Get Competitive Financing for Restaurants
The biggest mistake restaurant owners make is using their cash to purchase fixed equipment outright when financing restaurant equipment is a much more viable option. This decision often leaves them with limited cash to operate the business. Since some restaurants take time to see revenue ramp up, having cash on hand is essential for marketing and other operational needs. If your cash is tied up in fixed assets or equipment, it becomes challenging to retrieve, leaving you stuck with depreciating assets or forcing you to borrow working capital. As a result, many restaurants turn to merchant cash advances for working capital when they could have financed their equipment and conserved cash for better cash flow management.
Another common mistake many restaurants make is poor cash flow management. Financial mismanagement can severely impact any business. Here are some leading causes of restaurant closures:
- Poor budgeting
- High operational costs
- Inadequate financial planning
Understanding the failure rates for restaurants can be crucial for anyone planning to enter the food industry or expand their existing operations. Each lender will underwrite each restaurant differently. Use restaurant equipment financing is sometime difficult to do for restaurants as most equipment has no market and very little resell value. Restaurant will be treated different by time in business, sales, credit and location.
Here are some detailed statistics on restaurant failure rates, along with the factors contributing to these outcomes:
Restaurant Failure Rate Statistics
- First-Year Failure Rate:
- Approximately 20% of restaurants fail within the first year.
- This statistic is based on research from the Bureau of Labor Statistics (BLS) and is corroborated by several industry studies.
- Factors contributing to early failure include poor location choices, inadequate business planning, and insufficient capital.
- Approximately 20% of restaurants fail within the first year.
- Three-Year Failure Rate:
- About 50% of restaurants close by the third year.
- A study by Cornell University found that nearly half of new restaurants shut down within their first three years.
- Common reasons for closure include stiff competition, changing consumer preferences, and operational inefficiencies.
- About 50% of restaurants close by the third year.
- Five-Year Failure Rate:
- Around 60% of restaurants close within five years.
- According to data from HG Parsa, a professor at Ohio State University, this trend highlights the challenges of sustaining long-term success in the restaurant industry.
- Economic downturns and rising costs of food and labor often exacerbate these issues.
- Around 60% of restaurants close within five years.
- Ten-Year Survival Rate:
- Only about 30% of restaurants survive for ten years or more.
- The long-term survival rate is considerably low, reflecting the industry’s volatility and the constant need for adaptation and innovation.
- Success in this period often hinges on effective management, consistent quality, and brand loyalty.
- Only about 30% of restaurants survive for ten years or more.
What Financing Options Do Restaurants Have?
We know that your time is valuable. Understanding the types of funding that’s available to restaurants can save you time.
Liberty Capital uses a simplified online application process to get you the financing that you need as fast as possible under one roof. Compared to traditional lenders, our advantages to you include:
- Business line of credit
- Business term loans
- Merchant cash advance
- SBA loans
- Equipment financing
- Business cash advance
Mostly the top three types of financing for restaurants:
- Line of Credit
- Business Term Loan
- Equipment Financing
ONE APPLICATION MULTIPLE POSSIBILITIES!
Upgrades
Upgrade Hardware/Software & Office Furniture
Inventory
Ramp up on Inventory or stock up on supplies
Renovate or Relocate
Renovate or relocate your business
Payroll
Payroll, Sales and Federal Tax Dues
Web
Revamp Company Website.
Debt
Pay Off existing Cash Advances
This is not a cash advance.
Wide Range of Terms
Monthly Term up to 10 years (2 – 10 yrs available)
Tax Deductable
Express Financing for Approvals Up to $75,000
Builds Credit
Builds business credit
Large Funding
Business Loans up to $500,000 per Location
Fast Funding
Funding in 5-7 business days
Large Approvals
Approval based on debt ratio and cash flow.
We make it easy to grow your business
No Application Fee
No Switching Processor
No Additional Collateral Required
No Prepayment penalty
What are my options as a restaurant owner?
Your Options as a Borrower.
Your have various business funding options but they all have caveat. These can start from credit score, time in business, industry, use of funds and the lenders that’s involved.
Breaking down the types of business loans:
So, here are some you can read up without going deeper. That’s where we come in. We’ll work with you to determine the best loan for you.
1. Credit Card
- Pros: Quick and convenient access to funds, rewards points, and cash back.
- Cons: High-interest rates, potential for debt accumulation, and impact on personal credit score.
2. Investor (Equity Financing)
- Pros: No repayment obligation, access to investor expertise and networks.
- Cons: Dilution of ownership, loss of control, and sharing of profits.
3. Equity Financing
- Similar to investor financing, this involves selling a portion of your business in exchange for capital.
