(aka Small Business Loans with no B.S.)

Insider's Guide to Restaurant Loans and Financing in 2022

Whether you’re opening a new restaurant, expanding your concept, renovating your space, buying equipment or hiring more staff, you’re going to need capital to make it all happen.


Whether you run an existing restaurant or you’re about to open one, your success depends on having a steady supply of cash. With an existing restaurant, you hope this capital comes from daily operations, but there are many reasons you might want or need additional funds.


For a new restaurant, the cost of furniture, fixtures and equipment, plus starting inventory and payroll and marketing, all require start-up capital. A restaurant loan can help in all of these situations, providing the cash you need to grow, expand or survive.


After working with hundreds and hundreds of restaurants, I have a good handle on the complex world of restaurant loan options. In this guide, I’ll discuss the different ways you could put additional cash to use, do a deep dive on the various types of financing options available for restaurants, review how to weigh your options, and look at what’s needed to qualify.


TABLE OF CONTENTS

  1. What do we mean by “restaurant loans”?

  2. Restaurant loans: common uses of the cash

  3. Restaurant loans and financing: your top 8 options

  4. Term loans

  5. Restaurant equipment financing

  6. Working capital or ‘alternative’ loans

  7. Business lines of credit

  8. Small Business Administration (SBA) loans for restaurants

  9. Merchant cash advances

  10. Commercial real estate loan (CRE)

  11. Purchase order financing

  12. How to prepare to get funding for a restaurant

  13. The restaurant’s operating history

  14. Your revenues and profitability

  15. Your time in business

  16. Your personal credit scores

  17. The business credit profile

  18. Any available collateral

  19. How to find restaurant loan options

  20. A huge number of lenders

  21. Seek a financing broker you can trust

  22. How to evaluate restaurant loan options

  23. Wrap-up: final tips on restaurant loans and financing in 2022



What do we mean by “restaurant loans”?


In this guide, restaurant loans, or restaurant financing, refers to business loans that are designed to meet the unique needs of restaurant owners. Restaurant business loans can be used for funding both short- and long-term goals.


Some types of restaurant loans are best for startups and brand-new locations, while others are geared toward business owners that have at least one or two years of operating history.

Qualification requirements and repayment terms vary greatly based on the type of financing and the lender providing it. Some loans require good credit by the owner and the business, while some restaurant financing options have lower minimum credit scores. Some options require strong revenue results for two or more years, while others have lower or even no revenue requirements.

Historically, restaurant business loans have been harder to get because lenders viewed the restaurant industry as riskier than other types of businesses. However, this has changed in recent years, and you can now find many more restaurant loan options than you could just 5-10 years ago.



Restaurant loans: common uses of the cash


As a restaurant owner, you might want a loan for a wide variety of reasons. Some popular reasons restaurant owners use outside capital include:


Opening a new location

Restaurant loans can be a great help if you’re ready to grow your footprint. For example, you may want to open a pop-up restaurant to showcase some of the new recipes you’re working on, or set up an entirely new location across town to take advantage of your current brand success. A restaurant loan could be used to secure your new location, buy equipment, pay for marketing or help with starting inventory.


Remodeling an existing location

Understanding how to get financing for a restaurant can be useful when you want to give the interior or exterior of your restaurant, cafe or bar an updated look. A restaurant business loan can help with everything from basic updates such as painting or flooring to more time and cash-intensive projects, like expanding your space with a new outdoor patio or banquet room.


Upgrading your kitchen equipment

Your equipment is crucial to what goes on behind the scenes at your restaurant. Replacing ovens, ranges, stand mixers, coolers, refrigerators, coffee machines, or other equipment can quickly get expensive. Many restaurant loans can cover the cost of repairing, maintaining, and upgrading equipment when those needs arise, and some loans - specifically restaurant equipment financing - can help in the purchase of used or new equipment.


