Whether you are operating a well-established restaurant business or you’re just in the starting phase of establishing a restaurant business, obtaining a small business loan for restaurants can be stressful. Unluckily, financial institutions are well known for rejecting loan applications for restaurant owners.
Here are some of the secrets you need to know when applying for a small business loan for the restaurant.
1. It’s easier to obtain a merchant cash advance If your restaurant business accepts credit and debit card as means of making payment, a merchant cash advance can be a perfect alternative for securing a small business loan for a restaurant. You can obtain the cash advance from the merchant lenders and use it for your restaurant needs. The payments are made as soon as future transactions occur. On top of that, you don’t need a collateral or perfect credit history to get a merchant cash advance, and the application process is simple since they don’t ask for lengthy documentation and financial statements.
2. You don’t need a good credit history to get approved In most cases, restaurant owners believe that they can’t qualify for a small business loan just because they have bad credit history. Note that there are programs specifically designed to grant access to low-cost small business loans for restaurants. Besides, the programs can play a great role in rebuilding credit history following a slow month.
3. There is a loan product for every type of restaurant need Even though the majority of creditors will want to know how you plan to use the loan, the truth is that you will not have to explain all of that on some loan products. You can easily obtain a small business loan for restaurants by working with a bank that has a relationship with many lenders. For that reason, you will use your loan in any way that fits your business.
4. Banks will not offer the best loan product for your restaurant In the previous years, restaurant owners used to obtain a small business loan from their local banks. Currently, these financial institutions view the restaurant as risky a business due to the latest recession that closed the lending door for many. The truth is that these financial institutions are not the best alternative nor do they give the cheapest rate of interest in a small business loan.
5. Ensure you pay your loans on time It is evident that failing to pay your loans on time can impede your chances of getting approved in future. The moment you have received that small loan, you might decide to put it on a waiting list for a while. However, note that even a single ignored payment can hurt your trust with the lender. If you have realized that you will be late on making the loan repayment, you should inform the creditor in advance. The majority of the lenders will have flexible ways to help you and ensure that your obligation is met.
6. Several special loan products for minority restaurant owners Before you take a small business loan for restaurants, check out if they provide any special program for minority restaurant owners.
Note that there are multiple loan products specially designed for these markets. With these programs, you could be saving a lot on application charges, the rate of interest and the amount of repayment.