term restaurant loan for expansion, remodelling, equipment financing, or working capital for your restaurant, despite the fact that they do not specialize in the restaurant financing industry.
CAN Capital offers short-term loans with durations ranging from six to 18 months, ranging from $2,500 to $250,000.
You may apply in as little as 48 hours and get money, but you must have been in business for at least four months and fulfil certain revenue requirements.
eBusiness Funding, a company that offers business loans and merchant cash advances, specializes in restaurant loans.
Restaurants with a minimum of six months in operation and monthly revenues of $10,000 or more are eligible for merchant cash loans from eBusiness Funding.
After your application has been accepted, you may get a merchant cash advance of up to $500,000 in 72 hours.
FORA Financial invests in the restaurant sector the most.
If you’ve been in business for three months and have the necessary sales, you may apply for merchant cash advances and small business loans.
Restaurant loans of up to $500,000 may be granted in as little as 72 hours if the application is completed correctly.
FORA’s funds may be used to a number of uses, and they also provide funding for food trucks.
Business Capital of the United States
National Business Capital also offers a variety of restaurant loans, including SBA loans, short-term loans, merchant cash advances, equipment financing, and commercial mortgage finance, in addition to franchise financing.
For new companies, National Business Capital also provides starting loans.
It just takes a few minutes to fill out the application, and approvals may happen in as little as 24 hours. You can receive money in as little as a few days.
Finance in a Hurry
Small company loans, lines of credit, SBA bridge loans, cash advance loans, and other kinds of restaurant loans are all available via Rapid Finance.
Bridge loans from the Small Business Administration may help restaurant operators bridge the gap between when their SBA loan funds and when they need the money.
Rapid Finance allows you to apply for a loan online or over the phone and get funding in as little as one day.
Alternative financial institutions Kabbage offers working capital lines of credit. Kabbage may fulfill your restaurant finance requirements via an accessible line of credit, even if it is not particularly a restaurant loan.
Kabbage may be a suitable match for you if you require new restaurant equipment, need to employ additional staff, or want to engage in marketing initiatives. Kabbage has credit lines ranging from $2,000 to $250,000 and may accept applications in as little as one business day.
For bigger financial requirements, the alternative lender Funding Circle provides term loans.
The loans offered by Funding Circle vary in size from $25,000 to $500,000, with durations ranging from six months to five years. When you look at the statistics, Funding Circle seems to be the most similar to a conventional bank loan—but it’s a little simpler to get and takes a little less time to finance.
Although Funding Circle does not specialize in restaurant finance, its term loan may be ideal for major equipment acquisitions or restaurant renovations.
OnDeck, number eleven
OnDeck Capital, another another online alternative lender, is a fast restaurant financing option that all company owners should be aware of.
OnDeck provides $5,000 to $500,000 in short-term loans and $6,000 to $100,000 in credit lines. Again, OnDeck does not explicitly provide a restaurant loan product, but that does not rule them out as a viable alternative for your business finance need. OnDeck may be a good lender to look at if you need to make modest, short-term expenditures for your business.
Crowdfunding is another option.
Finally, although crowdfunding isn’t a kind of restaurant loan or a particular restaurant lender, it may be a viable alternative for your financing requirements.
If you’re just getting started with your restaurant or don’t qualify for bank loans, the SBA, or other lenders, crowdfunding may be a viable choice.
If you’re starting a restaurant, you may have to be a little more creative by using crowdsourcing sites like GoFundMe or Kickstarter to raise funds. Many individuals make modest investments and contributions to your fundraising objectives on these sites. To demonstrate their appreciation for the investment, company owners may give a discount, an early-access preview, or just a thank you letter.
If you already have customers, you may get creative with your marketing by revealing that you’re using a crowdfunding site to raise funds for your restaurant. Customers who are pleased with your service may feel compelled to donate to the cause of keeping your restaurant open.
Restaurant Loans: What They Are and How to Get Them
Let’s learn more about the various kinds of restaurant financing now that we’ve looked at some of the most popular sources of restaurant loans.
As we’ve seen, there are a variety of loan choices, so weigh them all and choose the one that best suits your needs.
Loans for machinery
If you operate a restaurant, you are well aware of the high cost of equipment. The cost of purchasing new industrial ovens and stovetops may quickly mount.
Just because you can’t afford to pay for new equipment for your restaurant out of pocket doesn’t mean you can’t have the most cutting-edge machinery and automobiles. Consider restaurant equipment finance if you’re having trouble raising the funds you’ll need to buy equipment for your business. With this kind of restaurant loan, you may finance up to 100% of the purchase price of your new equipment.
Furthermore, since this kind of loan uses the equipment as collateral, you may get secured restaurant financing without putting any of your personal assets at risk.
Loans to help with working capital
Working capital loans are the finest all-around financing for restaurant operators out of all your restaurant loan choices. Working capital loans are short-term loans that assist you pay costs and keep your restaurant’s finances on track.