Growing your staff

As a restaurant owner, you rely on a lot of helping hands. Managers, chefs, host staff, wait staff, bartenders, busboys, and dishwashers are just some of the people you might count on to keep your customers happy and coming back for more. If you’re expanding your location or your restaurant is growing quickly, a restaurant loan can allow you to hire and train new employees so you have all hands on deck.


Handling seasonal fluctuations in business

While some restaurants stay busy all year-round, many experience seasonal ebbs and flows. Restaurant financing options like a loan or a restaurant line of credit can help in both scenarios. In the slow season, for instance, you might use a working capital loan or draw from a line of credit to pay your overhead expenses — which could include everything from payroll and rent to insurance and utilities. As the season begins to pick up, you could use a restaurant loan to hire staff or stock up on inventory. If you use a line of credit, you could use the busy season to help pay back borrowed funds.


Adding more tables to increase covers

New locations are great, but not all expansion plans need to be so grand. Much like their chefs who carefully add an ingredient here and there to ensure a perfect taste, restaurant owners may look to change their business more slowly. Expanding can involve something as simple as adding space to serve additional ‘covers’ with new tables.


Operations, marketing or hiring advice

As a restaurant owner, you have to make many decisions every day, often against the backdrop of the hustle and bustle of a busy restaurant. Quite understandably, you may choose to get some outside advice. There are many consultants—some who own or chef in other restaurants—who provide advice to other restaurant owners. These consultants can help with sourcing managers or sous chefs, giving advice about how to position a restaurant in a crowded market or helping to improve the overall operating efficiency of your business.


Rebranding

You know how highly competitive your restaurant industry is. It can be a particular challenge for restaurants serving highly popular cuisines—think French bistros, Italian pizzerias, and Japanese ramen spots—to stand out from competitors offering similar dishes and experiences. It’s here where the value of a your restaurant’s brand can become a key point of difference. Some restaurant loans are being used to create standout brands or to rebrand traditional venues for emerging culinary and dietary tastes.


Diversifying through catering or packaged goods

One way you can build a strong brand is by expanding your engagement with customers “beyond the building”. Examples of this might be catering services and take-home products. Perhaps you are a steakhouse famous for your sauces, or an Italian restaurant known for your home-made pasta. Packaging these can help enhance customer loyalty and serve as great marketing as well. And while such packaged goods can provide an additional revenue stream for you, they come with new costs of product development, packaging and logistics.


Funding operational expenses

Let’s face it, seeking cash for your restaurant is not always about growth. Sometimes, you may need to pursue restaurant loan options to support the day-to-day running of the business. Restaurant working capital loans or restaurant lines of credit can help in such circumstances. In restaurants where your revenue is seasonal, or simply unpredictable, you may decide to secure financing to support positive cashflow and paying your bills.



Restaurant loans and financing: your top 8 options


There are almost as many restaurant business financing options as there are reasons to apply for the money! When restaurant owners think of business financing, they often assume all options are loans coming from a brick-and-mortar bank. This is not true at all.

Today, hundreds of alternative loan lenders offer a little more leniency and flexibility around eligibility, qualifications, and the pay-back process than brick-and-mortar banks. Sometimes the increased flexibility carries a higher financing cost, but this isn’t always true. Many of these non-bank lenders simply use sophisticated scoring and underwriting models, powered by technology, to make faster and sometimes more generous decisions.


Besides traditional bank loans, you have lots of solid financing options, including: merchant cash advances, lines of credit, equipment financing, purchase order financing and more.

Besides traditional bank loans, you have lots of solid financing options, including: merchant cash advances, lines of credit, equipment financing, SBA loans, purchase order financing and more.

Within the wide net of restaurant financing options, here are the top 8 options you might consider:


1. Term loans

A term loan is a loan that’s repaid over a set time frame with interest. As a restaurant owner, you can use term loans to meet short term expenses or fund longer-term investments in your business.

Term loans may or may not require collateral and can have fixed or variable interest rates. Repayment terms can be as short as three months or stretch up to five or even seven years.

