Do you need a loan for your restaurant? Despite their popularity, it is often difficult to get a loan for startup restaurants. Start-up costs are diverse but can range from a few thousand to millions of dollars. Still there are several financing and borrowing options for restaurant owners. It’s important to review every type of available loan to find the right one for your business. With interest rates and loan term differences, certain loan options can be better than others. The following are a few loan avenues for aspiring restaurateurs.
Small Business Association Loan – To apply for a small-business loan go to sba.gov to submit your application. If you are an experienced small business owner, have a solid business plan, and decent credit you have a good chance of getting a small loan.
Factoring – Factoring is a financing method where business owners sell accounts receivable at a discounted rate to a third-party funding source for capital. Restaurants use inventory “stock” for factoring. Restaurants can receive a loan using inventory as collateral. Money from factoring is a short term option that holds higher interest rates. Factors are extending credit to their clients’ (restaurant owners) customers, so they are mostly concerned about the customer’s ability to pay. This means that restaurant owners may not need a great credit history to qualify for a loan.
Restaurant Equipment Loans – Maybe you need to get the right equipment. Restaurant equipment is expensive, but there are special loans for restaurant equipment. Some lenders offer 100% financing, but this varies according to your business’ credit history. Equipment loans are generally fixed rate with an average interest rate. Equipment loans are a shorter term loan, usually no longer than 3 years. Leasing is also an option, but leasing requires a personal guarantee and fixed monthly payment.
First American Merchant (FAM) is the online lender that gives restaurateurs the funds necessary to start their businesses and purchase valuable equipment. FAM specializes in business cash advances for high risk industries and for restaurant owners with bad credit. First American Merchant is the lender that will work for you and with you. Contact them today.