Juggling employees, overhead, payroll, taxes, equipment, and seasonal fluctuations, the largest opportunities, like relocating your establishment to the smallest challenges like replacing broken equipment, can seem impossible to busy restaurant owners.
To help finance restaurant purchases without disrupting cash flow, most seek outside sources for financing, including banks and direct lenders.
While this is a great method of stimulating business growth while retaining the ability to continue your normal operations, finding the time to locate the perfect restaurant funding option available in the marketplace with rates, terms, and amounts that best suit your needs can be hard to come by.
And with so many restaurant financing options available, how do you even know where to start?
Fortunately, alternative financing companies like National Business Capital offer a variety of restaurant financing options that can help you grow and develop your business quickly and easily.
Whether you could use help financing the growth of your restaurant with options including startup loans, equipment financing, SBA franchise loans, or virtually any other restaurant expense, National Business Capital has the connections to find the best fit for you.
Here are the five most common and proven financing options that restaurants are using to grow their business in 2024:
Top 5 Restaurant Financing Options for Restaurant Owners in 2024
1. SBA Loans for Restaurants
With prime rates, huge offers, and long terms, loans backed by the Small Business Administration are one of the best restaurant financing options for restaurant owners in 2024.
However, many don’t know that SBA-supported loans are surprisingly hard to get. If you are one of the lucky ones who actually gets approved, your personal assurance and even collateral will certainly be needed to back the funding.
You might find that when your own individual funds are on the line, the stress might make it harder for you to succeed. Fortunately, National Business Capital offers SBA loans with eliminated wait times, funding in as little as 24 hours, and an easier approval process!
With SBA loans, you can get up to $5 million in funding, with repayment terms of up to 25 years.
2. Restaurant Equipment Financing
Among the most common restaurant financing options you can apply for is restaurant equipment financing. As a restaurant owner, you can lease or finance the necessary equipment to run your establishment.
Leasing offers affordable monthly payments through customized terms specific to your business. There are typically comprehensive packages offered, ranging from 12- to 60-month terms, which offer a solution to any type of restaurant owner. This type of financing or leasing usually has great tax benefits as well.
With restaurant equipment financing, it is also important to know that the financed equipment itself usually serves as collateral, potentially reducing the need for additional security. You can choose between fixed and variable interest rates.
3. Restaurant Business Line of Credit
A business line of credit is one of the fastest, most convenient restaurant financing options available at your disposal, designed to meet the exact needs of your business. One of its best features is that you only pay interest on the amount that you use, not on the whole amount of the line of credit.
Even if you do not have an immediate need for funding, a line of credit is always smart to have for emergencies or when an incredible opportunity arises.
Restaurant owners have been taking advantage of business lines of credit for discounts on bulk purchasing, short-term cash flow, fast access to working capital, bridging of slow account receivables, and taking advantage of exciting opportunities with a small window to pay their taxes in a timely fashion.
As opposed to other restaurant financing options, business lines of credit are revolving, which means that you can borrow up to a predetermined amount, pay, and borrow again. You can choose between an unsecured line of credit (doesn’t require collateral) and a secured line of credit (requires collateral).
4. Unsecured Restaurant Business Loans
Want business financing but don’t want to leverage any collateral? Unlike traditional banks, unsecured small business loans come with no restrictions on how the funds are used. Many restaurant owners utilize this financing option’s fast and flexible terms to serve as an extremely effective solution to their financial needs.
Small business financing approvals are NOT based on your personal credit, time in business, or if you are showing a loss. This product is very popular among business owners with good credit and even those who have issues with their credit.
You can usually acquire this type of financing even if you have open tax liens with no payment plans in place. Restaurant owners have chosen small business loans to grow their business at a faster pace.
The product requires a lot less documentation than a conventional bank loan, making it one of the most sought-after restaurant financing options in 2024.
5. Restaurant Cash Advances
A restaurant cash advance is not a loan; it is the purchase of future credit card receivables. Although this type of financing has been known to be pricey in the past, a few providers like us specialize in offering more competitive pricing for restaurant business owners.
A business cash advance features a repayment fluctuation based on your business and is the perfect solution if you don’t want to be tied to a set monthly payment.
Restaurant owners especially enjoy the program because not only is there no set payment, but it also doesn’t require a personal guarantee. The greatest part is you don’t have to leverage your own capital – you can leverage ours instead!
Applying for Restaurant Financing Options
Before you apply for any type of restaurant financing options, here are some words of wisdom. Choosing the wrong lender will wind up hurting your restaurant more than helping, so choose wisely and do your research.
Traditional lenders are known for giving restaurant owners the raw end of every deal. Approval is extremely difficult, and processing speeds are often sluggish at best.
Choosing the right lender will result in easier approval, faster funding, and greater growth potential. That’s what makes alternative financing companies like National Business Capital so great.
