Up-gradation, new equipments and expansions is a frequent change among restaurant businesses and might ultimately conclude whether a restaurant business carry on or phase out. Remodeling a restaurant business is expensive and financing such upgrades is a wearisome even for a well established restaurant business. Flourishing businesses are often rejected for restaurant financing because of its higher turned down rate within the restaurant industry. As a result, many restaurant businesses opt for alternatives business financing to traditional bank loans.
Merchant Cash Advance Financing
The best alternative financing option is a merchant cash advance also called business cash advance. This alternative financing option is a lump sum payment that focuses on the restaurant’s daily credit card sales so that the cash advance lender can advance cash up front against the future sales of the restaurant business. Underwriting factors and personal credit is not taken into account when approving merchant cash advance. Cash advance funding is made usually within 5-7 business days and every so often it’s a secured loan, but doesn’t require a personal guarantee from the business owner. Merchant cash advance is the best financing alternative for working capital needs of a business since funding is repaid within a 6 to 12 months time period.
SBA Loan Programs
The Small Business Administration (SBA), a US government agency that assist emerging entrepreneurs and small businesses, also offers SBA loan programs to restaurant business for their working capital needs. The SBA 7(a) loan program helps start-up & existing small businesses with guaranteed financing for a variety of different business purposes like working capital, leasehold improvements, inventory or equipments. The SBA CDC/504 loan program funds major fixed assets like purchase, construction or renovation in relation to expansion. The SBA CSC/504 loan is usually acquired by restaurants for real estate acquisition.
Restaurant business owners that are looking to restructure or consolidate debt can also obtained restaurant loans. Restaurant lenders will scrutinize the current restaurant financials and operations to conclude the benefits offered by debt restructuring and the business ability to repay the loan based upon cash flows from operations. Debt restructuring allows a business to ease and renegotiate its unusual debts so as to improve cash flow and continue its operations.
Crowdfunding is a practice of acquiring funding by raising financial contributions typically online. Instead of bank or financial institution contribution, it comes from the donation or investment of small group of investors. There are numerous Crowdfunding websites that allows businesses to post their profile along with their financing needs to allow the pooling of monetary contributions from a crowd of investors. The major benefit of Crowdfunding for restaurant businesses is to collect investments without staking their business equity. Crowdfunding replaces the necessity of specialized grants and other conventional fundraising practices with a powerful approach of crowd participation.
Furthermore, there are numerous lenders in the industry that offer franchise financing and restaurant financing to small businesses in addition to variety of funding and loan options. The key is to search and qualify for funding with affordable rates and terms if you want to position yourself in the food industry.