Guide: Best Types of Financing for Restaurants in 2019

Guide: Best Types of Financing for Restaurants in 2019

It’s a dog-eat-dog world, especially with regards to the restaurant industry. Establishing a successful eatery is tough-going, but restaurant business loans can do wonders for any owner, whether established or just starting up.

 

So roll up your sleeves, throw on your apron, and get ready to chow down on this feast of info. Learn everything you need to know about restaurant financing with this detailed guide. Bon appetit!

 

What could you use a restaurant loan for?

 

With 20% of restaurants failing within their first year of opening, it’s clear that anybody who plans on getting into the food industry will need as much help as they can get. Restaurant business loans can be used for a wide variety of purposes, from equipment to renovations, and much more.

 

So whether you had plans to obtain restaurant funding to expand, or if the necessity has come up unexpectedly, it’s important to know how to go about obtaining business loans the right way and more importantly, finding the one that’s most suited to your business and its needs.

 

Here’s a glance at a handful of applications for restaurant loans:

  • Paying rent and appliances
  • BOH (back of house) and FOH (front of house) equipment; grills, refrigerators, POS system, menus, etc.
  • Paying employees
  • Restocking food, drinks, cleaning supplies, etc.
  • Repairs
  • Advertisement
  • Refurbishing
  • Opening a new branch

 

The list of possible uses for restaurant loans is virtually endless. Whatever you might want (or need) to get done in your establishment, restaurant funding doesn’t need to be an obstacle to completing the task at hand.

 

So don’t let your financial situation boil over! Keep reading to discover the different solutions that are available when it comes to restaurant business loans.

 

Types of restaurant funding available

 

With so many restaurant funding options out there, the process of choosing the right one can become a dizzying endeavor. For your convenience, the table below displays all of the relevant information you’ll need to assess the different restaurant financing options available.

 

Lending Partner

Fundbox

Credibly

Kabbage

Fora Financial

ondeck

BFS Capital

Bluevine

Best used for

Invoice financing & line of credit

Working capital loans & Business expansion loans

Line of credit

Small Business Loan & Merchant Cash Advance

Business term loans & Line of credit

Small business loans & Merchant cash advances

Invoice factoring & Line of credit

Loan details

             

Loan Size

$1,000 – $100,000

Up to $250,000

$2,000 – $250,000

$5,000 – $500,000

Credit lines up to $100,000, term loans from $5,000 – $500,000

$5,000-$500,000

$5,000 – $250,000, invoice factoring $20,000 – $5 million

Repayment term

12-week repayment term for line of credit, 12-week or 24-week repayment terms available for invoice financing

6-17 months for working capital, 18-24 months for business expansion

6, 12, or 18 months

Flexible

3-12 months on short-term, 15-36 months on long-term

Flexible

6-12 months for credit line, 1-13 weeks for invoice factoring

Qualifications

             

Time in business

At least 3 months

At least 3 months

1 year

At least 6 months

1 year

1 year

At least 3 months

Minimum credit score

n/a

n/a

560

550

500

550

530

Annual revenue

$50,000

General business information and details of business owner

$50,000

Minimum of $5,000 in credit card sales or $12,000 minimum in gross sales

$100,000

Average daily bank balance of at least $1,500

$100,000

 

Equipment finance

  • Whether it’s for FOH (front of house) or BOH (back of house) equipment, you can use restaurant equipment financing to make the purchases you want (or need) without getting stuck under a mountain of debt.

 

Startup business loan

  • A startup business loan can provide you with the restaurant financing needed to get your restaurant started on the right foot. The best part is, you don’t need to own a business to qualify.

 

SBA loan

  • An SBA loan doesn’t provide the funds. Rather, it provides a safety net for borrowers (guaranteeing up to 85% of the loan amount), which gives lenders more incentive to approve applications for restaurant business loans.

 

Business line of credit

  • A business line of credit is typically recommended as a “rainy-day fund”, to be used when the financial pressure reaches a boiling point. When the temperature gets too hot, you don’t need to step out of the kitchen. Use this form of restaurant financing as a remedy for a difficult billing period.

 

Unsecured business loan

  • Unsecured business loans don’t require any form of collateral. That means the lender is taking a bigger risk than the borrower (good news for restaurant owners). Qualifications are generally stricter than other loan types, but on the bright side, unsecured loans can typically be repaid over a long period of time.

 

Merchant cash advance

  • Merchant cash advance is generally considered a last-case-scenario to temporarily boost your restaurant funding. It can help your restaurant make it through the off-season, or provide the funds needed to make an emergency repair. These restaurant loans are repaid by automatically drawing a certain percentage from future credit/debit card transactions, and the repayment term lasts until the entire loan is paid back in full.

