Securing a restaurant loan can help you to deal with the peaks and dips of a seasonal business. Depending on your venue’s location, cuisine, and business model, you may find that the majority of your income is generated in the summer or holiday period. For some restaurant owners, this can feel like a ‘feast or famine’ rollercoaster. You might even find that just a few months of business carry you through the entire fiscal year.
The cash flow challenges that accompany a seasonal business can be stressful. But there are funding options available to help you weather the low season until your business picks up. In this article, we look specifically at restaurant loan options for managing seasonal cash flow issues.
Business Line of Credit
Securing a business line of credit can be the ideal funding solution for seasonal fluctuations. It’s different to a loan in that you don’t have to make repayments from the get-go. Instead, you have an amount made available to you which can be drawn upon at any time. If you don’t use it, then there’s nothing to repay and you won’t be charged. But when you do need it, the cash will be readily available and you’ll start making repayments based on the amount borrowed.
Business lines of credit have several benefits for restaurant owners. Once you’ve gone through the initial set up, you can access the cash instantly instead of waiting for approvals. Because you’re only charged for the amount you use, it can also be a cost-effective alternative to a restaurant loan. However, the latter also has its own benefits so many restaurant professionals choose to use a combination of a credit line and business loan for funding.
Small Business Loan
Taking out a restaurant loan can give your business the cash it needs to pay rent, suppliers, and payroll. They are usually repaid on a monthly basis so you’ll be able to build consistent repayment amounts into your budget. One drawback can be the fixed term nature of a traditional restaurant loan. If you only need the cash for a couple for months but the loan term is 2 years, you’ll be charged interest for the entire duration. Some lenders will let you repay in full early but charge a hefty fee to do so. But if you need funds to tide you over for longer or want help with cash flow for several seasons, then a restaurant loan may be the ideal solution.
The key to making traditional small business loans work is applying early. The loan application process with traditional banks and the SBA can be long and complex so you’ll need to prepare several months in advance. However, alternative lenders like Strategic Capital have a streamlined application process which means we can give you an answer in as little as one hour. You can also get the cash in just 24 hours which makes it ideal for business owners who need funding quickly. Strategic Capital also offers fixed repayment terms starting at just 4 months which means you aren’t tied into a long commitment.
Merchant Cash Advances
Merchant cash advances can make it easier to weather seasonal fluctuations in your business. This type of funding is actually an advance on future sales rather than a restaurant loan. The business receives the cash upfront and repayments are automatically taken from customer credit and debit card purchases. The merchant is able to spend the cash on whatever they like, from ingredients to salaries and furniture to rent.
If your restaurant business accepts card payments, then this can be a quick and easy funding solution. Since the repayments are taken automatically you don’t need to worry about payment dates or cutting cheques. The amount is a fixed percentage of the sales you make which means it can adjust with seasonal increases and decreases in your business.
Equipment Financing for Restaurants
If you’re thinking about a restaurant loan to purchase machinery or tools, then equipment financing may be a practical alternative. Whether you need commercial ovens, blenders, dishwashers, or any other type of restaurant machinery, equipment financing is probably available. You can usually choose from loan or lease options which allow you to buy outright or rent respectively.
What is unique about equipment financing is that you don’t have to put up personal assets as collateral. The equipment itself is used as security so that if you fail to make repayments the equipment is taken away to cover the costs. This protects your home or car from being repossessed which can help some restaurant owners to sleep more soundly at night.
Restaurant Loan Options for Seasonal Fluctuations
If you’re thinking about a restaurant loan to cover seasonal fluctuations in your business, then there are several options available. A business line of credit, short-term small business loan, or merchant cash advance can all help you to keep things on an even keel. If you need the money for equipment specifically, then there are loan and leasing options that are designed for this purpose. Whichever option you go for, be sure to do your homework and read all the fine print so you can weigh up exactly which one is best.
How We Can Help
Strategic Capital offers numerous restaurant loan options that support organizations across the USA. We don’t require capital which means that your personal and business assets aren’t part of the equation. If you’re in need of short-term financing, then we can help. Whether it’s to pay for emergency repairs to your restaurant equipment or investing in expansion we offer small business loans without the need for collateral. Best of all, you’ll benefit from competitive repayment terms and low interest rates, so you have more money to reinvest in your business.
Transparency, innovation, and expertise are the driving factors behind everything we do. With a talented team of advisors, a plethora of funding partners, and the best technology available -we go above and beyond to help our clients receive their capital rapidly with the industry’s most competitive repayment options and interest rates. We want to break speed records, not bank accounts.
Upon submitting your application, it’s reviewed by a dedicated Capital Advisor. We generate the best rates and terms at lightning speed through our funding matrix and robust lender network. Yep… it’s that simple. Learn more about our small business loans here.