Every business during its active course will sooner or later seek a loan to establish or expand the activity of the firm. There are rarely any businesses that run without acquiring loans. Small businesses often avail short term loans to meet unplanned expenditure or to pay the existing loans. Seasonal businesses often fall short of funds to run the business during off-seasons and to keep it going until the peak seasonal period; seasonal businesses such as construction companies, restaurants and holiday resorts. There are various types of loans available for these seasonal industries that aim at helping them to meet business expenditure during off-season periods. The restaurant business is one of the most challenging seasonal businesses that need a regular inflow of funds to stay in business for many years.
A restaurant loan aims at helping any type of restaurant business including bars, nightclubs or lodging. A restaurant owner can avail a loan from banks, financial institutions, and non-lenders. However, bank loans are not easy to acquire for restaurant businesses due to their seasonal operating nature. Banks have strict eligibility criteria that a restaurant owner needs to qualify for in order to apply for the loan. Moreover, there is a good amount of paperwork involved making it a tedious and time-consuming process. The amount of funds that can be acquired by restaurants depends on the size and nature of the business.
The majority of loans are decided on four factors of the restaurant
The majority of loans are decided on four factors of the restaurant: the number of years in the industry, average annual sales, total amount and a credit score of the business owner. The banks and financial institutions also consider the number of years the restaurant has been in active business. A well-established restaurant is likely to get approved for more funds.
A credit score is considered to be one of the major factors when deciding or approving a loan for the restaurant business. Good credit score will strengthen your restaurant loan application and will guarantee the approval of loan because the lenders will not have to worry about you not repaying the loan as your credit score will speak volumes about your ability to repay.
Annual sales turnover is another important factor that will decide the amount of restaurant loan. If the sales are high, then the higher will be loan approval amount and vice versa. Apart from the above factors, there are several documents that banks and other lenders require you to submit when you are applying for a restaurant loan. Every information submitted by you needs to be supported by relevant documents apart from submitting your business plan and balance sheet. After presenting the application with all the required documents, you may need to pledge fixed asset to guarantee the loan repayment which may not be possessed by small businesses.
Fortunately, there is one loan that is easy to avail and does not require any collateral which is merchant cash advance. A merchant cash advance provider provides restaurant loans to meet various restaurant related expenditures. The cash is advanced against future card sales of the restaurant and is not based on credit score of the business owner. The loan can be applied online and can get approved in as less as 24 hours, and the approved amount is deposited into the business account of the borrower within a week’s time.