Loans for Restaurants Post Recovery
We all depend on restaurants for our social and dining needs. In the same way, restaurants depend on consumers to stay strong and continue delivering their essential services. COVID-19 caused a major economic impact, making it hard for restaurants to stay afloat during tough times.
Fortunately, with the CARES act and other recovery loans for restaurants, many dining establishments could remain in business and make payroll. Post-covid, restaurants have a chance to make up for their losses and thrive in the years to come.
Loans for restaurants can come in various forms, including business lines of credit, short-term loans, working capital loans, and term loans. One of the most popular options for small businesses is a loan through the Small Business Administration (SBA).
SBA loans typically have more favorable terms, such as lower interest rates and longer repayment terms, compared to traditional bank loans. However, they also often require a personal guarantee and a well-written business plan.
Another option for restaurants is a business credit card, which can be used for everyday expenses like inventory and restaurant equipment financing. A business credit card can also provide a revolving line of credit, similar to a business line of credit loan.
Merchant cash advances are another option, but they tend to have higher costs and shorter repayment terms than traditional loans. It’s important for restaurants to carefully consider their cash flow and the terms of the loan before selecting the best option for their business.
All it takes is suitable recovery loans for restaurants. The funds are available to launch your business to success again. With the right help and resources, you can access those funds in days! This article will cover the various recovery loans for restaurants with their requirements that you can take advantage of.
The Current Post-Covid Landscape
The pandemic caused businesses to suffer due to government regulations and people’s limited spending. The following two years were grueling for many businesses, particularly restaurants. Because restaurants relied on in-store sales, they struggled to maintain their businesses in the wake of COVID-19. Restaurants were able to pay their staff and stay open thanks to government aid, like the CARES Act.
In 2022 the economy will function better than in the past two years. While COVID-19 is still present, it doesn’t place the same restrictions on our everyday lives. People are slowly going back to their normal routines and the economy is recovering due to more people spending money.
While the last few years have been arduous for small businesses, especially restaurants, the economy is turning around. Restaurants can recover if they have the right loans for their business.
Recovery Loans for Restaurants Post-Covid
With COVID-19 quickly fading into the rearview, restaurants have a chance to thrive in the years to come. However, owning and operating a restaurant has never been easy, and future success is not guaranteed.
A study by Ohio State University found that 60% of restaurants don’t make it past their first year, and 80% don’t make it past five years. While this statistic is daunting, the main limiting factor in a restaurant’s long-term success is the lack of startup funds. Restaurants that have adequate funding succeed where others do not.
Restaurant owners who are new or have just gone through the pandemic can get back on track with post-covid recovery loans. It is possible to get the funds you need for equipment, payroll, or working capital with the right loan lender.
SBA Recovery Loans
One of the best options for restaurant owners looking for recovery loans is the Small Business Administration (SBA). The SBA is a government-run organization offering financial assistance to needy small businesses. Previously, the SBA offered the payback protection program (PPP) and the economic injury disaster loan (EIDL) for small businesses requiring financial assistance.
While the SBA no longer accepts PPP or EIDL assistance applications, restaurant owners can still get aid through the RRF program. The restaurant recovery fund (RFF) program is one of the best loans for restaurants. With the RFF program, your restaurant can get funded for up to $10 million (with no more than 5 million per physical location). Further, restaurant owners are not obligated to pay back the funds if the funding is allocated toward its eligible uses.
This payback protection feature of the RFF program makes it the most desirable restaurant loan option. You can get the funding you need to
- Cover payrolls
- Purchase equipment
- Pay for overhead costs
- Carry out maintenance
- Purchase raw materials
- Pay off existing debts and mortgages
While the RFF program is one of the best restaurant loans, qualifying is difficult, and funds are not guaranteed. Fortunately, with the right online loan lender, you can get help with the application and access to funds in days.
Merchant Cash Advance Loans for Restaurants
In some industries, such as food service, income is uneven. Rather than having a consistent cash flow, much of the business’s funds come through credit card sales. Often, you need funds before you gain access to them and can’t afford to wait for those payments.
One option is to take out a short-term loan to help cover the costs. However, one of the most efficient loans for restaurants is a merchant cash advance (MCA).
An MCA is a short-term loan where a lender gives you funds against your potential future sales. Typically, the merchant gives you a lump sum of cash upfront. You pay back the advance with a percentage of credit and debit card sales over fixed intervals.
There’s usually factoring involved to give the lender some leverage. If you borrow $10,000, you will end up paying $14,000 back in installments.
Merchant cash advances are premium loans for restaurants designed with this essential business in mind. MCA offers competitive rates of:
- 6.98% APR
- 6-18 Month payback period
- $5k-$500k Advance
However, not everyone is eligible for cash advances. To qualify, you’ll need the following:
- At least one year in business
- 500+ Credit Score
- 100k Verifiable annual income
Because of their low risk and high reward, MCA is an excellent recovery loan option for restaurants. If you need assistance applying for a merchant cash advance for your restaurant, consider an online loan lender like BitX Funding.
Equipment Financing Post COVID-19
While COVID-19 had a massive effect on restaurants everywhere, restaurant owners can get back on track with equipment financing. You can finance equipment by taking out a loan and using the item you purchased (e.g., a range or HVAC unit) as security. You make fixed payments at 8-30% APR until the equipment is paid off. If you cannot make payments, the equipment is repossessed.
This loan option is best for businesses seeing a lot of new traffic as we enter post-covid and consumers are spending more. With the influx of new business, older equipment will experience wear and tear and need to be replaced. Get equipment financing to replace your restaurant equipment instead of taking away funds from payroll and overhead expenses. To qualify, you’ll need the following:
- 1+ Years in business
- 630+ Credit score
- 100k+ Verifiable annual income
Get Recovery Loans for Restaurants today with BitX Funding
COVID-19 had an unprecedented effect on the economy, impacting all businesses, but especially restaurants. As essential businesses, restaurants worked overtime to keep the economy going and provide a level of normalcy for the nation. As we enter post-covid, restaurants are flourishing and seeing a lot of new business.
However, many restaurant owners require funding to return from the pandemic fully. Fortunately, you can get the recovery loans you need for your restaurant with the right resources and a quality lender. If you’re a restaurant owner looking for funds to thrive in the years to come, contact BitX Funding today.
For more information on recovery loans for restaurants, contact BitX Funding by phone, email, or fill out the form below.