A short-term loan may be a good restaurant financing option if you have a cash flow gap you need to fill quickly — such as paying insurance premiums or settling an outstanding invoice with a vendor. Short-term restaurant loans make sense when you’ll be able to repay it in less than a year.

A long-term loan, on the other hand, might be a more appropriate type of funding for restaurants that need to borrow a larger amount or need more time to repay. These are also usually best for refinancing existing debt.


2. Restaurant equipment financing

As the name suggests, restaurant equipment financing refers to loans that help restaurant owners buy equipment. However, these loans are more flexible than you might think. Restaurant equipment financing can be used for the purchase of furniture, appliances, technology and POS systems. For a deeper dive, see How to Get Restaurant Equipment Financing in 2022.

Here’s how they work: an equipment financing lender gives you the funds to buy it, or pays the vendors directly for it, and then you pay the lender back the loan plus interest in monthly increments.


Some equipment financing companies will also let you take out a loan against your paid-off equipment to fund small projects within your restaurant. This is known as a sale leaseback, and sale leasebacks tend to have very low interest rates and attractive repayment terms compared to other sources of funding.

With restaurant equipment financing, the equipment typically serves as collateral for the loan. A great benefit is that often you can borrow up to 100% of the cost. Usually, with equipment financing, you own the equipment from day one, but the lender will file a UCC filing against the equipment. (For more on UCC filings, see What is a UCC filing, and how does it affect my business?) Once the full amount of the loan has been paid back plus interest, the lien is released.



3. Working capital or ‘alternative’ loans

Working capital loans, also sometimes called ‘alternative loans’, are a flexible financing option for restaurant owners who are able to quickly repay a loan. These loans are usually aimed at short-term needs, such as paying suppliers or vendors, meeting payroll or starting a project you think will bring in new revenue soon.

Depending on the lender, you may be able to borrow up to $500,000 in working capital, but these loans may carry higher interest rates or fees compared to other restaurant loan options. For more on this, see How to Calculate the True Cost of Financing for Your Small Business.

Lenders offering working capital or alternative business loans typically have access to more sophisticated technology than brick-and-mortar banks to determine whether a candidate is qualified. This allows them to make faster decisions, and often more lenient decisions about who qualifies.

For example, where a “brick-and-mortar” bank may look for a business to have been operating for 2+ years and require the owner to have a great credit score, lenders offering working capital loans often accept newer restaurants and base approvals on your recent business performance, rather than emphasizing your personal credit score.

Working capital, or alternative, loans may also offer methods of repayment that flex with your daily sales. Rather than requiring you to make one fixed monthly or daily payment for the duration of your loan, alternative loans may offer daily payments as a fixed percentage of your credit card sales, so that payments ebb and flow with your business’s sales, making it easier for you to keep up with payments when sales fluctuate constantly.



4. Business lines of credit

A business line of credit could be a good restaurant financing option if you have various capital needs to meet at various times. Instead of a lump sum of funding, a line of credit is a revolving line that you can draw against over time as long as you have available credit. As you pay down the amount borrowed, you free up room to borrow again.

A restaurant business line of credit is often the most flexible financing option for restaurants. You can use the line as needed, and you only pay interest on the portion of your credit line you’re using. It’s similar to a business credit card in terms of how it works, but a line of credit may offer a lower interest rate and higher limit.

What are the drawbacks to a restaurant line of credit? You may pay an administrative fee to draw against your line of credit or keep it open. Also, a business line of credit may only be good for a set time period. If that’s the case, after the time period expires, your line of credit may be closed and you’ll have to apply for a new one to continue using it.


For a deeper dive, see our overview on Small Business Lines of Credit.


5. Small Business Administration (SBA) loans for restaurants

The Small Business Administration (SBA) backs loans that are made by banks and non-bank lenders. Loans are available for both new and established restaurants. If you're considering an SBA loan, check out Are SBA Loans Right for Your Business?


