Running a successful restaurant should be an exceptionally satisfying experience, yet it can pose certain challenges. In a late study of restaurant owners, just 38% depicted their current financial picture “good to excellent." Being ready to handle a wide range of difficulties is the wellspring of incredible fulfillment, alongside a few cerebral pains as well.
In any case, when restaurant owners are requested to state their most prominent test, one issue tends to seems to make its way to the top… Cash Flow! Many restaurant owners have trouble gaining access to business cash and working capital to oversee income. As such, ensuring there is sufficient cash flow streaming in will cover the funding that is flowing out.
Most restaurant ideas start from the passion of cooking, but much more than culinary passion is required to run a successful restaurant. You need funding to make your dream come true, keep the lights on, and expand. The problem is that many restaurant owners wait until they require funding before applying, and at that point, they are in a financially weak position. Once you are in that position, it is very rare to get a loan from the bank or other lending houses.
A revenue based loan could be your restaurants lifeblood and provide it with several financial benefits. When your restaurant is growing, chances are you'll need an injection of cash to continue its growth. Bank loans are often times too restrictive and near impossible to obtain these days. In this situation, a revenue based loan may be the best solution. If you use it wisely, a revenue based loan could do wonders for your restaurant. Without being capitalized, chances are you will wind up in a growth stalemate. Here are three ways that revenue based loan can save, and add limitless growth possibilities to your restaurant. For a restaurant owner who needs a quick, reliable outlet for restaurant working capital, or even fast restaurant cash due to an emergency, a revenue based restaurant loan may be your best option.
Helps Grow Your Restaurant
If your restaurant is under 2 years old and starting to scale, you obviously want to ride the wave. You cannot do this without a dependable source of capital. Bank criteria is typically a minimum of 2 years in business, strong cash flow, positive ratios and near perfect credit. However, a revenue based lender will fund newer restaurants, with less stringent credit requirements and use of capital restrictions. This type of loan will give you a shortcut to cash since it only requires a few months of business bank statements; whereas banks require 2 to 3 year business and personal tax returns, income statement, balance sheet, personal financial statement, debt schedule and countless other documents to complete loan package. Many times, your bank statements are enough to demonstrate to a revenue based lender that you can repay your loan.
Get Cash Quickly
You're busy running a restaurant, you don't have to time to compile overly detailed loan packages and chasing after loan sources. All you know is that you need cash quickly and even if you could get approved for a bank loan, is it really worth all the trouble? A revenue based loan will provide cash quickly with a very short turnaround time. If you are prepared to apply for a revenue based loan and have the appropriate supporting documents ready to go, you may be able to get funding in as little as 24 hours. Compare that to a bank loan where the loan process is on average 2 to 4 months. This is one of the main advantages of a revenue based loan. Some restaurants actually consider this a lifesaver, and will go this route over a bank loan any day.
No Lingering Debt
A revenue based loan will not weigh you down with long-term debt. When you obtain a revenue based loan, you will not be looking at 5 to 10 years to repay a loan for money that you're using today. Think about it, why would you want the headache of paying off a 2015 marketing campaign all the way into 2025? Not to mention, having this type of long-term loan could hurt your chances for getting funding in the near future, which all restaurants will need if they plan to scale. With a revenue based loan, you will pay it off in roughly 6-12 months, which makes more sense for short-term expenses. Additionally, lenders are usually willing to replenish the loan after roughly 50% is paid down, so you can continue getting more capital along the way. One more point to mention, going the bank route you'll also have to be aware of up-front fees, equity injections, referral fees, packaging fees, guarantee fees, and closing costs.
As you see, the preceding three steps show you how a revenue based loan could be advantageous for your restaurant. It helps you grow your restaurant quickly and it does not saddle you down with long-term, highly encumbering debt. It gives you the cash that you need quickly, to grow your restaurant your way. What more could a growing restaurant need?
LVRG Funding is one of the nation's largest and most trusted resources of revenue based loans. Want to know if a revenue based loan is right for your restaurant, give us a call (855) 998-5874. We're here to help!