5 Best Business Loans for Restaurants and Bars
When you work with Clarify, your dedicated lending adviser helps you find financing that fits your business goals. We’ve funded over 10,000 food services companies. The following are the five funding options we think work best for restaurant owners.
1. Business Line of Credit for Restaurants
A business line of credit provides working capital. It’s a flexible way to get approved for a credit line with low interest rates and is structured similarly to a credit card. You only pay interest on funds you utilize.
Benefits of having a business line of credit:
- On-demand funds available to use when needs arise
- Only pay interest on money withdrawn from the credit line
- Helps improve your credit rating
- No prepayment penalties
2. Short-Term Loan for Restaurants
The most common type of loan taken by business owners, a short-term loan is a traditional loan option. You borrow a fixed amount of capital from a lender with a fixed interest rate that is paid over a certain length of time. You get the entire loan amount as a lump sum, such as a merchant cash advance, and it can be used for any type of business expenditure, including renovations.
Benefits of getting a short-term loan:
- No collateral is needed to secure the loan
- Quick and easy approval
- Loan closing within one to two days
- Low credit score requirements (we recommend a credit score of at least 550)
3. Equipment Loans for Restaurants
Finance up to 100% of kitchen equipment, furniture, ovens, and decor needed to create a successful restaurant. Equipment financing offers competitive interest rates and requires minimal paperwork, so you can get your new equipment quickly.
Benefits of equipment loans:
- The only collateral needed is the purchased equipment
- APRs as low as 7%
- Minimal paperwork
- Approval for good or bad credit scores
4. SBA Loans for Restaurants
The Small Business Administration (SBA) offers two popular loan options for restaurant owners: SBA 7(a) and Microloans. The SBA backs up to 85% of the total funding amount. While SBA loans offer some of the best interest rates, approved lenders have strict credit score and paperwork requirements. Due to the time needed to get approved for an SBA loan, these loans are best for owners who are not in immediate need of capital.
Benefits of SBA loans:
- Partially backed by the SBA
- Low interest rates starting at 5.75%
- 5 to 25-year term length