Restaurant equipment financing has been on your mind lately. Especially since everyone at your last dinner party couldn’t stop gushing about the food. One guest even refused to leave until they had the recipe. But as you think more about opening a restaurant of your own you realize that you don’t know a thing about restaurant equipment financing, or the rates you can expect when you borrow. Well, you’re in luck. In this post, we’re going to explore all the possible ways an aspiring restauranteur like yourself can finance your restaurant.
Before we dive in, it should be noted that there are several types of financing options available and what will work for you depends on your needs and your business. The most common types of financing are:
Short-Term Loans
Suppose you already had some money to get started but need a little extra down the line? Short-term loans are great because they allow restaurants to borrow what they need quickly You get your loan in as little as 1 day!
If you’re scared about the interest rates short-term loans might have, don’t be. While they appear high, when you factor in the total cost of the loan and the short time you have it, you often end up paying much less overall than if you went with a long-term loan. Short-term loans typically last anywhere from 1-3 years and could be a great way to get what you need fast.
Lines of credit are perfect for seasonal restaurants who only operate part of the year, or for restaurants that need a little cash several times a year. Lenders typically lend less with lines of credit, but because you can borrow more than once, it shouldn’t be a problem.
There are two big pluses to lines of credit. The first is that you only pay interest on what you borrow. The second is that this will help you build a solid relationship with a reputable lender in case you need to borrow larger amounts later. By then they will have a good sense of how your business is performing and can craft you a loan to fit your needs.
SBA Loans
A lot of restaurants think that SBA loans are not an option for them. Well, we have some great news. Not only can restaurants get an SBA loan, but according to FitSMallBusiness, restaurants made up a large portion of SBA loans between 2006 and 2015.
Let’s expand on the example from above for a moment. Let’s say you’ve been using a line of credit at a financial institution you trust. Your restaurant is building a loyal following who just can’t get enough. In fact, you’re ready to move to a larger location! Now, because you’ve built up your credit and relationship with your lender, you can get an SBA loan to expand. The bonus of this situation is that not only does your lender know how well your business is doing because of your relationship with them, but the SBA loan will come with interest rates you can easily afford.
Equipment Financing for Restaurants
Equipment financing is exactly what it sounds like: getting a loan for the equipment you need. Suppose you want to open a cake shop. You have the perfect location and recipes that are sure to make customers craving more. Equipment financing from an alternative lender could get you everything you need from the tables and chairs to the mixers and blast chillers. The best part about equipment financing is that many alternative lenders work with people who are just starting out or have less than perfect credit. You can finally start the cakeshop or restaurant you’ve always wanted!
Do You Have a Restaurant Idea?
There are many types of restaurant financing options available.
Types of Restaurant Financing
Before we dive in, it should be noted that there are several types of financing options available and what will work for you depends on your needs and your business. The most common types of financing are:
- Short Terms Loans
- Lines of Credit
- SBA loans
- Equipment Financing for Restaurants
Short-term loans are great for when you need cash quickly.
Short-Term Loans
Suppose you already had some money to get started but need a little extra down the line? Short-term loans are great because they allow restaurants to borrow what they need quickly You get your loan in as little as 1 day!
If you’re scared about the interest rates short-term loans might have, don’t be. While they appear high, when you factor in the total cost of the loan and the short time you have it, you often end up paying much less overall than if you went with a long-term loan. Short-term loans typically last anywhere from 1-3 years and could be a great way to get what you need fast.
Finance Your Restaurant Today!
