Small businesses in the foodservice industry have been devastated by the global coronavirus pandemic. Many have closed for good. Those that have managed to survive have been riding a roller coaster of openings and closings, depending on their lockdown situations. One thing's for sure, if you own a coffee shop right now chances are that you’ve been operating at a loss for months.

Pardon the puns, but it’s been a real grind and there’s probably not a drop left in the pot!

We’re here to tell you today that there’s hope on the horizon! Federal and state governments have been smashing their piggy banks to make more money available to small businesses struggling through the pandemic.

If you’re a coffee shop owner, you’re eligible for a variety of small business loans, restaurant business loans, and SBA loans that will allow you to keep your doors open and the lights on, and they can also help you grow your businesses as well!

Here is a look at the funding requirements for a coffee shop, small business government grants for a coffee shop, and more about coffee shop funding opportunities.

Coffee Shop Owners Qualify for Financing as Restaurants

Traditional financial lenders are wary about doling out money to coffee shops. They tend to see the endeavor as high risk. Business owners need a high credit score, a carefully thought out coffee shop business plan, and skin in the game, with money and/or assets in the business.

These days, however, coffee shops have diversified the services and products they provide. It’s much more than a morning coffee with a muffin. With espressos and chai lattes served with avocado toast, grilled sandwiches, and acai bowls, many coffee shops are better defined as restaurants. A robust coffee shop business plan will make it easier to secure small business loans designed for restaurants.

Requirements for Cafes to Qualify for Alternative Financing

Lenders won’t approve loans to just anyone. Here are some of the requirements for coffee shop owners:

  • The business can’t be a non-profit.
  • The business must be located and profits made in the US or US territories.
  • The business owner cannot be on any form of parole.
  • The business must gross at least $120,000 in annual gross sales (however, there are other options for those that do not gross that amount).

If you meet all these requirements chances are that you will qualify for your small business loan. But there’s more to it than that. For more advice check out our blog on how to qualify for restaurant loans.

SBA Business Loan Options for Coffee Shops

The Small Business Administration (SBA) is an agency of the federal government that works with banks and other lenders to supply loans to small businesses. The SBA does not lend money directly but agrees to pay up to 85% of the lenders’ losses if the business fails to pay back the loan.

A Restaurant SBA Loan is usually at lower interest rates with flexible repayment terms, from anywhere between three and 25 years. You can use the loans for a variety of purposes.

There are many types of loans you can apply for and they all have different uses and terms. Here are just a few:

  • SBA 7(a)
  • SBA Express Loan
  • SBA 504 Loan
  • SBA CAPLines
  • SBA Veterans Advantage Loan

The downside is that applying for an SBA loan can be a complicated process with lots of paperwork. You may require a high credit score and collateral. When wading through the myriad of choices you may want to seek the help of a Business Financing Advisor.

Equipment Financing

We all know that the best equipment is at the core of every great coffee shop. The best espresso machines are pretty expensive, but your reputation for serving the best coffee around will dictate your success. So what do you do when you’re starting your coffee shop or when your deluxe espresso machine breaks down? An Equipment Financing Loan may be a great option.

Equipment financing uses the equipment itself as collateral, so it’s less risky and easier to get. It’s also why a lender can approve an equipment financing loan in just a few days, not months and you’ll have cash in hand when you need it most. To qualify, though, you’ll need a solid business history and a good credit score.

If you’re having trouble with traditional lenders like big banks, the SBA offers a range of equipment financing options with attractive terms and rates. However, like most government institutions, there is a lot of paperwork involved. Approval can take months in this case.

$28.6B Government COVID-19 Grant Program for Restaurants (2021)

The federal government recently announced a $28.6 billion grant program aimed at helping small restaurants survive the pandemic. It’s called the Restaurant Revitalization Fund and it started accepting applications in May 2021. Struggling business owners can use the money to pay down debt or catch up on late rent payments.

Eligible businesses are restaurants with fewer than 20 locations. The maximum grant payment is $10 Million. Applicants can receive up to $5 million for each location, but no one applicant can receive more than $10 million total. The grants are in addition to the loans distributed to small businesses through the Paycheck Protection Program, which was specifically aimed at helping restaurant owners pay their workers.

You can apply for a grant from the Restaurant Revitalization Fund through the Small Business Administration. Any restaurant can apply, however, priority is given to businesses that are majority-owned by women, veterans, and others deemed socially and economically disadvantaged.

Financing for Coffee Shop Owners: The Last Drop

As you can see, there are many ways to get financial help if you are a coffee shop owner struggling to make ends meet. There are loans and small business grants for coffee shops that may help you survive what is a trying time for many business owners.

About the Author, Madison Taylor

Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates!Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.