Working capital loans are a good choice for restaurant owners who need a small business loan quickly—typically, the maximum loan amount is $250,000.
One of the most frequent difficulties faced by restaurant operators is covering food expenses.
As a result, if you need money to buy goods for your restaurant, inventory financing may be a good option. Inventory finance may come in a variety of forms, including a short-term loan, a medium-term loan, or a company line of credit, and it’s used to purchase inventory for your restaurant. Inventory finance is similar to equipment financing in that the inventory being purchased serves as security.
And as long as you’re just buying goods with the proceeds—and making timely payments, of course—that inventory is yours to use as you see fit.
For all small business owners, but particularly for restaurant owners, lines of credit are excellent financing options.
You’ll be authorized for a certain amount of money that you may use whenever you want or need it with this flexible financing option.
You only pay interest on the restaurant financing you take out of your line of credit, and after you’ve returned it, your credit line is replenished with the original amount.
A working capital line of credit may be particularly useful if you operate a seasonal restaurant. It’ll stay in your back pocket until you need it—perhaps during the busy season or when company slows and you need to pay your normal operating expenses
How to Get a Loan for a Restaurant
Let’s talk about how to apply for a restaurant loan with all of these lenders and financing alternatives in mind
Lenders will require a range of details about your company to establish its legality and financial history, whether you submit an application online or talk with a representative. You’ll have to give proof of your identity and respond to any inquiries they may have.
The list of business loan criteria may, of course, vary depending on the lender; nevertheless, you can anticipate to be asked the following questions:
What kind of restaurant are you running, and how long have you been open?
Most lenders will want to know what type of restaurant you own and operate. Prepare a business plan that explains your restaurant’s financial projections as well as more qualitative growth goals.
What distinguishes and distinguishes your restaurant from others? In the next five years, how will it change? Your business plan should provide answers to these questions.
The length of time you’ve been in business is also important to lenders. Lenders are wary of any young, small business, but restaurants are especially so.
You’ll be a good candidate for a small business loan if you can show that your restaurant has been around for a while and that it can withstand any challenges that may arise.
What is your money management strategy for your restaurant?
When applying for a small business loan, lenders will request a slew of financial documents.
They’ll most likely need bank statements, profit and loss statements, personal and business tax returns, a cash flow forecast, and other documents from your company.
All of these documents demonstrate your restaurant’s revenue and profits, as well as your ability to manage your business’s finances, to the lender.
The lender will be confident that you’ll be able to repay your restaurant loan if you’re good at bringing in money and keeping it in the business.
As a borrower, how do you like it?
You’ll need to provide your personal and business credit scores for any restaurant loans that you apply for.
Lenders will look at your credit score to see how trustworthy you are with money you borrow.
You’ll be a good candidate for the best types of restaurant financing if your credit score is excellent.
On the other hand, lenders may be hesitant to work with your business if your credit score indicates that you have a poor track record of repaying what you borrow on time and in full.
You don’t need a perfect credit score to get a business loan, but you’ll be more likely to qualify for the best products if you can show you’re responsible with your money.
Before You Apply, Consider These Questions
As you can see, working with a lender and applying for a restaurant loan is a lengthy process. As a result, before you get too deep into the application process, make sure you’ve answered the following questions to yourself:
When do you think I’ll require the funds?
If the answer is “tomorrow,” don’t put off the process of obtaining fast restaurant financing. There are a variety of quick business loans available to assist you in obtaining the funding you require for your restaurant right away.
If you can afford to delay your business loan and spend more time looking for and applying for one, you should do so.
The most affordable options are the business loans that require more paperwork and effort in their applications.
What is the reason for my financial requirement?
This question will help you determine whether or not you need to take on debt for your restaurant.
Plus, if you know why you need the money for your restaurant before you start the application process, you’ll have a better chance of finding the right loan.
Is the application process something I’m prepared for?
Business loan applications take a long time to complete unless you work with short-term lenders who rely on technology to process their loans.
And, if you aren’t completely prepared to begin the search and application process, you are jeopardizing your chances of receiving a loan. Before you start looking for a business loan, think about how much time you have to devote to finding one and completing an application.
Have I given all of my options a thorough thought?
Make sure you’ve considered all of your options before deciding on a restaurant business loan.
An equipment loan may be the best option if you need to purchase a piece of equipment. Finding the best option for general financing needs, however, will be more difficult.
Short-term loans, short-term lines of credit, and merchant cash advances all have their own set of terms, rates, and fees.
As a result, before committing to a restaurant loan, you should weigh all of your options.
Ultimately, while obtaining restaurant loans may be more difficult than obtaining loans for other types of businesses, there are still a number of options available to entrepreneurs seeking to fund their restaurants.
As we’ve seen, there are a variety of online and alternative lenders to consider, which can come in handy if you can’t get a bank loan.
As a result, the choice of which type of restaurant financing and which lender to work with is ultimately yours. There’s no doubt you’ll be able to find the financing solution that’s right for your restaurant if you think carefully about what it needs and what product will meet those needs.