Microloans, which top out at $50,000, exist for startups or restaurants with small capital needs. SBA 7(a) loans can offer up to $5 million for working capital, inventory, equipment, renovations and more, while the CDC/SBA 504 program can provide restaurants with up to $5 million in capital to purchase, construct, or renovate commercial real estate.


There is good and bad with these SBA loans for restaurants. The good: they have the best rates and longest terms of any of the loans mentioned here. The bad: they are tough to qualify for, very document-intensive and take longer than any other form of financing.

These loans usually have a rate set as Prime rate plus between 1.00%-3.75%, and the terms can be as long as 7 or even 10 years. Unfortunately, SBA loans typically take from one month to a few months to provide funding. Also, these loans require a significant amount of paperwork, including tax returns, business financial statements, personal financial statements and many SBA forms.

For this type of restaurant business loan, you’ll need to offer collateral if any is available, along with a personal guarantee. So, lenders will want a lien on any real estate, including your home, plus any equipment you own. Also, you’ll need to meet minimum credit score requirements which are typically from 650 to 680 minimum depending on the lender.

Finally, for most of these loans, you have to be able to show a profit for your restaurant, both in recent years and for the year to date. This can be particularly difficult for some restaurants impacted by the pandemic and recent troubling trends in hiring, payroll costs and supply chain issues.



6. Merchant cash advances

A merchant cash advance is a way to borrow against your business’ future debit and credit card receipts. It’s a convenient form of financing for most restaurants that have a steady daily flow of credit and debit card sales. (For more detail - What is a Merchant Cash Advance?)


Merchant cash advances are a flexible restaurant financing option in that you can generally borrow between 50 percent and 200 percent of your restaurant’s average monthly credit card sales. The payback for merchant cash advances is relatively simple: payments are deducted from your credit and debit card sales daily or weekly. Terms typically range from 6 months to as long as 24 months.

It’s possible to get funding in one or two business days, and these advances may provide you with more spending power than a loan or line of credit. That convenience may come with a higher price, however.

Merchant cash advances (sometimes called ACH loans) use a factor rate, rather than an annual percentage rate, to determine loan costs. Depending on how much you borrow, the factor rate, and your time frame for repaying the advance, the effective APR could end up being much higher than what you may pay for other borrowing options.

For help in considering the cost of a merchant cash advance, visit How to Calculate the True Cost of Financing for Your Small Business.


Typically, whether a restaurant merchant cash advance is for you comes down to the use of funds. If you will use the funds for something that will translate into near-term revenue, and you can pay back the advance within 9 to 18 months, then it makes sense to consider this.

For example, if an advance lets you quickly hire more staff, or open a new section of your restaurant, or expand your services, or even payoff high interest short-term debt, those could be great reasons to consider a restaurant cash advance since those could translate into an increase in revenue or decrease in outflows quickly offsetting the higher cost of the financing.



7. Commercial real estate loan (CRE)

Restaurateurs can tap into commercial real estate (CRE) loans to either buy a property or to access the cash available to you in a property you own. If you’re interested in buying the property you operate in, this is a very common type of loan made to restaurants. This financing often comes from SBA financing, but there are other non-SBA lenders that can offer a commercial real estate loan for restaurants.


If you already own your property, and you have equity available (equity is the value of the property above what you owe), you can borrow against the property in a number of ways and for a variety of purposes.


One option is to refinance the existing debt on the property, and in doing so possibly reduce your monthly payment and thereby lower your monthly expenses. Alternatively, you might refinance the debt and at the same time increase the loan size to get cash-out for your business.


A cash-out refinance can be used to improve the building, parking lots, exterior space or even provide working capital for operations. If you are doing construction or making improvements, some lenders, particularly those offering SBA loans, may allow you to include soft costs such as architectural and legal fees, appraisals and other construction costs.


Another option is a second mortgage, allowing you to leave your existing mortgage untouched. This is often an option with SBA loans. Lenders can make an SBA 7(a) loan for your restaurant, for example, providing working capital for many reasons, and your property will provide collateral for the loan. One issue with these is to be sure the current first mortgage lender will allow you to have a second lien on your property.


