As a restaurant owner and or entrepreneur, you may need a loan to finance your Mexican restaurant. However, it can be tough knowing which ones would work best for you. You’ve likely seen, or at least heard of, Personal Loans, SBA Loans, Equipment Financing, and even Business Lines of Credit. So, while they’re all great for small restaurants, you may only need one.
Advantages Of A Business Line Of Credit For Your Mexican Restaurant
Here, we will talk about the perks of a business line of credit for your Mexican restaurant and help you decide whether it’s the right choice for you.
- What is a business line of credit?
- How do you qualify for a business line of credit?
- Where can you get a business line of credit?
- what are the benefits of a business line of credit?
For Your Mexican Restaurant: What is a Business Line Of Credit?
To explain it as simply as we can, a business line of credit is a revolving credit where banks and lenders offer a specific amount of money for an undetermined amount of time. And when you use some cash from the line of credit, you pay interest only on the money you used, and not the total amount of the credit limit. As a Mexican restaurant owner, it’s important to look at business credit cards and bank lines of credit.
Business Credit Cards
The application process for business credit cards is similar to that of a standard credit card. Business credit card applications are typically much easier than other business loans. The business credit cards themselves can be used for a wide variety of purchases and are a good way to keep business and personal credit separate. However, with all of the benefits, this means business credit cards often have higher interest rates than other loans. Business credit cards can give upwards of $25,000 – $150,000.
Bank Lines Of Credit
Bank lines of credit are incredibly flexible when it comes to revolving credit. You can request a specific amount of money, but don’t have to use all of the available limits. In essence, you only take out what you need and pay interest on only what has been used and not the entire line of credit. Repayment periods are also flexible and allow you to change the amounts you pay back monthly. Bank lines of credit can give upwards of $50,000 – $250,000.
For Mexican Restaurant Owners: How do you qualify for a business line of credit?
As a Mexican restaurant owner, there a few things you need to know when it comes to qualifying for a business line of credit. Lenders like to look at the Three Cs: Credit, Cash Flow, and Collateral.
When it comes to credit, they look at anything between 600 and 800; however, the ideal score is 660+. As for cash flow, they like to see time in business, monthly/annual revenue, and the current amount of money in your business account (Ideally have $1,000 – $5,000, minimum). And in terms of collateral, you would be putting assets up such as your home, business, or car in the case of a default.
It’s good to note that you only need one of the Three Cs to qualify and they are offered as unsecured or secured.
For Mexican Restaurant Owners: Where can you get a business line of credit?
Banks: While you’re able to get a business line of credit from them, they’re much harder to qualify for and require more paperwork. You’ll need to provide your business and personal tax returns, documentation for business registration, and financials. And beyond that, you’ll have to submit to an annual financial review.
Alternative Lenders: If you were to pursue alternative lenders, you’d have more flexibility for your Mexican restaurant. There’s less paperwork, documentation, and the qualifications are a bit easier. The payment terms, interest, and so on depend on the agreements made between you and the lenders. However, there is also no annual financial review.
For Mexican Restaurant Owners: What are the advantages of a business line of credit?
Quick access to money: Mexican restaurant owners like you would be able to use the money exactly when you need it.
Flexibility: You can use the money in whatever way you need for your Mexican restaurant. There are also flexible payment periods.
Higher credit limits: If you need to make a big purchase, you can put it on your business line of credit and pay only the money used back (plus interest).
Credit history is separate: Business lines of credit aren’t the same as your personal credit, so if one isn’t doing as well as the other, it won’t impact the other.
Builds your credit up: As long as you make your payments on time, your credit score will grow; providing better loan options and interest rates for your Mexican restaurant in the future.
Finance Factory Can Help You Establish A Business Line Of Credit For Your Mexican Restaurant
Interested in finding funding for your Mexican restaurant? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days, and have a credit score between 600 and 800, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!