- Pros: No debt or interest payments.
- Cons: Loss of ownership percentage and potential loss of decision-making power.
4. Debt Financing
- This includes traditional bank loans, lines of credit, and other forms of borrowing.
- Pros: Retain ownership, predictable repayment schedule.
- Cons: Repayment obligation, interest costs, and potential collateral requirements.
- Pros: Quick access to funds, repayments based on a percentage of daily sales.
- Cons: High fees, potentially higher overall cost compared to traditional loans, can strain cash flow.
6. Small Business Loan through Private Bank
- Pros: Potentially favorable terms for established relationships, various loan options.
- Cons: Strict lending criteria, collateral requirements, longer approval process.
7. Small Business Administration (SBA) Loan
- Pros: Lower interest rates, longer repayment terms, partial government guarantee.
- Cons: Lengthy and complex application process, stringent qualification requirements.
Choosing the right funding strategy depends on your specific business needs, financial situation, and long-term goals. Small business loans offer a balanced approach with the benefits of capital access, ownership retention, and credit building. Exploring all available options, including credit cards, equity financing, debt financing, merchant cash advances, private bank loans, and SBA loans, can help you make an informed decision that aligns with your business objectives.
Up to $1 million in as little as 24 hours
Our small business financing experts are available to guide you through the funding Process.
Instant Quote Online
Use our instant online quote calculator to get an accurate no obligation quote.
Apply Online
Complete our quick online application. Application takes 5 mins.
Review Your Options
We will contact you to review your options.
Get Funds
Money will be deposited in your account in as little as 24 hours.
HOW TO APPLY!
Where can I apply?
1. ONLINE APPLICATION: You can fill out our application, upload and authorized us to process your application. We do soft-inquiry, and our lender will do hard inquiries once you are approved for Equipment Financing only.
2. Equipment Invoice or Quote for the truck or equipment you want to buy. Multiple vendors accepted. We’ll lump them into one monthly payment for you. We’ll accept bill-of-sale for some private sale.
3. Banks statements (3-4 months) – Proof income, proof of banking, and proof funds availability in case down payment is needed and to match for ACH Payment Drafting – as an auto pay.
Are you an Equipment Vendor??
If you sell new or used trucks, trailers or machinery including medical equipment, we’d love to partner with you to offer highest approval rate for your clients. Our goal is to get them approved no matter what their credit profile might be. Working with Liberty Capital will give you a wider credit window so you can stop shopping for your clients. We do soft-inquiry for each applicant.
1. Check out how you can grow your vendor business using our financing options. View our credit guidelines here.
2. Download our equipment vendor package here.
All we need from your clients is a simple application.
1. ONLINE APPLICATION: You can fill out our application, upload and authorized us to process your application. We do soft-inquiry, and our lender will do hard inquiries once you are approved for Equipment Financing only.
2. Equipment Invoice or Quote for the truck or equipment you want to buy. Multiple vendors accepted. We’ll lump them into one monthly payment for you. We’ll accept bill-of-sale for some private sale.
3. Banks statements (3-4 months) – Proof income, proof of banking, and proof funds availability in case down payment is needed and to match for ACH Payment Drafting – as an auto pay.
Business Loans for Start Ups!
Credit Requirements for Startup Financing for restaurants:
For startup companies, we require: Credit requirements Varies depending on the types of business loan. Here’s how you get your ducks in a row to make sure you make it easy for the lender approve you.
Ø Business license or active business entity registration.
Ø Personal guarantees from all owners – history matters.
Ø Minimum 650+ credit score.
Ø No bankruptcies in the last 7 years.
Ø No unresolved tax liens.
Ø No judgments, or repossessions
Ø Sufficient net worth
Starts up in a sense can be subjective. Gov’t consider start up differently than a public company. Mom and pop start or small business start up? Hobby to a business start up? Well it comes down to this:
Pre-revenue Start up – obviously no revenue yet. So, it’s difficult to get working capital or cash advance loans due to the fact that they base their decision on annual sales. Pre-revenue has limited option and one of the option that’s suitable type of funding for pre-revenue startup is equipment loan, equipment lease that’s not as hard process as SBA loan. You can qualify for an SBA loan as a start up but you have to have down payment, collateral or all your financials, projections, budget and master plan ready to go with it. Do you?
Post-Revenue Start up. – Post start up sales give you more options than a pre-revenue start ups. Now you’re eligible to get term loan, MCA, equipment financing and even SBA. Start up equipment leasing for restaurants is possible if you have good credit.
Contact us to get started! Apply for a start up loan here.
