Small Business Restaurant Improvement Loans

If you’re a business owner in the restaurant industry, you understand the importance of keeping your restaurant up to date to be successful. Whether you’re opening a new restaurant, establishing a new location, or renovating an existing restaurant, a restaurant improvement loan and other financing options can help.

Some financing options include:

  • Traditional bank loans
  • Business line of credit
  • Equipment loans
  • Commercial real estate loans
  • Merchant Cash Advance
  • Small Business Administration (SBA) Loans

This article explains your financing options and how they can help your restaurant business.

Why would someone need a restaurant improvement loan?

As restaurateurs, keeping your restaurant open and profitable is the most important thing. So it is good to understand why you would need a restaurant improvement loan for your business. Here are four reasons:

1. Buy inventory

A restaurant improvement loan can help you avoid breaking the bank on everything from bar stools, tables and chairs to other must-have restaurant equipment. With a loan, small business owners can focus on creating the best environment for their customers that matches their business needs. Also, inventory can extend to kitchen equipment like ovens, food prep counters, or food processors, which are very expensive and you don’t want to pay for with your personal funds or put on your score. personal credit.

2. Renovations

Another reason you might need a restaurant improvement loan is to renovate your restaurant. Renovations can include:

  • Installation of new flooring
  • Updated seat cabins
  • Bathroom upgrades
  • Installation of new light fixtures
  • Paint the interior and exterior

There are many reasons why you would want to renovate and keep your restaurant up to date, especially in a social media generation where people value aesthetics. A restaurant improvement loan can bring you much closer to your goal of having a restaurant with rave reviews.

3. Implement new technologies

Technology is constantly changing, so whether you need an updated point-of-sale (POS) system or you’re infusing your restaurant business with mobile technology and online ordering, you may need funds. additional. Brick-and-mortar businesses are constantly changing the way they serve their customers, so finding a lender who can provide you with the financing to scale your restaurant can help you scale.

4. Marketing and Advertising

Restaurant improvements can also include how you get the message across to your customers. Marketing and advertising are key tools for retaining repeat customers, attracting new ones, and keeping your business profitable. However, marketing and advertising online or elsewhere can be quite expensive and having funding options that increase cash flow can help you acquire the right amount of marketing needed to keep your business running.

Types of Catering Business Loans

These types of restaurant business loans are the ones you should consider:

Equipment loans

Equipment financing is specifically designed to get you the new or updated equipment your restaurant business needs. You have the option of securing the necessary financing to purchase or lease the equipment. Alternatively, you may decide to pursue a sale and leaseback agreement, in which you sell the equipment to a lender in exchange for cash and then lease the equipment from the lender. You have the option of returning the equipment at the end of the term or purchasing it from the lender.

Working capital loans

A working capital loan is money you borrow for the day-to-day running of your business. Working capital loans pay for a business’s short-term needs and expenses instead of investments or assets that will be held longer. This is a small business loan that could come in handy if your business finds itself in a difficult financial situation. Rather than long-term investments, short-term financial goals are the main focus of this type of business financing.

Merchant Cash Advance

Compared to other forms of financing, such as conventional bank loans, merchant cash advances offer a unique opportunity for small businesses. Business owners get financing in the form of an upfront lump sum from a merchant cash advance provider. The owners then repay the advance using a percentage of the business’s future sales. An MCA can be an alternative for businesses that have a high number of credit card sales, are in dire need of capital, or don’t qualify for a conventional loan.

Bank loans

Other financing choices, such as credit cards, payday loans, or short-term loans from internet lenders, often carry higher interest rates than those offered by traditional bank loans. Also, if the lender discloses payments made to commercial credit bureaus, you can improve your business’ creditworthiness if you make your payments on time.

When you have questions about your loan or other financial products that could benefit your business, you can speak to a professional banker or loan officer located at a local branch of many banks for assistance. . This service is offered by many banks.

When to Apply for Restaurant Improvement Funding

Having a business plan can help you determine the longevity of your business growth, especially with financing. Knowing when to apply for restaurant improvement financing can have a positive effect on your working capital and can also help you buy equipment, do renovations, and more.

Here are important times in your business when you should consider applying for restaurant improvement financing:

  • Opening a new location
  • Low season
  • When your credit score is high
  • If you need more inventory
  • To afford additional equipment
  • Make essential renovations

Depending on the length of your business or your restaurant’s volume of business, this may dictate when you should apply for financing. In the end, needing it and not having the extra funds is worse than having it and being ready to make the changes necessary for your business to grow and succeed.

How to Improve Your Chances of Funding Approval

There are many facets to improving your chances of being approved for funding, but it is absolutely essential and doable. Whether you are a new business or have bad credit, you always have options. Here are ways to improve your chances of getting your seed funding approved:

  • Build your business credit score. When seeking financing for any loan amount, it is good to have established credit for your business. As a borrower, you don’t want to run the risk of sacrificing your personal credit, so establishing an EIN against a social security number will help your application process strictly through your business name. Nav offers a tool here to better understand your business credit score.
  • Increase your income. One of the best ways for lenders to ensure that you have the ability to repay a loan is to show your financial statements. With lower incomes, you may benefit from loan options with higher interest rates or only short-term loans requiring faster repayment terms.
  • Bring in a co-signer. Depending on the type of loan, if your credit isn’t the best, bringing in a trusted co-signer who has better credit and income can also improve your chances of approval. A co-signer on your loan application could also be someone related to your restaurant business, as they will have the same responsibility for repaying the loan.

Best Loans for Restaurant Improvements

If you’ve ever started your search for a loan, you know there is a seemingly endless number of lines of credit and small business loans available from banks and online lenders. Since new businesses are perceived to have a higher level of risk, the opportunities available to them will be more restricted. However, check out the loan deals Nav has for all small businesses.

Ultimately, whatever loan products, small business loans, or other type of financing you choose for your restaurant business, Nav is here to help. With Nav’s resources and loan matching tool, you can receive the business financing that best suits your business needs. From how to establish business credit to offering a comprehensive list of business credit cards to ensure you get the best restaurant financing options, the choice is yours.

This article was originally written on June 6, 2022.

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