Amid the 2020 pandemic, restaurant owners have been facing more setbacks than ever when it comes to keeping their business afloat. As a result, they are seeking information on how to get a restaurant business loan.

If you run a restaurant, you more than likely have been looking for ways to improve your restaurant’s finances. There are a few different ways to find support for your business, and in this article, we will be discussing Small Business Administration loans or an SBA loan for restaurant owners.

How Can an SBA Loan Help Your Restaurant

An SBA loan for your restaurant can support your business endeavor in many different ways, which can ultimately help increase your profits.

One of the most commonly sought-after small business loans is the SBA 7(a) loan, which can provide valuable financial backup for essential needs. The SBA 7(a) loan is a good option if you have not had luck securing other means of financial assistance.

Buy Your Restaurant

A startup loan can help if you are still in the beginning stages of setting up your business. One of the biggest roadblocks for aspiring restaurant owners is getting the money to buy a building or even a food truck.

You will need a designated space to cook the food and serve it. With an SBA loan, you can get the backup needed to obtain this space, including purchasing real estate. Furthermore, a loan can help you buy a building for your restaurant and finance the land on which the building sits.

Purchase Equipment

Once you’ve purchased or rented space, you will also need to buy the many pieces of equipment necessary to keep a restaurant running, and it doesn’t come cheap. A loan can help increase the range of restaurant equipment, and quality, available to you.

Equipment Financing for Restaurants

Equipment financing for restaurants is often a necessity. A restaurant can’t function without the proper equipment, and having access to the right equipment can make or break a restaurant, especially within the first year.

The SBA 7(a) loan covers restaurants’ financing, and it will cover certain staples you need to stay open. Restaurant equipment financing can cover POS systems, ovens, fryers, shelves, office equipment, and more.

What This Means for Your Business

SBA loan qualification will make a big difference in achieving the necessary restaurant funding to get your eatery started. It can also take some of the weight off your shoulders, so you can focus on creating something special.

Large expenses, such as real estate and equipment purchases, will be less of a worry once you have been able to secure financing. However, the challenges don’t end here, as there will still be a lot of investing and personal funds needed to keep the restaurant running smoothly.

Overall, however, securing loans to buy your restaurant and fund equipment purchases can ease your journey into small business ownership. It can take time to turn a profit, particularly when you have loan payments, but many startup loan options for restaurants have flexible terms and low rates.

Of course, there are limitations to what you can use the funds for, and the amount you can borrow depends on a handful of factors.

How Can I Qualify?

Like any government loan, there are certain conditions in which a business owner will not qualify for an SBA loan. Even if you meet the qualifications and do not have bad credit, or former business startup loans, there is no guaranteed loan approval. Unfortunately, the myth of “guaranteed” loans is just that; there are many qualification metrics and minimum standards for SBA loans.

Owners who are applying for an SBA loan will need to meet these standards to qualify for a loan:

  • The business must be working for profit. These loans are not available for non-profit organizations.
  • The owner of the business cannot be on any form of parole.
  • The business must be run and make a profit in the US or the US territories.
  • If you have been able to secure other forms of financial assistance for your restaurant, you must first use those resources.
  • The business owner must have invested, either with money or with property, equity into the business.

If you have met all of the above qualifications, you will likely qualify for an SBA loan. Keep in mind that the SBA itself is not the business lending you money. SBA loans are available through banks, credit unions, or other institutions centered around lending money.

And of course, with any loan, you will deal with terms and conditions. These terms specify how much money you will be receiving and for how long. It is important to hold on to and remember all the information about your business loans collected during the process.

What Are My Options?

The SBA 7(a) loan is an example of one of many SBA restaurant loans. Depending on the restaurant and business you are running, you may find that other restaurant loan options suit your funding needs better. Before sorting through all of your options, it would be wise to speak with a Business Financing Advisor. You can speak to an advisor today for free by completing ROK's 15 second online application!

Finding an investor for a restaurant can play an important role in how the restaurant succeeds. Personal networking is a good place to start, but some banks may be willing to work with you on finding support. Research and looking at how to find investors for a restaurant can also give you a good idea of how much money you will need to start your business.

There are also the SBA Express Loan, the SBA 504 Loan, the SBA CAPLines, and the SBA Veterans Advantage Loan. These loans are viable options depending on the needs of the restaurant. They are each catered to specific demands that may come up depending on the business you are running.

We recommend surveying your restaurant's business and identifying what you need finance-wise. It is a good idea to have a strong understanding of what your business needs to run based on your restaurant's location and size. Obtaining an SBA loan for restaurant owners may not be simple, but it’s an excellent step toward your future as a small business owner.

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.