Running a small business can be challenging, mainly when unforeseen circumstances have significantly lost profits. Amid a global pandemic, the need for quick restaurant funding has become a necessity for many restaurants and bars. If you’re not familiar with bank jargon, figuring out how to qualify for a small business loan can be overwhelming.
That’s where we come in. We’ve done the research, finding all the information available on small business loans for restaurants affected by COVID, so you don’t have to. So, what is the best bank for restaurant loans? Are there restaurant financing companies that you can use? Let’s break it down.
What You Need to Apply for Business Funding
Wondering how to get funding for a restaurant or how to qualify for a restaurant loan?
A Small Business Loan, or SBA, is the most common funding option for small businesses. To apply for an SBA loan for a restaurant, you will need to have all of your information ready. To apply for a loan for your business, you will need to provide documentation on your business proof that you are running a for-profit business.
Many loaning companies, especially banks, will need to know why you need a loan and what you plan to do with the money. For example, suppose you are applying for financial aid that is part of a COVID relief program or citing loss of profits due to the pandemic.
In that case, you may need to prove that the pandemic has negatively impacted your business. Proof of impact can include a previous year’s tax documents to compare with your business’ current profit.
You will also need to provide some form of proof that you will repay the loan. Whether it’s your credit score or evidence that your business will significantly benefit from the loan and generate enough profit to repay the loan, the bank is more likely to approve your application if they’re sure that you will be able to repay.
The Minimum Requirements for Restaurant Financing
Now let’s get into the technical side of things. Here are the basic restaurant loan requirements that you will need to meet to be approved for your loan, whether you’re looking for small business loans for bars or need something larger for your cafe.
First, you will need proof that you are running a for-profit business. Second, the company must also be run in and profit in the United States or United States Territories.
Next, the business owner will need to provide their credit score and may be required to undergo a background check. Loans cannot be applied for by a business owned by someone on parole.
To qualify for an SBA, you need to have exhausted any other form of financial assistance. Essentially, this rule means that you cannot apply for and receive multiple loans simultaneously. If you have previously received financial aid for your business, you need to use the entirety of that loan before applying for another.
Finally, the business owner will need to prove that they have invested some form of equity into their business. Equity can include money or property.
If you meet these basic requirements, you will likely be approved for a small business loan for bars and restaurants. However, suppose you are unsure whether or not you meet all of these restaurant loan requirements or need more information on small business loans. In that case, you can speak with a financial advisor to help you better prepare for the application process.
Alternative Funding Options For Restaurants in 2021
No matter what kind of assistance you need, there is likely a financing option available to you. If you do not qualify for an SBA loan or are hesitant to apply for an SBA for any reason, there are other options.
Opening a line of credit through your bank is an excellent alternative to a typical loan, and many financial institutions offer more flexible payment plans. A line of credit also gives you the option to borrow as much money as you need when you need it. By opening a line of credit, you will provide yourself with the protective cushion, knowing that you have a financial lifeline available for you.
Depending on your state, there may be grants available for small businesses to take advantage of. With the massive financial toll a global pandemic has caused, financial assistance options have opened up to lessen the blow that the months of lost or lessened business have forced.
Grants are a fantastic option for small businesses as they do not need to be repaid, so you won’t have to worry about managing payments if your business is still struggling through these unprecedented times.
How to Apply and Get Fast Funding
The best way to prepare for your restaurant loan application is to do your research. First, you will need to find the type of financial aid that will best fit your needs.
For example, if you feel like the future is too uncertain about locking yourself into loan payments, a grant may be a better fit for you, whereas a loan may be a better fit for other business owners. Understanding the type of financial assistance that would benefit you the most is crucial in getting funding for your restaurant.
Once you’ve decided what loan or grant option will work best for you. You will need to do some research on the funding providers and their application process. The general restaurant loan requirements are the same, but some financial institutions may have more or slightly different requirements.
Ensuring you understand and meet all the requirements for financial aid will ensure that you have the best chance possible for approval.
Finally, you need to make sure you are managing your expectations. Many financial institutions and loaning companies have restaurant loan calculators that will give you a general idea of how much money you can expect to be approved for. These systems aren’t perfect, but they can give you a general idea of what to expect if you get approved.
Restaurant Capital Funding: In Conclusion
Now that you have a better idea of getting small business loans for restaurants, you are one step closer to receiving your financial assistance. Making sure you understand the loaning process will help you make a better, more educated decision when it comes time to apply for your loan.
To apply for a restaurant loan through ROK Financial, you can apply directly here or speak with a financial advisor today.
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.