When considering a commercial real estate loan, there are some things to keep in mind. First, most lenders will be laser-focused on your restaurant’s financial health. You will have to be able to show financial statements and tax returns showing that your restaurant makes enough profit to cover the monthly payments.

Also, these loans are not fast to obtain. Most commercial real estate loans for restaurants will take anywhere from 2-3 months to close. Finally, since real estate loans are generally large loans with longer terms (20 to 30 years), they will impact your cash flow for a very long time.

8. Purchase order financing

Are you looking to expand into new revenue streams, introduce your concept and brand to new audiences, and grow your bottom line? If you’re a restaurant with a signature product – like a hot sauce, bbq sauce, jam, or seasoning – and one that guests love, you might consider testing sales of the product outside the dining experience. Sales of the item as a consumer packaged good (CPG) in grocery stores and other brick and mortar retail locations could be a viable revenue option for you.

Purchase order financing can help restaurants that have already taken orders but need additional capital to fulfill the orders and get the products produced. This type of financing can be a good fit for you if you’re looking to expand into the catering or consumer packaged goods space and need help scaling quickly to meet demand.




How to prepare to get funding for a restaurant

Now that you’ve got a better idea of the restaurant business financing options available to new and existing restaurant owners and how they work, let’s take a look at how to prepare to apply for getting restaurant loans.

There are several factors that can influence restaurant business loan approval decisions. As you consider how to get funding for a restaurant, it’s important to keep in mind some of the things lenders look for. Depending on the type of loan, these can include:

  • The restaurant’s operating history

  • Your revenues and profitability

  • Your time in business

  • Your personal credit scores

  • The business credit profile

  • Any available collateral

The Restaurant’s Operating History

For a lender to review your operating history, get your financial statements in order, including a cash flow statement and profit and loss statement. These help lenders gauge your ability to repay a loan. If you have a newer restaurant, review your business plan to make sure you’ve outlined a clear plan for becoming profitable and being able to pay back a loan. Some types of loans, such as restaurant merchant cash advances and equipment loans, won’t require much detail about the operating history.


Your Revenues and Profitability

For some restaurant loans, such as some restaurant lines of credit and merchant cash advances, lenders will focus on your restaurant’s revenue above all else. For this, they will want to see the last 3 or 4 months of business bank statements. It’s best if you can show flat or upward revenue trends, and ideally you have no or only a small number of overdrafts or days with negative balances.


Your Time in Business

Some lenders will require 1 or 2 years in business, while other types of restaurant financing lenders are fine lending to start-ups or early stage restaurants. In particular, equipment financing is possible for brand new restaurants, while SBA loans require usually 2+ years in business.


Your Personal Credit Scores

Almost any restaurant loan will review your personal credit, so before applying for a restaurant business loan, review your personal credit record. Even if a loan does not require a personal guarantee, almost all lenders will review your personal credit to see your payment history and any challenges reported there.


Some lenders will require excellent personal credit - such as SBA lenders - but others will be ok with scores in the 500 to 600 range. If you are in the 400’s or low 500’s, you might benefit from working with a credit counselor for a couple of months before putting in applications. A good credit counseling advisor can help raise most scores pretty quickly.


The Business Credit Profile

If possible, also get a feel for your business credit record. Three major credit bureaus maintain business credit reports, and you can contact them to see your record. Those three are:

If your business does not yet have a credit record, a new restaurant business loan could be a good opportunity to start building credit. You might also consider obtaining a business credit card quickly to start building a positive credit profile for your business.


Any Available Collateral

Whether you need to have collateral totally depends on the type of restaurant financing you are getting. Smaller SBA loans, for example, do not require collateral, while for larger SBA loans - typically those over $350,000 - one of the requirements is that lenders attempts to fully secure the loan with business or personal collateral.


