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You’ve got a passion for cooking and the desire to make something bigger than yourself. Here’s how to fund that dream.

There’s a lot of stress in the kitchen: heat, a large crowd, special orders — all of it can be demanding. Luckily, that demand can help you prepare for owning your own business. Running a restaurant can take steep investments of time and money, and a great deal of dedication on top of that.

Because the right financing can potentially make or break your new venture, you’ll want to carefully consider your needs and your options. Our guide takes you through your options, how to compare them and even tips from professionals in your field.

OnDeck Small Business Loans

OnDeck Small Business Loans

Among the largest online business lenders offering term loans and lines of credit at competitive fixed rates.

  • Minimum Amount: $5,000
  • Maximum Amount: $500,000
  • Loan Term: 3 to 36 months
  • Simple online application process with fast decisions
  • Dedicated loan specialists and loyalty benefits
  • Must have been in business for at least one year with annual revenue of $100,000+
  • Must have a personal credit score of 500+

    What loan options are available for restaurants?

    Here’s a breakdown of the main financing options you can choose from:

    • Business loans from banks. A good relationship with your lender can ease the funding process, so why not start with a financial institution you already have rapport with? Your local bank or credit union could provide the financing you need.
    • Business loans from online lenders. Many businesses don’t qualify for a traditional bank loan. Often thought of as beneficial when you can’t qualify for those loans, an SBA loan comes with some unique features — regardless of how eligible you are for other types of financing. These loans are guaranteed by the government for up to 90% of their value. This guarantee can make lenders more accepting of borrowers with a less-than-stellar credit history, and potentially supply better rates as a result of the lower risk.
    • Equipment financing. New and used equipment can sometimes be financed in-house by the place you’re renting. If not, you can look into a business loan to purchase equipment.
    • Inventory financing. Designed specifically for obtaining supplies and inventory, the types of financing offered range from short term loans to lines of credit.
    • Invoice factoring. If inventory isn’t a problem but you need working capital, consider invoice factoring, in which you sell account receivables to a third-party at a discount.

    Business loan options to consider for your restaurant

    Rates last updated February 17th, 2018
    Name Product Product Description Min Loan Amount Maximum Loan Amount Requirements
    LendingTree Business Loans
    Compare multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    Must have been in business for at least one year with annual revenue of $100K+. Must have a personal credit score of 500+.
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    2+ years in business; $75,000+ in yearly sales; No bankruptcies or tax liens; At least 20% ownership of your business; Fair or better personal credit
    National Business Capital Business Loans
    Get a large business loan to cover your financing needs, no matter what the purpose is.
    Your company must have been in business for at least 6 months and have an annual revenue of at least $180,000.
    Kabbage Small Business Line of Credit
    A simple, convenient online application could securely get the funds you need to grow your business.
    Must have been in business for at least 1 year. Revenue minimum is $50,000 annually or $4,200 per month over the last 3 months.
    SmartBiz SBA Loans
    Get funding for your small business with a government-backed loan and extended repayment terms.
    Personal credit score of 650+; US citizen or permanent resident; Business must be 2+ years old; Annual revenue of $50,000+; No outstanding tax liens; No bankruptcies or foreclosures in past 3 years.
    Excel Capital Management Small Business Loans
    Get personalized financing options that suit your unique business needs in just a few simple steps.
    Varies by loan type
    Varies by loan type
    Your business must operate in the US, be at least 1 year old and have monthly revenue of $15,000+.

    Compare up to 4 providers

    How do I compare my financing options?

    It can be overwhelming to compare your options, what with so many ways to get funding. Here are a few elements you can focus on when making a decision.

    • Eligibility criteria. The age of your restaurant, annual revenue and your personal credit score, among other factors can all affect your eligibility.
    • Loan type. When you’re looking at financing, you may want to consider how the different merits of each could fit your needs. A traditional loan or an SBA loan will likely have stricter qualifications than a short-term loan will, but the rates are almost certainly significantly better. Other types of financing for specific needs, like equipment or inventory, and may not provide you with working capital.
    • Loan amount. Be sure the lender’s maximum amount offered covers what you need. But avoid applying for too much — taking on more than you need can lead to paying unnecessary interest.
    • Loan term. With a longer loan term comes lower monthly payments but a higher overall cost due to more payments toward interest.
    • Costs. The interest rate and any fees charged can help you determine how much your business loan will cost. If the lender provides an annual percentage rate (APR), this can give you an idea of how much you’ll pay on top of the loan principal. Keep in mind that the APR doesn’t include penalty fees for things like late or missed payments.

    What do I need to apply?

    Generally, you’ll need to provide the following:

    • A detailed business plan.
    • A statement of your financial need.
    • Your business and/or personal bank account statements.
    • Profit and loss statements.
    • Your business ownership documents.

    6 tips on running a successful restaurant from Michelin-starred chefs (source: The Legacy Project)

    • compare restaurant loansMake it nice. A nice welcome can set the tone for a diner. A nice plate requires fresh ingredients and a sophisticated presentation. A nice table requires lovely linens, a pressed tablecloth and a high level of cleanliness. It all comes down to the details.
    • Hire people who have passion. Bring on people who love food and service as much as you do. Find members for your team who will dedicate themselves by giving their all.
    • Lead by example. If you expect your team to do well, show them what that looks like. Work just as hard as you want them to.
    • Shove good aside — and be great. Great requires sacrifice, time and patience. Take things up a notch with a willingness to listen to criticism and evolve from it.
    • Balance is everything. If you go until you break, you won’t be of use to anyone or anything — your restaurant included. Take time for yourself to do more than just own a restaurant.
    • Don’t give in. You’ll have days when you want to quit for something less intensive. Think over your options, and don’t make any snap decisions. How can you view tough days as learning experiences or delegate tasks to lighten your workload?

    Bottom line

    A great restaurant is about making an influential dining experience. Keep your goal in mind to give yourself some perspective. Just as each guest’s time at your restaurant is unique, so are your restaurant’s needs. If you’re looking for solid financing, patiently taking your time can ultimately lead to you realizing your vision.

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