As a restaurant entrepreneur, chances are you’ve seen SBA loans in your search for financial help. Which makes sense. It’s one of the best loan programs for new or small restaurants. And to give you some background information, the U.S. Small Business Administration created SBAs to help small businesses.
However, the SBA doesn’t give you physical cash. Instead, it’s a guarantee by banks and certified lenders for a set percentage of funding. And SBAs protect lenders in the unfortunate case of a default.
Still, SBA loans are great for restaurant entrepreneurs. This is because they’re easier to qualify for than other loan options. And they can provide you with funding even without a long credit history– at least as long as you have proof of revenue, two years in business, and tax returns for documentation.
Best SBA Loan Options For Your Restaurant
For restaurant entrepreneurs, there are quite a few SBA loan options out there. However, the primary three you’ll see is the 7(a) Loan Program, the CDC/504 Loan Program, and MicroLoan Program.
7(a) Loan Program:
The 7(a) Loan Program is pretty flexible for your restaurant. However, the primary uses include: refinancing existing debt, revolving funds, equipment purchases, working capital, and the purchase of real estate. And the loan gives upwards of $5 million in guaranteed financing and applications are processed through banks, certified lenders, and credit unions.
CDC/504 Loan Program:
Restaurant owners like you use the CDC/504 Program for building and renovating your restaurant. When your loan is approved, 50% of the money comes from the bank and 40% of it from a Certified Development Corporation (CDC). However, it requires fixed assets that include: buying equipment, buildings, land, building/renovating new/existing facilities, landscaping, and debt refinancing due to renovations/improvements. The CDC/504 gives upwards of $5 million in finances and applications are processed through non-profits and private-sector lenders.
MicroLoan Program:
The MicroLoan Program is for restaurant owners who need smaller amounts of money. They finance equipment, inventory, startups, and working capital. They also provide upwards of $50,000 in finances and applications are processed through community-based non-profits.
How To Qualify Your Restaurant For An SBA Loan
When you’re looking into loans for your restaurant, Finance Factory looks at the Three Cs: Credit, Cashflow, and Collateral. You’ll want to have a credit score between 680 and 800– with an ideal score of 660+. But we’ll also look for a minimum account balance of $1,000 – $5,000 for monthly cash flow (but also look at tax returns, profit, and annual revenue). As for collateral, we prioritize unsecured funding; however, collateral is an option. As long as you have one of the Three Cs, you’ll qualify for a loan.
Finance Factory Helps You Find The Best SBA Loan Programs For Your Restaurant
Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days for $25,000 to $500,00 and have a credit score of 660 or better, 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!
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