For equipment loans, the collateral is the equipment being purchased. Typically these loans require no further collateral. In the case of many restaurant lines of credit and restaurant working capital loans, no collateral is required or expected. Finally, for commercial real estate loan, the collateral is the property being financed or being used to guarantee the loan.



How to find restaurant loan options


As you start seeking your restaurant financing or loan, one important question is how do you find the various types of financing. With the advances in technology, and the evolution of the lending industry, finding the right loan can be a bit of a challenge.


A Huge Number of Lenders

There are currently hundreds of lenders in the marketplace, and even thousands when you include SBA lenders. This presents some benefits and some challenges.


On the one hand, the diversity of lenders means there is a wide variety of loan types available to a wide variety of restaurants and owners. There are lenders who offer low-rate financing to those with great credit, and lenders that offer restaurant loans at higher cost to those with poor credit.


Some lenders offer very small restaurant loans, while others offer financing into the millions. And of course, there are lenders offering all of the 8 types of financing discussed above.


This huge array of options also presents challenges. How are you as a restaurant owner expected to know who makes which type of loans to which type of businesses and owners? And how do you know which companies to trust?


Seek a Financing Broker You Can Trust

One option is for you to apply with your bank directly. This can be a good option if you have a great relationship with your bank, your credit is strong, your business financials are in shape and you want the kind of loan they offer. The last point is the critical one - most banks only have one or two types of loans, and that’s all they will offer if you are approved.


Another option is to apply separately to a number of lenders. This was once more realistic than it is now. Back when you had access to a smaller number of banks in your locality, this was a more possible approach. Now, however, with the internet and the growth in the number of non-bank lenders, this isn’t reasonable for most restaurant owners.


A financing broker, or loan broker, is someone who is an expert at all of the ins and outs of restaurant financing and can help you navigate this complex and confusing financing world.

There are thousands of lenders, and the lending landscape is constantly changing. For even someone doing it full time, it is very difficult to keep up with the types of loans, their terms, their benefits and drawbacks, their processes and their guidelines. A financing broker, or loan broker, is someone who is an expert at all of the ins and outs of restaurant financing and can help you navigate this complex and confusing financing world.


When selecting a financing broker, try to focus on a few key questions. Is it a company that has been around for awhile, and do they have testimonials or public feedback about their work? Also, can you see who the owner is or who the key executives are? Many brokers are small firms, so at least be sure you can see who the owner is and find her or him on LinkedIn. Any loan broker who tries to stay anonymous or isn’t publicly visible should be avoided.



How to evaluate restaurant loan options

If you are working with a loan broker, they can help you understand and compare your options. It can be difficult to make an apples-to-apples comparison when you’re considering different loan products with very different structures, but generally, you’ll want to review and consider things like:

  • How quickly can you get your money?l

  • Evaluate the total repayments

  • Compare the term of the loans

  • Compare the benefits of fixed vs. variable rates

  • Find out if collateral is needed

How quickly can you get your money?

The important questions here are how quickly do you need the money, and how quickly can you get your money. Before you choose one restaurant financing option over another, it’s important to think about how long it will take until the capital is available to be put toward the project you have in mind. Ask about the anticipated timeline that you can expect to be approved and to be funded, and also ask yourself how long you can wait for the money?


Evaluate the total repayments

There are many different types of cost structures that lenders use and there are equally as many factors to consider when determining total cost, including total payback amount, APR, upfront fees, compounding interest or other penalties, and more.

There is a common misconception that annual percentage rates (APR) and interest rates are the same thing. APR is a calculation that looks at all interest, fees, and the timing of those fees on equal ground. APR is expressed as a percentage and represents the yearly cost of borrowing funds. While APR is helpful in comparing funding options, it isn’t the end all be all.

Another factor used to assess the cost of a loan is the absolute dollars you will pay back for the funding you receive (inclusive of application costs, interest, late fees, origination fees, etc.). Sometimes this amount - the total amount to be repaid - is an easy and helpful total to give you a feel for the cost of the money in absolute terms.

