Marketing is an essential part of any business but can be more difficult to accomplish without working capital. For small businesses like restaurants, marketing enables you to reach a broader audience or customer base, retain your current customers or clientele, and contribute to the overall growth of your business. Factoring in a marketing budget can be costly, but you shouldn’t pay the bill out of pocket or use your personal credit.
Fortunately, there are many loan options available for marketing your restaurant business, including a business line of credit and small business loans like appliance loans, a traditional bank loan, a term loan, and loans from alternative lenders. In this article, you’ll learn about your hospitality options, how to qualify, and the standard application process for the type of funding you need.
Whether you are a new business owner with a new restaurant or an established one, financing options are readily available to help you get your startup restaurant off the ground and determine the type of loan you need to start your restaurant market.
What is marketing in a restaurant?
Simply put, marketing is a plan to reach your target audience. In order to attract customers, you need to market your restaurant by presenting and promoting it to the general public. One of the most important factors in a restaurant’s reputation is the quality of the food and service, but without marketing, expansion and growth are nearly impossible.
Ways to market your restaurant could be:
- Social Media Channels (including Pinterest, Instagram, Facebook, YouTube, TikTok, LinkedIn and Twitter)
- The local community (newspapers, flyers, word of mouth)
- Ads (Google, social media, commercials, billboards)
Is it difficult to get a loan for a restaurant?
Getting a loan for a restaurant business can be challenging as lenders see the industry as unpredictable. The Small Business Administration (SBA) guarantees small business loans, making it easier to get a restaurant loan through them, making your bank more inclined to accept the risk of lending to your business to meet your business needs. Various lenders, including banks and credit unions, are involved in SBA funding so restaurateurs can get the money they need to fund their marketing efforts.
Do Restaurant Owners Qualify for SBA Loans?
Loans for newly opened and already operating restaurants can be made through the SBA. Microloans, which have a maximum limit of $50,000, are typically better suited to startups or restaurants that have lower cash needs. The SBA 7(a) loan program can provide up to $5 million in capital, and the CDC/SBA 504 program can provide up to $20 million in capital for restaurants to purchase, build or can renovate.
However, it is important to remember that SBA loan eligibility requirements can be strict and the funding process can take several months. In order to qualify for such a loan for your catering business, you must provide collateral, a minimum credit rating and a personal guarantee. To be considered a small business, you must also meet the size criterion, which is determined by the number of employees, annual income, and net worth of your business.
Before applying for a Small Business Administration loan, your restaurant must first meet a number of requirements, including having a valid business license, being located in the United States, and exploring all other possible sources of funding. For purposes of equipment financing or other restaurant improvements, owners may qualify for SBA loans. Make sure you have your business plan, annual revenue, bank statements and any other relevant information showing business operations, cash flow or growth.
Can restaurants use an SBA loan for advertising?
The short answer is yes, restaurants can use SBA loans for advertising. The SBA offers a extensive list the programs they offer and how business owners can use the money. Some of the program options include:
- base 7(a)
- Working capital CAPlines
- Lender structured credit line
- 504 loan program
- microcredit program
Top lenders for restaurant loans
There are a number of business lenders that are great for restaurateurs looking for credit. Many restaurant owners have used them for financing and purchasing restaurant equipment, financing inventory, renovations and of course marketing and advertising.
If you already have a relationship with a bank or other financial institution, whether for personal banking or other types of commercial banking services, you may be able to use that relationship to get a loan from them to open a restaurant.
How does a business owner apply for a restaurant loan?
There are a variety of ways to apply for a restaurant loan, including:
- Through an online lender
- About a classic bench
- Through the Small Business Administration (SBA)
You can expect to be asked for information about your business, including contact information, length of service and earnings when you apply for a restaurant loan, just as you would expect to be asked for this information when you apply applying for a different type of business loan. While specific requirements may vary from one lender to another, in general you can expect to be asked for this information. If you personally vouch for the loan as a borrower, the lender can also ask you for information about your personal finances and see your personal creditworthiness. This results in the loan amount and repayment terms.
The type of loan you are looking for also determines the difficulty of the application process. Applying for a traditional bank loan or an SBA loan may take some time, while applying for a merchant cash advance may take just a few minutes. A traditional bank loan or SBA loan application will most likely require small business owner financial and tax records.
No matter what type of credit products you choose to market your restaurant business, Nav is here to help. With the help of Nav’s resources and loan matching tool, you can get the best business financing for your needs, including small business loans such as small business start-up loans. From setting up a business loan to a full list of business credit cards, the choices are yours to ensure you get the best restaurant financing options.
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