It’s a poorly kept secret that it costs a fair chunk of change to finance your own restaurant. When you factor in that many restaurant businesses often have razor-thin profit margins and always look for cost-cutting measures, it can start to feel a bit overwhelming. Luckily, there are easy ways to find the right business loan, grant, or financing opportunity to help get your passion project off the ground.
Whether you need a small-business loan to start up a food truck or you’re considering an SBA loan to help you secure a brick-and-mortar eatery, here are a few ways you can finance your restaurant’s startup costs.
Look for a solid lender.
When you’re looking for business loans, it’s important to vet any lender ahead of time thoroughly. After all, a small-business loan can saddle you with debt that eats away at your annual revenue. Many small-business owners turn to the Small Business Administration (SBA) to secure a business line of credit. Others turn to independent and alternative lenders to get a line of credit. Regardless of whether you choose the Small Business Administration or find an alternative lender, you want to make sure they’re reputable.
Before you apply for a small-business loan, you want to ensure that you can present critical information. A lender may want to know where you’ll get your restaurant equipment, how your cash flow looks, what loan term you require, and what you have to offer as collateral.
Also, depending on the lender, your creditworthiness, and your small business plan, you may qualify for other financing options and loan options. Whether you’re looking to invest in low warehouse prices, restaurant supply, or a piece of real estate, bring the critical information to your application process. It’ll help streamline the loan process and can even help secure the loan amount you require.
Cut existing costs.
While you’re looking for external financial aid, it’s also important to turn your gaze inwards to find ways you can naturally save money. Whether you’re looking into collecting used cooking oil to re-use it once it’s filtered, or you’re trying to find ways to spend less on animal fats for the dinner rush, you don’t always need a financing solution to give your business a bit of extra cash flow. As a small-business owner, it’s important to review your current processes and look for ongoing improvements, areas of opportunity, and cost-cutting measures.
In some cases, restaurateurs and business owners even find ways to automate certain customer service processes to save money, resources, and time. Since some customer service tasks are integral to the commercial kitchen industry, this is a major win if you can find ways to save here. Caterers, pop-up kitchens, and fine-dining establishments alike can all use ways to slice prices, save money, and increase overhead allowances. It makes sense from a business standpoint.
Invest in more effective restaurant equipment.
Outfitting a commercial kitchen is expensive. A quick Google search for “commercial stove” will show you some sky-high price tags, especially if you pick brand-name options. When you have to buy pots, pans, a sink, a refrigerator, and cooking equipment, the costs can easily start to add up. Plus, if you have bad credit or don’t qualify for a business credit card, these expenses can eat away at your finances, harm your personal credit score, and even impact your business. However, this doesn’t mean you should buy the cheapest equipment you can find.
In fact, in some cases, you can skip the new equipment altogether. Restaurant equippers like The Restaurant Warehouse have excellent used commercial kitchen equipment that makes for an easy shopping experience. If you’re in the food service industry and you don’t want to blow your annual budget on new equipment, this is a good place to start. If you have reservations about buying used equipment, don’t worry. Most used restaurant equipment purchases come with limited warranty offers. Some of these brands even offer their own equipment financing options that make it easier to get the gear you want without paying exorbitant upfront prices.
Take it one step at a time.
It’s easy to feel a bit discouraged if you try to tackle all of your restaurant financing needs at once. Starting any business is expensive, let alone one that isn’t always conducive to turning a profit. Luckily, there are plenty of ways to secure the right financing for your business between online lenders, personal loan options, and business loan offers.
Even if you have bad credit or you lack the appropriate qualifications for a traditional loan, you may be able to find business expansion loan options or even working capital loans that won’t require stringent credit approval. It always helps to talk to a loan specialist about any loan program so you can find terms that work for you. With a bit of patience and a lot of elbow grease, you’ll be on track to starting the restaurant of your dreams.