You’ll already know that beginning and keeping a restaurant is hard work. We understand that you have a lot on your plate — pardon the pun — with salaries, food waste management and overhead costs that are at an all-time high restaurant business loans are an important option to consider during lean times especially if you are in a seasonal location or industry.

It requires so much persistence and dedication to realize your dream. You will be busy with menu creation, sorting out a location, interior design, hiring staff and deciding where to get your ingredients — and all this is fantastic! There’s just another big aspect… the money! All of this business is expensive. You will either need to have your own capital or take out a business loan or financial product.

Even if you aren’t just starting up your restaurant and are, in fact, a seasoned veteran in this business, then you can use a loan to hire additional people, set up a new location or find ingredients for a new menu.

So, before we dive right into what financing options are out there for you as a restaurant owner, let us take a look at what restaurant business loans can be used for.

Top Ways to Use Restaurant Loans

If you are reading this guide, you probably already know what you want to use the money for but what do people usually utilise it for?

You can use restaurant loans for pretty much anything that requires funds (as long as it is to do with your business, of course). For example, the most common uses are:

Renovations

Whether this is interior design aspects, furniture or actual architectural issues, restaurant business loans can help fund all of this.

Hiring and Training Staff

Any funds that are needed for wages, uniforms, training, benefits and extra fees that come with hiring, preparing and maintaining your staff team.

Brand New Equipment

If you need a new piece of kit or have to fix something you already own, loans can help with this.

Marketing and Advertising

This includes your adverts, website and other marketing and necessary advertising material.

Working Capital

This relates to the daily running costs of your business — yes, your loan can even help with this!

Things to Consider When Looking Into Restaurant Business Financing

Before you start your application for your restaurant business loan, there are a few things you should consider.

To start with, ensure you know precisely why you need the funds so you can articulate the reason well with the lenders you apply for. As well as this, you will need to know how much you need.

Secondly, you have to look beyond traditional banks — we will jump into this in more detail later on. Why? Well, the crux of the matter is that restaurants are considered a high risk to most banks these days.

You will then need to consider the size of your restaurant since a study that was conducted a number of years ago stated that larger restaurants are more likely to survive. Food for thought don’t you think?

Also, do not forget to think about the amount of money you will need to spend on marketing and what type of advertising you’ll be doing. This is how your restaurant will gain customers and ultimately, survive.

Where to Find Restaurant Business Loans

Since you are currently researching restaurant business loans, you need to make sure you shop around so you can find the best one for you. The best place to do this? The internet, of course!

Comparison websites allow you to easily pitch different lenders against each other to compare their terms and fees so you can discover the right one for your business.

Additionally, you’ll need to ask yourself these questions while you are finding your restaurant business loans:

  • Have you looked at all the types of loans available to you?
  • Do you know the advantages and disadvantages of them all?
  • Have you researched different lenders to find the best terms?

So, now you know where to find the loans, let us look at what types are available to you as a restaurant owner so you can start answering those above questions.

What Type of Funding is Available to Restaurant Owners

Equipment Financing

When you need new equipment, you need quite a lot of money because restaurant appliances aren’t cheap. The chances of you having this sort of money stashed away is unlikely so you can use an equipment financing loan.

With this option, you can replace the equipment immediately or upgrade with minimal effort. Amazingly, you will see your funds between 1-2 working days after you apply!

Plus, the equipment itself is the collateral so you don’t need to relinquish any property or personal assets.

Business Lines of Credit

This is the most valuable one of all because you can access a pot of money whenever you need it!

You only have to pay interest on the funds you actually spend so you can effortlessly control your spending, while simultaneously having unbeatable flexibility.

Working Capital Loan

A working capital loan is short-term and pretty small which is used for working capital (payroll, inventory and other costs).

This choice is really useful when you need a one-time lump sum to make sure you have enough funds for an unusual expense or activity.

SBA Restaurant Loan

These are offered as a partnership through the Small Business Association and whichever lender you decide on. It is a valuable option because the SBA reassures the lenders that the loan will be repaid.

How does this benefit you? Well, it means you will probably be offered better terms because the lenders are not as at risk as they were.

On the downside, you could be waiting from 45 to 120 days to be approved so, as long as you have time — go for it!

Go Forth and Apply!

Now you are aware of your options and you know your figures, all you have to do is actually apply. Once you are approved, you’ll be well on your way