Managing a restaurant is not easy. For it to be successful, you have to offer top-notch customer service. Likewise, the menu should be good and varied enough to keep attracting diners. You even need to know how to get a business loan.
The food industry is a highly competitive one. In the spring of 2018, the number of restaurants in the United States reached more than 660,000, that means a lot of competition for any new businesses. If that’s not enough to stress anyone out, it is estimated that in 2017, some 11,000 independent restaurants closed their doors.
The main concern of restaurant owners is how to get the capital to continue working and being competitive. Unfortunately, accessing funds is difficult for food businesses, as some lenders seem the restaurant industry as a volatile one.
In this article, we tell you how to get a business loan to open a restaurant, to make the one you already thrive, and even make it grow.
How can a loan help your restaurant?
Staying in business after the first year is probably the biggest challenge a restaurant has to overcome. About 60% of new restaurants in the United States fail during their first year. And almost 80%t close before reaching its fifth anniversary.
Some of the reasons for these businesses going bankrupt are:
- The lack of financing
- A bad location
- Having inefficient employees
- Having problems with the menu
Of these factors, the lack of qualified employees is one of the biggest challenges for these food businesses.
As the industry continues to grow, the demand for workers also increases, and therefore finding people with the necessary skills gets more and more complicated.
You also need to consider the high payroll costs, which are increased by adding new employees.
With a loan, you will not only be able to hire the employees that your restaurant needs, but you can also give your team the necessary training to offer excellent customer service.
Well-trained workers feel more satisfied, do a better job, and are more efficient. Similarly, ongoing training generates loyalty and decreases employee turnover.
Lack of capital
Another problem for food entrepreneurs, perhaps the most pressing one, is the lack of capital. Many restaurant owners underestimate the amount of money they need to manage their businesses.
For this reason, if you are thinking about opening a restaurant, you have to know that most of these businesses do not get good profits during their first months. This means that you can not rely solely on your cash flow to operate.
Even for established business owners, financial challenges arise during recessions or low seasons, when they have fewer clients. For them, lower incomes imply difficulties in covering expenses such as leasing, purchasing supplies or paying payroll.
How to use a business loan
To face these problems, you have to learn how to get a business loan and how to use it. These are just some of them:
- Promote your restaurant
With the funds provided by a loan, you can create social media campaigns, or organize special events to promote your business. Don’t forget to make sure that your strategy is unique and that it shows what makes your restaurant different from others.
- Buy kitchen equipment and vehicles
If you have a restaurant, you know how expensive it can be to replace industrial ovens or stoves. With a business loan, you can update these and other equipment, and acquire the most modern available in the market.
In the same way, if you plan to expand your restaurant and reach many places outside of your physical restaurant, you can offer additional services, such as catering. With the money from the credit you can buy a food truck or vehicles to transport food.
- Makeover your restaurant
You can renew your restaurant by investing the loan money to completely change the concept, remodel some areas, or update them with the latest trends in interior design. Or simply change the paint and modernize the electrical and gas networks.
- Get work capital
With a business loan, you can ensure sufficient funds to keep your business running. Working capital is essential to cover the daily expenses of the business, especially during peak seasons, when there’s more money going out than entering.
Now that you know how you can invest the money from a loan, it’s time that you know how to get a business loan for your restaurant.
How to get a business loan
There are alternative lenders that can help you obtain the financing your restaurant needs to grow.
At Camino Financial, we have the loan that best fits your needs. Requesting it is very easy, you just have to follow some simple steps:
- Fill a brief online application about your business. This will let you know if you qualify for a loan.
- One of our business loan specialists will contact you to learn more about your restaurant. During this process, we will explain all the financing options that we offer, and we will answer all your questions.
- Send us your financial records through our online platform. With this information, we will make sure to find the best financial solution for your company.
- After reviewing your application, our team will send you a final offer with the terms of the loan. After signing it, you will receive the funds in your bank account in just two days.
As you can see, the process to apply for a loan is quite simple. In the same way, the requirements that you must fill are very simple:
- To qualify for a loan from Camino Financial, your business must have been operating for at least 9 months.
- Your restaurant should generate sales of $30,000 per year.
- We do not require a minimum FICO credit score.
Remember that our requirements are much more flexible than those of a bank. To grant a loan, we rely solely on the cash flow of your business, and the way you intend to invest the money. We offer our clients the best interest rates and the most convenient terms in the market. Our goal is for more minority group companies to access the financing they need to grow.
If you want to go directly to a bank, you keep in mind that these lenders are quite demanding at the time of granting their loans. To begin with, you need a high credit score to increase your chances.
Another requirement has to do with the collateral, on some occasions, you will have to offer your personal assets.
As if this was not enough, it is well known that these loans can take up to six months, or even more, to be approved.
SBA is another alternative. However, the application process takes a long time, and it takes between 45 to 120 days for the funds to be available.
Make your restaurant successful
If we give credit to the statistics, the chances of success of these businesses seem slim. However, every day more restaurants open their doors hoping to conquer the market and are able to succeed. And for many, survival depends largely on a loan.
For this reason, it is important for food entrepreneurs to know how to get a business loan, and know how to invest it well.
But it is important to select the right lender, to guide you through the entire process, explain what your financing options are, the terms of the loan, and how the payments will impact your earnings.
At Camino Financial you can easily access a loan. Apply today and get ready to have the cash you need to make your restaurant successful and prove the statistics wrong!