Top Reasons for Small Business Loans for Restaurants

November 19, 2021

Top Reasons for Small Business Loans for Restaurants
Business resources

There were over 1 million restaurants operating in the US last year according to the National Restaurant Association – but, as an American cultural institution with no real peer, there’s always room for one more.  

And whether it’s a greasy spoon, niche dish specialist, or aspiring five-star establishment, a small business loan can help a restaurant serve its first meal, open a new location, or grow in all kinds of exciting ways.

After providing so many restaurateurs a restaurant business loan, line of credit, and other financing options, we at Idea Financial have noticed several key reasons small business owners turn to a short-term loan or alternative financial resource rather than a big bank.  

First and foremost, the speed and transparency of an alternative lender can make a massive difference for those operating on tighter margins than other industries. It's why Idea Financial always works with our clients to turn around approvals as quickly as possible—some even on the same day of application.

Here are six other top reasons restaurant owners seek out a small business loan:

1. Remodeling an existing location

According to the National Restaurant Association, 70% of US restaurants are single-unit operations. These small businesses depend upon a business line of credit or other lending tools to help with the upkeep of their only location. From tables, chairs, décor and POS systems to lighting, floors, menus, and other touches unique to their location, restaurant business loans empower these local spots to invest in the upkeep necessary to appeal to customers new and old alike.

2. Open a new location

For the other 30% who have chosen to expand by opening another location, restaurant business loans and restaurant financing are very common. This type of long-term investment can be tricky to manage without working capital devoted solely to it because restaurant owners have so much else to handle when it comes to the daily operations. That's where a restaurant loan comes in: By receiving a line of credit, SBA loan, merchant cash advance, or other type of loan, the small business is able to focus on other important aspects of their restaurant such as inventory and service without getting too bogged down in the particulars of the expansion.

3. Expand services

Perhaps you're going to start offering more menu items, additional options (say, delivery), prepackaged options, meal plans, or other natural extensions of the great food for which your restaurant is known. In this instance, a restaurant business loan helps owners take the next step in the growth of their shop while providing the flexibility to learn and expand the tactics that prove most fruitful for your restaurant.

4. Upgrade kitchen equipment

Over time your stoves, grills, refrigerators, freezers, burners, and other vital restaurant equipment will wear out or break down. You can't afford to wait on replacing these—and a line of credit can be perfect for restaurants that need to make the large purchase and immediately integrate the equipment into their day-to-day. It's a purchase that is often financed with equipment financing, making restaurant loans the perfect solution to help small business owners.

5. Grow your staff

To help restaurant owners avoid longer serving times and disgruntled customers, adding more team members is often a great option. You may need additional cooks, runners, bussers, hosts, waitstaff, or administrative support—accounting or finance, for example—to make sure your restaurant meets customer expectations. A restaurant business loan is perfect for this because deploying the capital towards employing more people immediately pays dividends with helping handle your increased foot traffic.

6. Handle seasonal fluctuations in business

Oceanside restaurants are typically slow in the winter. The summer? A different story, obviously. To accommodate the lulls from season to season, restaurant business loans help keep the lights on, or cover needed upgrades or expenses. In this way, your business is ready when your busy season comes along.

Does your restaurant need a small business loan to accommodate one of these? Contact us to get started with your restaurant business loan needs.