Are you wondering how to get a small business loan for your restaurant in 2022? If you’re one of the many restaurant or bar owners that took a hit during COVID-19, it’s not a surprising question.
Small business loans for restaurants are in high demand. Luckily, restaurant owners have several options. There are SBA loan programs, investors, and even grant money available. We cover the best options below and then give you the tools to reach them easily.
So, if you’re interested in a loan for your small restaurant or bar, read on. We’re here to help you navigate the ever-changing currents of restaurant funding in 2022.
Best Funding Options for Restaurants
There are several funding options for restaurants depending on what you need, be it equipment financing, restaurant financing companies, or a traditional loan.
Some of the best financing options are from lending institutions that participate in the U.S. Small Business Association (SBA) Programs. An SBA loan for restaurants and bars provides funding more readily than traditional loans because the SBA guarantees against default.
Having the SBA guarantee makes lenders more willing to take on risks, which means more restaurants will qualify more easily. Small business loans for bars and restaurants from traditional institutions aren’t the only option, though. Alternative lenders tend to have much easier guidelines to get the restaurant industry back on their feet.
For quick restaurant funding, nothing beats finding access to a business line of credit. You can receive access to the funds in a matter of days or less. Even through the SBA program, a bank or credit union usually takes weeks or months to approve a loan. Business lines of credit might be the best choice for you, and you can easily access a variety of offers from alternative lending companies
There is an SBA express loan available that provides funding in 36 hours. However, it comes with higher interest rates, and the SBA doesn’t back as much of the loan. That puts lenders in greater control, and they can put more stringent requirements in place, where accessing this type of loan can be quite difficult.
Restaurant Business Loan Qualifications and Challenges
Now that you have a general idea of funding options, let’s look at how to qualify for a restaurant loan. Whether you go through a traditional bank, credit union, or alternative lender, you’ll need to meet eligibility requirements to receive your loan (based on who you choose to work with). Some of these requirements include:
- The business must be in the U.S. or a U.S. territory
- Must be a for-profit establishment
- Equity (or collateral) to invest (for traditional lenders)
- 3-6 months of bank statements
- Tax Returns
- Additional requirements set by the individual lender
Equity or Collateral
If you can show that your restaurant is already profitable, or was before COVID-19, then you can meet the equity requirement easily. If you’re newer to the restaurant game, you can use personal collateral instead. It all depends on the lending institution you choose to work with. It’s a good idea to do your research a head of time to make sure you are making the best decision for your business.
Personal collateral could be a home, car, or restaurant equipment you already own. If you’re using personal collateral, lenders may require you to prove that you are considered a low risk borrower.
Individual Lender Requirements
Lenders can place additional requirements on SBA loans. Often, they’ll run your credit score. If you don’t have good credit, you may need to seek out other funding options or be willing to meet a higher interest rate. If you have an already profitable restaurant, though, lenders may waive the credit requirement altogether.
If you’re worried about qualifying for a restaurant loan of any type, check out our tips here. We can help your restaurant qualify for funding even when business is slow or seemingly non-existent like it was during Covid-19.
$28.6B Government COVID-19 Grant Program for Restaurants (2022)
Small business loans for restaurants affected by COVID-19 are in high demand. The pandemic took a noticeable toll on the restaurant industry. To help struggling bars and restaurants, the U.S. government is currently handing out $28.6 billion in grants.
The grant money is available through an application with the SBA. The program provides restaurants with funding that equals COVID-related revenue loss, up to $5 million per restaurant location.
As long as the funds are used by March 2023, applicants need not repay the grant money, making this the ideal choice for those who qualify. However, not everyone will be eligible, and the grant money you receive will depend on your restaurant’s revenue loss. That may or may not be enough to cover all of your costs.
How to Get Funding for a Restaurant
If you don’t qualify for the COVID-19 grant or find it won’t cover all of your expenses, don’t fret. There are still ways to get funding for your restaurant or bar.
And, you don’t need to get in your car and find the best bank for restaurant loans. You don’t even need to call around! Instead, you can let ROK Financial do the legwork.
Simple Application for Quick Restaurant Funding
ROK Financial has Business Financing Advisors to match you to the best financial products for your restaurant or bar. Many of our providers require no minimum credit score, and you can receive approvals in a matter of minutes!
So whether you need equipment financing, a line of credit, or an SBA loan, we can help. Fill out the application and start building your business back up!
About the Author, Madison Taylor
Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates! Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.