You’ve done your research and concluded that, just as you expected but were afraid to admit, your restaurant could really use a small business loan. Other restaurants similar to yours are clearly evolving. Some have expanded their menus, added physical space, or launched delivery services for customers don’t feel like venturing into the crowded streets. If you don’t make your own game-changing move, you could get left behind. This discovery wasn’t a very big surprise considering how many of your competitors are heavily-capitalized. They have partnerships with banks, investors, or wealthy family members. As unfair as this is, you’re on the right track. In most cases, a successful business is somehow tied to intelligent, resourceful business partners.
You might not have realized it, but these days, lifelong business relationships are more accessible than ever. If you take enough time to prepare yourself and your business, you could receive all the funding you need in a matter of days. There’s simply no reason to count out restaurant business loans in 2018.
1. You Have More Options Than You Think
Before you start gathering documents or filling out applications, you should educate yourself on all the restaurant business loan options available today. Yes, there are a lot. But when you work with a company like United Capital Source, you will be promptly connected with an account rep who is more than happy to explain all of your options and answer any question you might have. We don’t expect you to instantly become an expert in modern business lending but you should most certainly be prepared to answer a substantial number of questions about your business’s current financial health.
Much of our success is based on how well we know our clients’ businesses. This is a key difference between alternative business lenders and traditional lenders, like banks. Instead of asking for mountains of paperwork and flawless finances, we ask you to tell us all of your pain points so we can design the perfect small business loan for you.
2. Bad Credit Doesn’t Always Mean Explosive Interest
It is extremely common for restaurants to have poor credit history. These restaurants have probably dismissed the idea of small business loans altogether. They believe they will never qualify and, if they do, the interest and payment structure will be so restrictive that they’ll be more concerned with paying back the lender than actually growing the business. Both notions couldn’t be more false. There are numerous low-cost business funding programs available for restaurants with bad credit and/or other outstanding debts.
Companies like United Capital Source base their approvals on entirely different criteria than traditional business lenders. For example, if your restaurant consistently deposits a certain amount of money into the bank, you may be eligible for a revenue based small business loan. Most borrowers are given approximately 10% of their annual gross deposits and can take up to 18 months to pay off the debt in full. If a great deal of your revenue comes from debit and credit card transactions, you will likely be eligible for a merchant cash advance. The amount you are given is based on the amount of revenue you are expected to generate from debit and credit card sales. This type of working capital loan is popular for restaurants, primarily because of the industry’s seasonal nature. You only make larger payments when you make substantial sales, so you don’t have to worry about paying your bills during an unexpectedly slow month or two.
3…But You Still Need To Repair Your Credit
As previously mentioned, United Capital Source prides itself on educating its clients. We wouldn’t be able to do this properly, however, without being 100% honest. The truth is that even though restaurant business loans are accessible with bad credit, you must still do everything you can to repair your bad credit as soon as possible. Think of how many different entities look at your credit score: insurance companies, suppliers, etc. The next time you speak to them, ask if they would consider giving you better rates if you raised your credit score. You’ll save money and have more room to grow your restaurant.
When you explain your credit problems to your UCS account rep, he or she might recommend one of our special bad credit business loans. The money could be used to pay off your existing debts while staying current on regular business expenses. Many UCS clients take out business loans to prevent falling behind on bills during slow periods. But they also use this time to prepare for the upcoming busy period, which will allow them to pay off the debt without digging into operational or personal funding.
Preparation Is The Hardest Part
If preparing for a small business loan seems intimidating, it’s because this is the hardest part about the entire business lending process. As long as you take the time to prepare adequately, everything else will be much easier. That includes growing your business, making payments, and obtaining additional rounds of funding. Recognizing exactly why you need a business loan in the first place is the only way to ensure you never find yourself in this position again.