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How to Get Funding For a Restaurant

DO SMARTER RESTAURANTS GET THE BEST SMALL BUSINESS LOANS?

RESTAURANT BUSINESS LOANS Header sunwise capital

HOW RESTAURANTS GET THE BEST SMALL BUSINESS LOANS

What type of Restaurants gets the best small business loan you ask? It’s simple.  To start, it’s the restaurant owner that is best prepared to meet the requirements that most financial institutions and small business lenders require in order to get a small business loan. But ultimately it all comes down to one simple question. Can you repay the business loan? That’s it!

How to Get Funding For a Restaurant

Restaurants are easily one of the most popular businesses to own, so it’s no surprise that by far got the largest number of SBA loans (Small Business Administration sba.gov) between 2006 and 2015. From the food truck to the family restaurant to the most novel restaurant concept it’s all about how you serve up your personal financial picture. What’s the key to getting your restaurant that allusive small business loan?

When you start exploring your financing options and you go the traditional banking route it’s all about the “C’s”. There are 4 of them.

  • Character.  It’s all about reputation. How’s your history and financial stability?
  • Collateral.  What assets can they take if you default?
  • Credit Score. What does your repayment history look like?
  • Capacity.  Can you have the ability to pay it back (after all of your current debts)?

So, what happens if you want that small business loan and you don’t have all of your A, B, and C’s in order?

There are always the 3 F’s (no it doesn’t mean you’ve failed).

They are Friends and Family and (no insult intended) Fools.

Enough with the alphabet. Besides family and friends, you can look for:

A business partner – this can be a past or present friend, co-worker or someone you met through networking. This can be an individual or even a company that will play a role in owning and managing the business.

Potential investors – the potential investor is an individual or company that will take a percentage of equity in your company in exchange for financial considerations. Typically, they will want at least 51% of the equity to maintain control over the decisions you make. They probably will not play a role in the actual operations of the business.

Angel investors – the angel investor is the cross between your family and friends and the investor. They are more likely to get involved with an entrepreneur and a startup compared to the venture capitalist. The venture capitalist will pool other individual’s money while the angel investor is using their personal financial resources.

Business grants Start at Grants.gov. You can also look at Economic Development Agencies. or Small Business Development Centers.

Personal Savings Account or retirement funds like a 401K or Roth IRA.

how to get funding for a restaurant

Another restaurant funding option is an alternative loan or restaurant cash advance from the small business lenders that specialize in the restaurant industry and offer several loan programs that can help your business grow and expand. There are several business lenders that will consider lending your restaurant money with less rigid requirements than the bank (SBA). These are the merchant cash advance lenders and the lenders that base your business loan on its total revenue. Whether it’s for renovations or restaurant equipment – in lieu of equipment loans – these lenders will not require a business plan nor personal assets to back the loan.

stressed business owner needs bad credit business loans

These alternative lenders, especially those restaurant financing companies are less concerned about your 4 C’s and more concerned about your revenue. Their big concern is can you repay that business loan?

So, what are your small business loan alternatives that will help your restaurant business meet its financial obligations and more importantly grow and expand?

Well, let’s revisit the 4 C’s.

  • The alternative small business lender like Sunwise Capital that is a bit more forgiving than the bank will look at your payment history and your financial stability. The difference is that these alternative lenders will forgive you if you have bounced checks or NSF’s. This becomes the perfect solution if you’re asking; “can I get a business loan with bad credit”?
  • Typically, the alternative lender does not require any personal collateral or assets. This means it makes it a lot easier to be able to get those working capital business loans. Essentially all you need is to be in operation for at least six months, have a business checking account or savings account and established a little business credit. Maybe now it’s becoming a bit clearer when you ask how I how to get a business loan with bad credit?
  • Credit Score. Your credit history may be dinged up. There are lenders that know that you’re more than just a credit score and that what you need is a business loans with bad credit. The good news is that financing a small business or a restaurant with bad credit is not the end of the world. If you are a true startup and have startup costs, we can get you funded as long as you can show us:

    650 plus FICO credit score
    – Must have $2,500 – $3K/mo. income
    – Get $25K – $150K
    – Interest rate can start at 0%


    700 plus FICO credit score
    – 1 credit card with at least a $10K limit
    – Get $200K – $400K – Interest rate can start at 0%
    – Minimum income $100K


  • Capacity. Here is a huge difference with the lenders that offer business working capital loans. These lenders do not look at your personal expenses. This is a business loan. So the only question is whether your business can pay it back.

how to get funding for a restaurant

So now it comes down to the type of lender and the type of loan they offer. You have the merchant cash advance lender (aka MCA) or the revenue based lender (aka term loan or fixed term loan).

The merchant cash advance will only be concerned with your daily credit card receipts. You will repay your business loan through your merchant account. A certain percentage of your daily receipts or batch will be withheld on any day (up to 7 days per week) you batch your receipts and that will be used to repay the loan. As a result, your payments vary or a variable from day to day. The term of the loan depends on your daily payments and the fluctuation in your cash flow.

The term loan or fixed term loan will be more defined. This is a close cousin to the traditional bank loan. They will range from 6 months to 5 years. There will be a fixed daily payment Monday through Friday. It is based on total revenue and not just what you run through your merchant account. So, if you have a more dependable stream of revenue this may make more sense.

Either way, it doesn’t require a smart restaurant to get the best small business loan but as the proprietor of a restaurant it’s comforting to know that with a little effort and “smarts” you can find a business lender with a loan menu that suits your tastes.

Most business owners can’t afford to wait for banks because they require large amounts of paperwork, financials, tax returns, personal guarantees, collateral and high credit. Many entrepreneurs and small to medium sized business owners do not know where to go when traditional banks cannot fund their loan requests to working capital, expand their businesses or better manage their cash flow.

Sunwise Capital has provided alternatives to small to medium sized businesses looking beyond typical bank products, loans, and credit lines to find the right solution for each customer’s requirement.  In effect, we become a partner that understands your business and is flexible enough to work with you to help you move forward.  Our unique blend of successful small business entrepreneurship with expertise in the small to medium sized business market gives us deep insight into the minds of our clients.

At Sunwise Capital we’re 100% focused on small business. Apply at http://sunwisecapital.com.

how to get funding for a restaurant

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