When you’re dreaming of opening a restaurant, it’s easy to overlook the nightmares: broken equipment, customer gripes, employee turnover. The financial requirements, in particular, can be overwhelming, even for the savviest business owners.
That’s why running a restaurant often requires funding, whether it’s from investors, business credit cards or small-business loans.
But not all business loans are created equal. Certain financing will be a better fit, depending on how you plan to use the funds. When doing your homework, check out the range of small-business loans that could work for your restaurant.
- Restaurant loans for everyday expenses
- Restaurant loans for inventory
- Restaurant loans for established businesses
Restaurant loans for everyday expenses
You’ve made it through the first year running your restaurant, but your stove is on the fritz and your cash flow is a little spotty. Finding financing to help cover the cost can be tricky since you’re not very well established, but both Kabbage and StreetShares offer working capital loans to newer businesses. If your credit is lacking, Kabbage’s qualifications are linked to alternate data sources, such as bank accounts or payment systems. Alternatively, StreetShares is a peer-to-peer lender that connects you to investors with similar backgrounds and interests, which helps drive down default rates — and, in turn, interest rates.
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Restaurant loans for inventory
Food costs are a top challenge for restaurants, and those costs are rising, according to the National Restaurant Association’s 2015 industry forecast. If you need cash to buy nonperishable ingredients or paper goods for your restaurant in bulk, Dealstruck offers an inventory line of credit to help you cover the cost. OnDeck is another solid option for a line of credit. Unlike Dealstruck, though, OnDeck’s line of credit can be used for both perishable and nonperishable items.
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Restaurant loans for established businesses
You’ve been around a few years and are going strong. Now you’re looking for financing to renovate or open a second location. SmartBiz and Funding Circle offer low-cost term loans to help you meet larger expenses. SmartBiz provides SBA loans through its online platform, connecting you with some of the lowest rates among online alternative lenders. Funding Circle is a peer-to-peer online lending marketplace that matches accredited and institutional investors with already successful small businesses looking for long-term growth.
Want to compare more financing options?
NerdWallet has created a comparison tool of small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged the lenders by categories that include your revenue and how long you’ve been in business.Compare business loans
For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
This article was updated June 21, 2016. It was originally published Aug. 24, 2015.