3 Ways to Finance Your New Restaurant

May 15, 2021

Making a dive into the restaurant industry isn't easy. There's so much a restaurant startup has to consider, and depending on your financial situation, you'll need help financing your new business without disrupting your cash flow.

Although an average restauranteur will consider seeking external sources like banks, it's worthy to note that there are many other restaurant financing options you can choose from. This article provides you with three ways to finance your new restaurant and what to expect from each option.

1. Equipment Financing

Successful restaurant owners know that instead of opting for equipment purchase, equipment finance is one of the best ways to keep their business competitive while preserving their credit score and working capital. This financing option also comes with significant tax benefits and flexible repayment terms without down payment or collateral. So if you want to get commercial kitchen equipment (which is usually costly and can take a dip into your working capital), restaurant equipment finance is a great option to consider.

Another advantage of using this lending option is that a restaurant equipment lease can closely match the total span of the equipment's warranty. This makes it a preferable option, especially when compared to the typical working capital loan, bank loan, or term loan—which are generally available only for a time that is significantly less than the equipment's life. Also, the lease payments are usually the same over the length of the lease.

2. Alternative Financing

Suppose you're to ask the average individual or business owner the best way to get a business loan. They would typically have a conventional option in mind, like a bank loan. While this is a good option, alternative loans from non-bank lenders are a great way to finance your new restaurant as they typically have more flexible repayment options. For instance, while the traditional bank may expect businesses to have been in operation for more than two years (along with an excellent credit score), an alternative loan option considers other criteria like your restaurant's performance.

So take a close look at reviews of online providers before you start applying for a business loan to find the best one for you.

On that note, one excellent example of an alternative lender and investment company is Pacific Private Money Inc. (PPM), which Mark Hauf runs. This Northern California hard money lending company boasts of its reliability and security features that many traditional investments lack.

3. Short-Term Loans/Lines of Credit

Short-term loans or line of credit (LOC) is a good option for busy owners who don't have the time or credit rating to get loans from a conventional lender. These types of loans are easy to apply, and you can have access to funds once they're approved. The catch is, these shorter-term loans tend to have a higher interest rate that makes up for their less stringent requirements when compared to conventional money lenders.

Unlike the traditional monthly payments that we're all familiar with, LOC offers flexibility. This is because some of their payment options include daily or weekly payments, thereby putting less strain on your cash flow and making it a good choice for seasonal restaurants. So, if you're considering a finance option like this, ensure that your business can afford it and have a clear repayment plan. Additionally, confirm with your lender what happens if you choose to repay early, as some short-term lenders will penalize you.


As a restaurant owner, it's a given that there will always be the need to access capital quickly to address unexpected issues. This might include the replacement of a faulty oven or refrigerator or opening a new branch. Thankfully you have several; restaurant financing options to choose from depending on the purpose, repayment plan, and urgency of your need.

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Carlos Diaz
I believe in making the impossible possible because there’s no fun in giving up. Travel, design, fashion and current trends in the field of industrial construction are topics that I enjoy writing about.

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