Restaurants/ Bars
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Intro To Restaurant Business Loans
If you live in a bustling town, you’ve likely witnessed numerous restaurants open and close. Despite their pivotal role in the community, the restaurant industry is fraught with risk. Successful restaurants can encounter financial challenges due to various factors: equipment breakdowns, outdated facilities, high turnover among staff seeking more stable hours, and the substantial monthly rental costs necessary to maintain a prime location. 60Day Capital offers Restaurant Business Loans & Equipment Financing to help restaurants overcome these obstacles and continue serving their loyal patrons.
In this guide, we’ll address the following questions and more:
- What Are Restaurant Business Loans?
- How Do Business Loans For Restaurants Work?
- What Are The Advantages of Restaurant Business Loans?
- What Are The Disadvantages of Restaurant Business Loans?
- Who Qualifies For Restaurant Business Loans?
- How To Apply For Restaurant Business Loans:
- What If I’m Declined For a Restaurant Business Loan?
What Are Restaurant Business Loans?
Restaurants play a vital role in bustling towns, but it’s also one of the riskiest industries. Successful restaurants can face financial challenges from various fronts: equipment breakdowns, outdated technology, employee turnover, and the high costs of prime location rentals. At 60Day Capital, we specialize in Restaurant Business Loans & Equipment Financing to help restaurants overcome these hurdles and continue serving their loyal customers.
Here, we’ll explore key questions about Restaurant Business Loans:
Working Capital Loans
Revenue-Based Financing
Business Term Loans
Business Line of Credit
SBA Loans
Merchant Cash Advance
SBA Loans
How Do Business Loans For Restaurants Work?
Restaurant Business Loans cater to a wide range of needs, from equipment replacements to managing cash flow fluctuations. For instance, if you’re looking to upgrade costly equipment, our Equipment Financing allows you to use the equipment itself as collateral. With minimal paperwork, you can secure the new equipment in just a few business days.
Given that restaurants often process high volumes of debit and credit card sales, we often recommend a Merchant Cash Advance for temporary slowdowns in business. This option allows for smaller payments during quieter periods, preserving cash flow for peak times. The flexible repayment schedule is particularly beneficial for restaurants experiencing seasonal fluctuations or unpredictable demand shifts.
If your challenge lies in maintaining adequate inventory to meet sudden spikes in demand, a Business Line of Credit can be the solution. This financial tool provides access to funds to purchase large orders when needed, aligning with your cash flow cycle. Minimal interest accrues since you can pay off the balance swiftly.
For larger investments such as opening a new location or undertaking renovations, we offer Business Term Loans and SBA Loans. These loans feature expedited approval compared to traditional banks, and terms can be tailored to match the projected timeline of your investment.
Business Loan Options Compared
LOAN TYPES
MAX AMOUNTS
RATES
SPEED
- Merchant Cash Advances
- $5k – $1m
- Starting at 1-6% p/mo
- 1-2 business days
- SBA Loan
- $50k-$5.5m
- Starting at Prime + 2.75%
- 8-12 weeks
- Business Term Loan
- $10k to $5m
- Starting at 1-4% p/mo
- 1-3 business days
- Business Line of Credit
- $1k to $1m
- Starting at 1% p/mo
- 1-3 business days
- Receivables/Invoice Financing
- $10k-$10m
- Starting at 1% p/mo
- 1-2 weeks
- Equipment Financing
- Up to $5m per piece
- Starting at 3.5% (SBA)
- 3-10+ business days
- Revenue Based Business Loans
- $5K – $1m
- Starting at 1-6% p/mo
- 1-2 business days
What Are The Advantages of Restaurant Business Loans?
Thanks to companies like 60Day Capital, Restaurant Business Loans can be accessed quickly. The application requires minimal documentation, and funds can be deposited into your bank account within a few business days. This rapid access is crucial for restaurants, where unforeseen expenses and challenges are common. Having access to additional funds can mean the difference between surviving setbacks and struggling to stay afloat.