 

Restaurant financing

 

Best loan for small purchases

 

Restaurant expenses aren’t all about the big appliances – you’ll need to buy things like uniforms, cookware, utensils, and so on.

 

For smaller restaurant purchases, consider these restaurant funding options:

 

Lending Partner

Fundbox

Kabbage

BFS Capital

Loan size

As low as $1,000

As low as $2,000

As low as $5,000

Minimum credit score

n/a

560

550

Repayment term

12-24 weeks depending on type of financing

6-18 months

Based on your business’s cash flow



Best loan for large purchases

 

For your restaurant to operate up to par, you’ll need to make some big purchases as well – a flat grill, a walk-in refrigerator, a beer-tap system, etc.

 

For those more costly restaurant purchases, consider these restaurant funding options:

 

Lending Partner

Credibly

Fora Financial

ondeck

Loan size

Up to $250,000

Up to $500,000

Up to $500,000

Minimum credit score

n/a

550

500

Repayment term

6-24 months depending on type of financing

Up to 15 months for small business loan

3-12 months for short term; 15-36 months for long term

 

Best loan for startups

 

Turning your restaurant idea into a culinary reality takes money. You’ll need to get your kitchen stocked with equipment and food, make the design of the seating area, pay rent, utilities, and so on and so forth.

 

For startup restaurant funding, consider these restaurant funding options:



Lending Partner

Fundbox

Bluevine

Kabbage

Loan type

Line of credit

Line of credit

Line of credit

Time in business

At least 3 months

At least 3 months

At least 1 year

Best if…

You have bad credit

You have slow-paying customers

You need to access cash quickly

 

Find out which business loan is best for your needs

 

Wow, that’s a lot of online lenders and different loan options to choose from. How do you know which option is best for YOU?

 

How do you know which loan option you’ll qualify for without applying for all of them and taking a credit hit each time. Fear not, there is a solution…

 

There’s no longer the need to search the far corners of the internet to scrape together a list of restaurant loan providers. We’ve done the due diligence for you. By applying for restaurant loans through Lending Express, you’ll effectively minimize the amount of time and energy needed to get approved.

 

Why apply for a loan with Lending Express?

  • One application to access over 50+ lending partners
  • No credit hit
  • Free service
  • Tailored business lending profile – learn how to improve your funding odds
  • Get approved in as little as a few hours

 

Lending Express looks at a large variety of factors; its technology takes into account how well your business is doing by looking at your business age, financial history, business credit and more. All of the information that lenders need to know is gathered and analyzed by advanced software, making it quicker and easier for you – and for the loan providers as well.

 

The best part is, if you don’t qualify for a loan, you’ll learn the reasons why through your tailored LendingScore™ dashboard. You’ll also receive advice on how to improve on certain areas of your business in order to help increase your funding odds – and it won’t cost you a dime!



Cutting it down to size

 

Getting restaurant funding is easier said than done. But, with the information provided in this guide, you won’t get burned in your search for restaurant financing. Chew on it for a while, and if you need to come back and review the pointers you can bookmark this page for later.

 

We hope you’re able to get your restaurant dreams cooking, and if you have more questions let us know in the comment section below.

Disclaimer: The information contained in this article is provided for informational purposes only, should not be construed as legal advice on any subject matter and should not be relied upon as such. The author accepts no responsibility for any consequences whatsoever arising from the use of such information.

Recommended Reading

What’s the Difference between Equipment Leasing an... For many small business owners, having up-to-date equipment is crucial to the success of the company. Whether you operate a restaurant, run a constru...
6 Signs that Your Business Needs Additional Financ... As a small business owner, you know that having enough financing is crucial. Without it, you might not be able to remain operational, therefore putti...
Guide to Using Credit Cards to Build Credit As a business owner, or as someone aspiring to become one, there are many expenses that will stand in the way of achieving your big business goals.  ...
How to Start Your Own Construction Business in 201... Chances are, if you’re reading this, you aren’t quite sure how to start a construction company. Starting a construction business, as with any sort of...
Startup Fundraising: A 2019 Guide to Startup Fundi... You’ve come up with a great idea for a business. It’s taken time for you to polish your rough idea, design your product or service, sketch out your b...
Business Loan vs Personal Loan: What’s the Differe... Business loan vs personal loan - it’s one of the most fundamental hurdles that small business owners need to overcome in the early stages of getting ...