Managing a restaurant is not easy. To be successful, you have to offer first-class customer service. Likewise, the menu must be good and varied enough to keep attracting guests. It is also important to know how to get a loan.
We are talking about a highly competitive industry. In the spring of 2018, the number of restaurants in the United States reached more than 660,000. And it is estimated that in 2017, some 11,000 independent restaurants closed their doors.
Given this scenario, the main concern of the owners of these businesses is to get the capital to continue operating and be competitive. Unfortunately, accessing financing is difficult for the food business, as some lenders see the restaurant industry as volatile.
In this article, we tell you how to get a commercial loan to open a restaurant or make the one you already have to stay in the market and even grow.
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If we give credit to statistics, the chances of success of these businesses seem slim. However, more and more restaurants open their doors with the hope of conquering the market and they succeed. And for many, survival depends largely on a loan.
For this reason, it is important for these entrepreneurs to know how to get a commercial loan, and to know how to invest it well. Among the possibilities are opening a new store, remodeling, hiring employees, acquiring equipment, or accessing working capital.
But it is important to select the right lender, to guide you throughout the process, explain what your financing options are, the terms of the loan, and how the payments will impact your earnings.
With us, you can easily access merchant cash advance https://oakparkfinancial.com/merchant-cash-advance/. Apply now and get ready to have the money you need to make your restaurant successful and to prove that the statistics are wrong.
How can a loan save your restaurant?
Staying in business after the first year is probably the biggest challenge a restaurant must overcome. About 60 percent of new restaurants in the United States fail during their first year. And almost 80 percent close before reaching its fifth anniversary.
Some of the reasons for these businesses to fail are:
- lack of funding
- lousy location
- inefficient employees
- problems with the menu
Of these factors, the lack of qualified employees is one of the biggest challenges for these companies.
As the industry continues to grow, the demand for workers also increases, and therefore, finding people with the necessary skills is more complicated.
To the above, we must add the high costs of labor, which are increased by adding new employees.
With the money of a loan, you will not only be able to hire employees that your restaurant needs. You can also give your team the necessary training to offer excellent customer service.
In this same sense, well-trained workers feel more satisfied with their work and are more efficient. Similarly, continuous training generates loyalty and decreases employee turnover.
Lack of capital
Another problem for these entrepreneurs, perhaps the most pressing, is the lack of capital. And it is that many restaurant owners underestimate the amount of money they need to manage their businesses.
For this reason, if you are thinking of opening a restaurant, you have to know that most of these businesses do not make good profits during their first months. This means that you cannot depend solely on your cash flow to operate.
For established business owners, financial challenges arise during recessions or low seasons, when they have fewer clients. For them, lower-income implies difficulties to cover expenses such as leasing, the purchase of supplies or the payment of payroll.
How to use a commercial loan
To address these problems, you have to learn how to get a commercial loan for your restaurant and know what you can use it for. These are just some of them:
- Promote your restaurant
Define the message of your brand, spread it, and get loyal customers, are essential for the growth of the business, and the main objectives of any marketing strategy.
With loan funds, you can create a social media campaign, organize special events to promote your business and implement other tactics. But you must ensure 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 commercial 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 take your menu to other places, or offer additional services, such as catering, with the loan money you can buy a food truck or vehicles to transport food.
- Do remodels
Renew your restaurant by investing the loan money to completely change the business concept, remodel some areas, and update them with the latest trends in interior design. Or simply change the paint or modernize the electrical and gas networks.
- Get working capital
With a commercial loan, you can secure enough funds to keep your business running. Working capital is essential to cover the daily expenses of the business, especially during peak seasons, when it is more money going out than entering.
Now that you know how you can invest a loan’s money, it’s time for you to know how to get a commercial loan for your restaurant.
How to get a commercial loan
There are alternative lenders that can help you get the financing your restaurant needs to grow.
At Ferdies Financial, we have the credit that fits your needs. Applying for it is very easy, you just have to follow a few simple steps:
- Answer a brief online application about your business. By filling it out, you’ll know if you qualify to access a loan.
- One of our commercial credit specialists will contact you to learn more about your restaurant. During this process, we will explain all the financing options we offer and 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 loan terms. After signing in, 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. Similarly, the requirements that you must complete are very simple:
- To qualify for a Ferdies Financial loan, your business must have been operating for at least 9 months.
- Your restaurant must generate sales of $ 30,000 annually.
- We do not require a minimum FICO credit score.
Remember that our requirements are much more flexible than those of a bank because to grant a loan we rely solely on the cash flow of your business and the way you plan 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, take into account that they are quite demanding when granting their loans. To start, you need a high credit score to increase your chances.
Another requirement has to do with the guarantee. On some occasions, you will have to offer your personal assets as collateral.
As if this were not enough, it is well known that these loans can take up to six months, or even longer, to be approved.
SBA is another alternative. However, the application process takes a long time, and it will take 45 to 120 days for the funds to be available.