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As the United States economy continues to rebound, more Americans dine at their favorite restaurants. This is welcome news for the restaurant industry. A survey by Toast reveals that people will use more disposable income for dining out. 45% of survey respondents dine out multiple times a week, and 20% dine out once a week. If you own a restaurant, things are looking good from a growth standpoint.
It would help if you always looked at ways to add value to the customer experience. New menu additions and ongoing employee training are a given, but the appearance of your restaurant can help set it apart from the competition. A clean environment with attractive tables, comfy chairs, and a great ambiance will create an enjoyable dining experience for your customers. It can help you attract new customers and generate repeat business. Investing in your restaurant requires capital that you might not have readily available, but the options are there. In this Balboa Capital blog, you will learn how to get a restaurant business loan.
Determine your restaurant’s needs.
Before seeking a loan for your restaurant, you need to determine what you need the funds for. Then, make a list of things that need to be upgraded or replaced. In addition, ask your employees what improvements they recommend. They might have heard suggestions from customers you were unaware of, such as new trends relating to recipes or ingredients. Finally, talk to your chefs and kitchen staff to find out if any equipment is not working up to par.
The right restaurant equipment can help your chefs prepare delicious meals promptly and keep your restaurant running smoothly and efficiently. All of this adds up to a good customer experience. Once your list is complete, you will have a good idea of how much you need to borrow.
Choose the best restaurant business loan option.
There are several types of restaurant funding you can select from, and each one has its approval and underwriting criteria. If you need to make a small purchase and do not require a large amount of funding, a short-term business loan is a good choice. This loan option is easy to apply for and offers you fast capital access. Moreover, its shorter repayment period can help improve your credit score sooner than with a longer-term loan. Short-term restaurant loans are suitable for inventory, payroll, and taxes.
Traditional business loans are typically used for more capital-intensive investments, such as expansion efforts and remodeling. As a result, these loans have higher borrowing limits and extended repayment periods. In addition, you might have to put up collateral depending on the lender you select.
Equipment financing might be better than a business loan if you need new equipment, furniture, or fixtures for your restaurant. As the name says, restaurant equipment financing is used for capital equipment investments. You get funds to finance equipment and make monthly payments over a specific term. For example, this option enables you to upgrade your old restaurant equipment to new commercial ovens, stoves, refrigerators, etc.
As a restaurant owner, your basic philosophy should be to set aside profit and invest using available funds. However, if you need to make an equipment or technology purchase or need an influx of capital for operational needs, take the time to examine all available restaurant loan options.
Lenders have money to lend, so remember that you are in control and have flexibility regarding your loan options and term lengths. Lastly, some restaurant equipment is deductible under the Section 179 tax code, so ask your accountant to see if your purchase qualifies.
Section 179 limits and information on the Balboa Capital website are for illustrative purposes only; the Section 179 limits and information provided are subject to change by the IRS. Please visit the IRS website or consult a qualified tax professional for confirmation of the current Section 179 limits and information related to your situation.
Balboa Capital, a Division of Ameris Bank, is not affiliated with nor endorses Toast. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.