What You Need to Know

When you’re running a restaurant, you’re constantly investing in your business to stay ahead of the curve and keep customers coming back. You need to invest in marketing efforts to keep bringing in new customers and engaging with returning ones, hire top-notch kitchen staff, and upgrade your dining space regularly.

At the same time, your cash flow may be uneven as you go through the busy and slow season, order kitchen supplies upfront, or cover unexpected costs like equipment repairs.

Financing for your restaurant can help. A line of credit or short-term loan can help you smooth out cash flow, purchase supplies, or finance new kitchen equipment. Here are some ways that a small business loan for your restaurant can help.


Types of loans available for restaurants

1. A Business Line of Credit: A business line of credit gives you access to flexible, revolving funds when you need them for your restaurant. With a line of credit, you borrow what you need, pay down the balance, and the funds are replenished so you can use the line again. Many restaurant owners find a line of credit helpful to bridge cash flow gaps, manage payroll, and purchase the inventory they need to keep their kitchen running. Learn more about OnDeck's Business Line of Credit. 

2. A Short-Term Business Loan: Many online lenders offer short-term business loans for small businesses like restaurants. With terms that range from three months to three years, this type of financing makes it possible for a restaurant owner to borrow capital and repay it quickly—often making the total dollar cost lower than a longer-term loan. Getting a short-term business loan from an online lender can be much quicker than getting a traditional loan from a bank – typically, the borrower can apply in minutes and get their funds within days. Many restaurant owners will use a short-term loan to make improvements to their kitchen space or dining area, purchase inventory, or replace kitchen equipment like an oven or freezer. Learn more about OnDeck's Short Term Business Loan.

3. Equipment Financing: Equipment financing is another way to finance the purchase of business equipment, besides just using a loan or line of credit. Any tangible asset used in business operations can be considered business equipment. For restaurant owners, this can mean an oven, deep-fryer, commercial refrigerator, or even kitchen shelving units.

4.  A Bank Loan: As a business owner, the financing option you’re likely most familiar with is a traditional bank loan. A bank loan typically requires collateral to secure the loan, and the application process tends to take several weeks. The length of the loan can be anywhere from 2-20 years. While the interest rates on a bank loan can be attractive, restaurants may find it difficult to meet stricter bank requirements for a loan. Restaurant owners may also find the process too slow for their cash flow needs.

5. The SBA (Small Business Administration) Loan Guarantee Program: Although the SBA is not a lender and provides financing through participating banks and credit unions (among others), the SBA Loan Guarantee Program will sometimes qualify a borrower who might not otherwise meet the more rigid criteria required by the bank. If your restaurant is an established business, with a few years under its belt, and your personal credit score is above 680, this could be an option for your business. However, the application process tends take several weeks, so restaurant owners may find this too slow for their cash flow needs.

“OnDeck was different because I felt like they really understood who we were. They understood that we were small. They knew some of the challenges that we face, and I felt like our representatives that we worked with really cared about what we were doing and where we were going with our money. ”

Read their full story

Erin Bradley and Janet Meyers
Tea by Two
Bel Air, MD

Resources for Restaurants

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