For example, during a state-mandated health inspection, you may need to purchase specific appliances or upgrade materials for your tables, which can quickly exceed $10,000 in expenses.
Adapting to changes in customer preferences is also vital. If your target audience now prefers delivery over dining in, a business loan can enable you to quickly onboard a delivery service, demonstrating your responsiveness to customer needs.
Another common issue in restaurants is understaffing, leading to slow service and customer dissatisfaction. Business loans provide the financial flexibility to maintain an adequate number of staff members during periods when cash flow might otherwise be insufficient.
Additionally, companies like 60Day Capital specialize in assisting businesses as young as six months old. In the competitive restaurant industry, new owners often face substantial startup costs, even without an extensive credit history or less than a year in operation. Accessing funding can support new restaurants in meeting their financial needs and achieving successful operations from the outset.
What Are The Disadvantages of Restaurant Business Loans?
Navigating the restaurant industry’s unpredictability can make choosing the right business loan challenging. Opting for an unsuitable product can strain cash flow and hinder growth potential. Given the array of available options, thorough research is essential before pursuing funding. However, many restaurant owners admit they are too occupied with daily operations to dedicate time to researching business loan products.
The constant stream of unexpected expenses in restaurants complicates determining the appropriate loan amount. Requesting too little might leave essential costs uncovered, while asking for too much could burden you with excessive debt. Restaurant owners often find themselves in the latter scenario, as new expenses seem to arise daily.
Predicting future expenses and revenue dips further complicates the borrowing decision. As a result, some restaurant owners may avoid exploring business loans altogether due to perceived complexity and uncertainty.
Who Qualifies For Restaurants/Bars?
Approved businesses generally met the following criteria:
ANNUAL REVENUE
$75K+
CREDIT SCORE
550+
TIME IN BUSINESS
6 months+
How To Apply For Restaurant Business Loans:
The amount of paperwork needed depends on the loan product you select. In most cases, funds can be approved and disbursed within three business days. Here’s how to apply:
Step 1: Choose the Right Product
Selecting the appropriate solution is crucial. Each product is tailored for different expenses and cash flow needs. Consider whether your goal is to cover short-term or long-term expenses, and anticipate changes in demand over the coming months. Understanding your funding purpose helps determine the best borrowing amount and terms.
Step 2: Gather Your Documents
For Restaurant Business Loans, prepare the following documents:
- Driver’s license
- Voided business check
- Bank statements from the past three months
- Invoice for equipment (for Equipment Financing)
- Credit card processing statements from the past three months (for Merchant Cash Advance)
SBA Loans require additional documentation. Visit our SBA Loan page to learn more about specific requirements.
Step 3: Fill Out Application
Start the application process by calling us or completing our brief online form. Provide the requested information, including your desired funding amount.
Step 4: Speak to a Representative
After applying, a representative will contact you to explain repayment terms, rates, and available options. This ensures transparency without unexpected fees during repayment.
Step 5: Receive Approval
You’ll typically receive a response within 24 hours if approved. Depending on the loan type:
- Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring funds can be deposited in your account within 24 hours to one week.
- SBA Loans generally take 3-5 weeks for funding.
Your Restaurant Financing Gets Set Up – Now What?
Your loan not only provides financial support but also an opportunity to build or enhance your credit. Ensure all payments are made on time and in full. If you have a revolving credit line, maintain a balance below the credit limit.
Consistent, timely payments positively impact your credit profile, securing preferred rates and terms for future financing needs.
What If I’m Declined For a Restaurant Business Loan?
If your application is declined, it may be because the chosen product doesn’t align well with your cash flow situation. In such cases, we typically recommend an alternative product with a more suitable repayment structure.
Another reason for decline could be if we determine that taking on additional debt isn’t financially feasible for you at this time. In such instances, another financing option like a business credit card or a personal loan might better meet your needs. These options are often more accessible through 60Day Capital and have simpler qualification requirements compared to business loans.
If your credit score is an obstacle to obtaining financing, consider our credit repair services. We can assist in identifying factors impacting your score and develop actionable strategies to improve it.
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