By calculating the absolute dollar amount you will pay back and comparing it to your other offers, you can determine which funding option works best for your budget and cash flows. Also, some restaurant loans allow for early payoff at a lower cost, so it is important to pay close attention to any such options that are part of the offer.


For more on this topic, visit How to Calculate the True Cost of Financing for Your Small Business.

Compare the term of the loans

Another key item to evaluate and consider is the repayment term, assuming there is one for the financing option you select. The repayment term will dictate the size of your regular payments, plus it will indicate the amount of time you have to pay back the amount of funding you receive.


The term is important for a number of reasons, but most importantly, it indicates the amount of time your cash flow will be impacted by making the payments. For a restaurant short-term loan or cash advance, the payback period might be as short as 6 to 12 months. This could hamper cash flow during that period, but you know it will be a short time frame to payback.


Other types of financing, such as equipment loans and SBA loans, might allow for a long payback of 3 to 7 years, but you will be obligating yourself to those payments for a very long time. Sometimes you may not feel you have the visibility to the future of your business to be comfortable with the longer term options.


Compare the benefits of fixed rates vs. variable rates

If approved for a loan, yes you’ll be paying back the loan amount, but you’ll be responsible for paying back the amount borrowed plus interest or a fixed interest cost. The interest rate or factor rate (fixed cost) may be based on a variety of potential factors like your sales history, personal credit score, the time you’ve been in business, any existing debt your restaurant has, and more.

Interest rates can either be fixed rate – meaning they do not fluctuate during the life of the loan – or variable rate – meaning the interest rate can fluctuate throughout the life of the loan based on economic conditions.When comparing restaurant financing options that have an interest rate, you’ll want to consider whether fixed rate or variable rate interest payments are more affordable for you.


Find out if collateral is needed

Sometimes, in exchange for the money the loan is providing, banks and non-bank lenders will require you to offer up a valuable item – like your business property, your business equipment, your personal house – as collateral that they would then own should you default on your payments.


It’s important to note that some lenders will require you to offer up collateral that is the property of the business – like the funds in the business's account, any food or catering trucks, or your actual brick and mortar location (if you own it) - while other lenders may require personal assets (your house, your car, etc.) if they require a personal guarantee, which requires you to put your own assets and personal well being on the line if anything goes wrong.


Offering up collateral can be very stressful, knowing that should you default on your payments, you may lose something meaningful and valuable to you, so it’s important to weigh out the benefits and risks before you sign on the dotted line of loans that require collateral.

Wrap-up: final tips on restaurant loans and financing in 2022

Owning a restaurant is a dream for many people. Yet, the day-to-day costs of opening and running a restaurant can make business owners think twice about owning or running one.


Whether you’re a talented chef, an energetic entrepreneur or a foodie full of ideas for a new kind of dining experience or culinary concept, restaurant loans or financing can be one way to help bring the dream to life.


Today, there are hundreds of options offered by thousands of lenders. Possible restaurant loans include working capital loans, equipment loans, SBA loans, merchant cash advances, lines of credit and more.

Finding the best equipment financing options has become more difficult with the surge in the number of online lenders, which include both banks and non-bank lenders. You can spend time applying to many different lenders yourself, but often the best and fastest path to successfully getting restaurant financing is to work with a trusted finance broker like Everfund.


Finally, don’t hesitate to apply for financing even if you have less than perfect credit, or your restaurant doesn’t have a long operating history yet. Thanks to the wide array of lenders in the market, there are lenders who will consider a very wide range of individual situations. Many will even provide financing for start-ups or for owners with weak credit.



 

About the Author


Mike Spitalney

Mike Spitalney is the CEO and founder of Everfund. Mike is an expert in restaurant and small business financing, with nearly two decades of hands-on experience in small business, SBA and commercial property lending. Mike knows well the challenges of small business ownership, as he is a successful, repeat entrepreneur with past founded companies involved in finance, technology and restaurant operations. Outside work, you'll usually find Mike outside running, hiking or biking.