There are two types of business loans best for restaurants: for small and for large investments. Short-term loans for small investments are suitable for different replacements and upgrades. They usually don’t exceed $150,000. The line of a credit is the most popular solution. When you apply for small business administration loans for restaurants, you don’t need a minimum personal credit score. Still, some lending websites such as Kabbage do check the credit.
The main disadvantage of this loan type is high interest compared to other options. APRs usually start with 9% and can be as high as 100%. Kabbage offers very high APRs and small loan terms (comparing to other options) – up to 12 months (while other services offer 24 months and more).
You can also consider applying for a credit card or a line of credit. Its line of a credit might be a little bit smaller but you can apply for competitive APRs and rewards such as cashback on purchases.
If you need long-term business loans for restaurants, you should consider Small Business Administration loans first. They offer the lowest APRs between 8.5% and 9.21%. Still, the application process is long and you might face exhausting paperwork. If you apply to online lenders, the average interest rate for business loans for restaurants is 25%.
In fact, restaurants financing is very developed now and you will find suitable option even with weak creditworthiness.