We have a 90% approval rate, work with all credit profiles, and can find restaurant financing options for business owners regardless of annual revenue and time spent in business.
4 Questions Lenders Will Ask You Before Approving Your Restaurant Loan
Regardless of the restaurant financing option you have chosen, it is important to be prepared for the application process. Here are a few key questions that lenders will ask you before approving your restaurant loan:
- How long have you been in business? Are you looking for funds to start up your restaurant, or have you been in business for years and looking to grow and expand your establishment? The answer to this question will help the lender determine what you need to qualify for the funding option of your choice, as well as the interest rates, term lengths, and loan amounts that come with it.
- What do you plan to use your borrowed funds for? Before approaching your lender, have a solid strategy for using your borrowed funds to grow your restaurant. Being as specific as possible when explaining your business goals will help your lender feel more comfortable lending you capital and may even increase your chances of approval and getting financing with more desirable funding rates, lengths, and amounts.
- What is your FICO score? Most banks and direct lenders base their entire approval process on the strength of your credit score. However, through alternative lenders like National, restaurant financing options with low rates, long terms, and large amounts are available to all business owners, regardless of FICO and financial history.
- How much does your business make in annual gross sales? The more your business makes in annual gross sales, the better the terms of your restaurant loan will be. However, this is more true through banks and other lenders than it is through alternative lenders.
Make sure you explore all your options to find a financing option that scales to the amount of sales your business makes to prevent over-borrowing and overspending.
Applying for Restaurant Financing, Step by Step
If you are ready to apply for restaurant financing, here are the steps that you will need to follow in order to get through the application process:
Step 1: Fill Out an Online Application. This simple application takes about a minute to complete and will never affect your credit score. You will only need to provide basic information, including your business name, email, and phone number, as well as your gross annual sales and time in business.
Step 2: Connect with an Expert Restaurant Financing Advisor. After filling out your application, an expert advisor will call you in minutes. Tell them your business goals that you need to accomplish through financing, so they can begin tailoring your formal application in ways that help you obtain the perfect funding option with the terms you desire.
Step 3: Determine the Best Restaurant Loan for Your Needs. Once your formal application is completed with help from your advisor, they will get to work comparing over 75+ specialized lenders in the global marketplace to find the perfect financing match for your restaurant, saving you the time and capital needed to do it yourself!
Step 4: Analyze Your Options with Your Advisor. Consult with your advisor to compare the funding offers you receive and determine the best financing option with terms that best match your business needs.
Step 5: Receive Funds in as Little as 24 Hours. Through a simplified and expedited process that involves industry-leading experience and cutting-edge technology, you will receive the capital you need in as little as 24 hours.
Explore Restaurant Financing Options with NBC
If you are looking to leverage the benefits of restaurant financing options, look no further than National Business Capital. With a single application, you can get access to dozens of exclusive offers from a diverse lender platform, so you can make the best decision for your business.
With $2+ billion financed since 2007, multiple awards, and an experienced team of Business Finance Advisors, we have everything you need to find the best financing options for your project.
Are you ready to get started? Apply here.
FAQ
What are the best restaurant financing options?
The best restaurant financing options include SBA loans for favorable terms, equipment financing for upgrading tools, and lines of credit for managing expenses. Merchant cash advances and traditional bank loans offer additional flexibility and stability based on business needs and credit profiles.
What do I need to qualify for restaurant financing?
To qualify for restaurant financing, you typically need a solid credit score, detailed financial records, proof of consistent revenue, a comprehensive business plan, and sometimes collateral. Lenders also assess your operational history, preferring businesses with a track record of at least two years.
Specific requirements may vary depending on the lender and the type of loan sought.
What are the advantages of restaurant financing?
Restaurant financing offers several advantages, including access to capital for various needs like opening a new location, purchasing equipment, or covering operating expenses. It provides flexibility in repayment terms, allowing businesses to align payments with cash flow.
Additionally, financing can help restaurants build credit and establish relationships with lenders, paving the way for future borrowing opportunities. Moreover, by spreading out costs over time, financing allows restaurants to conserve cash and maintain liquidity for day-to-day operations or unexpected expenses.
Overall, restaurant financing empowers businesses to grow and thrive in a competitive industry.
What are the disadvantages of restaurant financing?
Restaurant financing may come with drawbacks such as high interest rates, additional fees, and stringent eligibility criteria. Borrowing can increase debt burdens and monthly expenses, impacting cash flow.
Moreover, failure to repay loans can harm credit scores and risk business assets used as collateral. Additionally, long-term financing commitments may limit flexibility and hinder adaptability to market changes.
Can I get financing for a new restaurant?
Yes, financing options exist for new restaurants, although eligibility criteria may be stricter. Lenders typically require a solid business plan, good personal credit, and collateral. Alternative lenders or SBA loans may offer more flexible terms for startups but expect higher interest rates.