Whether you’re opening up your first restaurant or wish to update your current dining area, it can be challenging to access the funding to do so in time to hit your launch date. Luckily, there are plenty of financing options available to you.
Here are four financing alternatives to consider when looking to upgrade your restaurant.
4 Loans to Improve Your Restuarant
1. Working capital loans
If you’re ready to open your restaurant, but need a little extra money for fixtures or inventory, a working capital loan might be right for you. Working capital loans are low-interest loans for small businesses that help businesses grow by providing extra cash.
These loans are usually short-term and can be paid back quickly. To qualify, businesses should have good credit and steady cash flow; each business is unique, so talk to a lender about whether or not a working capital loan would work well for your business needs.
2. Merchant cash advance
If your business is struggling to make ends meet, a merchant cash advance (MCA) can help bridge that gap until things turn around. As long as you have good credit, there are no restrictions on how much money you can borrow or how often you can apply for financing.
With MCAs, you use your business’s income and receivables as collateral for a cash advance from a merchant cash advance lender. In return, you get an influx of cash and pay back what you owe over time—typically in equal monthly installments.
3. Equipment financing
An equipment loan allows you to purchase big-ticket items like cooking equipment, ovens, stoves, refrigerators, and freezers.
This can be a huge help if you don’t have enough cash on hand to pay for everything upfront. Equipment financing terms generally last from one year to five years and come with reasonable interest rates that typically run between 6 percent and 20 percent.
4. Traditional bank loans
Traditional loans are much like business loan certificates of deposits. The money you borrow is deposited into your bank account and you repay that amount over a predetermined time period, at an interest rate set by your bank. If you’re looking for more than $500,000 in funding, however, these loans aren’t likely going to be your best option.
Ways to Use a Restuarant Improvement Loan
Businesses use improvement loans for a wide variety of purposes, from remodeling projects and new technology to employee training and marketing initiatives.
For example, some entrepreneurs might want a loan to upgrade their equipment—this can be anything from upgrading your register or POS system to installing an energy-efficient air conditioner or purchasing new kitchen equipment. Be sure you know what you’re getting into before you commit!
A major investment in the equipment should add immediate value for your business or provide cost savings down the road. If your business is already profitable but could use a makeover, you might want an improvement loan for cosmetic changes like painting walls, installing new flooring, or adding beautiful artwork.
Last Words
Taking on new opportunities encourages quick growth. Yet you can’t do more without financing. Consider these four products when looking for a restaurant improvement loan.