Best Post-Covid Recovery Loans for Restaurants
We all depend on restaurants for our social and dining needs. In the same way, restaurants depend on consumers to stay strong and continue delivering their essential services. However, COVID-19 had a massive effect on the economy, making it difficult for restaurants to stay in business and thrive during economic hardship. Fortunately, with the CARES act and other recovery loans for restaurants, many dining establishments could remain in business and make payroll. Post-covid, restaurants have a chance to make up for their losses and thrive in the years to come.
All it takes is suitable recovery loans for restaurants. The funds are available to launch your business to success again. With the right help and resources, you can access those funds in days! This article will cover the various recovery loans for restaurants with their requirements that you can take advantage of.
The Current Post-Covid Landscape
At the start of the pandemic, all businesses took a hit as government restrictions went up, and consumers were limited in how they could spend their money. The following two years were grueling for many businesses, particularly restaurants. Because restaurants relied on in-store sales, they struggled to maintain their businesses in the wake of COVID-19. Fortunately, restaurants could make payroll and keep their businesses alive with government programs such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
In 2022 the economy will function better than in the past two years. While COVID-19 is still present, it doesn’t place the same restrictions on our everyday lives. After a long and challenging lockdown, people are returning to their daily lives, and the economy is rebooting with an influx of new consumers ready to spend.
While the last few years have been arduous for small businesses, especially restaurants, the economy is turning around. Restaurants have the potential to rise back to success as long as they have the proper recovery loans for their small business.
Recovery Loans for Restaurants Post-Covid
With COVID-19 quickly fading into the rearview, restaurants have a chance to thrive in the years to come. However, owning and operating a restaurant has never been easy, and future success is not guaranteed. In fact, a study by Ohio State University found that 60% of restaurants don’t make it past their first year, and 80% don’t make it past five years. While this statistic is daunting, the main limiting factor in a restaurant’s long-term success is the lack of startup funds. Restaurants that have adequate funding succeed where others do not.
If you’re a new restaurant owner or just survived the pandemic, post-covid recovery loans for restaurants will help you get back on track. Whether it’s equipment financing, funds to cover payroll, or getting some more working capital, getting the funds you need is possible with the right loan lender.
SBA Recovery Loans
One of the best options for restaurant owners looking for recovery loans is the Small Business Administration (SBA). The SBA is a government-run organization offering financial assistance to small businesses in need. Previously, the SBA offered the payback protection program (PPP) and the economic injury disaster loan (EIDL) for small businesses in need of financial assistance.
While the SBA is no longer taking applications for PPP or EIDL assistance, restaurant owners can still get aid through the RRF program. The restaurant revitalization fund (RFF) program is one of the best loans for restaurants. With the RFF program, your restaurant can get funded for up to $10 million (with no more than 5 million per physical location). Further, restaurant owners are not obligated to pay back the funds if the funding is allocated towards its eligible uses.
This payback protection feature of the RFF program makes it the most desirable restaurant loan option. You can get the funding you need to
- Cover payrolls,
- Purchase equipment,
- Pay for overhead costs,
- Carry out maintenance,
- Purchase raw materials,
- And even pay off existing debts and mortgages!
While the RFF program is one of the best loans for restaurants, qualifying is difficult, and funds are not guaranteed. Fortunately, with the right online loan lender, you can get help with the application and access to funds in days.
Merchant Cash Advance Loans for Restaurants
In some industries, such as food service, income is asymmetrical. Rather than having a consistent cash flow, much of the business’s funds come through credit card sales. Often, you need funds before you gain access to them and can’t afford to wait for those payments. One option is to take out a short-term loan to help cover the costs. However, one of the most efficient loans for restaurants is a merchant cash advance (MCA).
An MCA is a short-term loan where a lender gives you funds against your potential future sales. Typically the merchant gives you a lump sum of cash upfront. You pay back the advance with a percentage of credit and debit card sales over fixed intervals. There’s usually factoring involved to give the lender some leverage. For example, if you take a $10k loan at a factor of 1.4, you will pay $14,000 from your credit sales over the payback period.
Merchant cash advances are premium loans for restaurants designed with this essential business in mind. MCAs offer competitive rates of:
- 6.98% APR
- 6-18 Month payback period
- $5k-$500k Advance
However, not everyone is eligible for cash advances. To qualify, you’ll need:
- At least one year in business
- 500+ Credit Score
- 100k Verifiable annual income
Because of their low risk and high reward, MCAs are an excellent recovery loan option for restaurants. If you need assistance applying for a merchant cash advance for your restaurant, consider an online loan lender like BitX Funding.
Equipment Financing Post Covid
While COVID-19 had a massive effect on restaurants everywhere, restaurant owners can get back on track with equipment financing. Equipment financing works by taking a loan to purchase a piece of equipment, such as a new range or HVAC unit, and using the equipment as collateral for the loan. You make fixed payments at 8-30% APR until the equipment is paid off. If you cannot make payments, the equipment is repossessed.
This loan option is best for businesses seeing a lot of new traffic as we enter post-covid and consumers are spending more. With the influx of new business, older equipment will experience wear and tear and need to be replaced. Rather than devote funds away from payroll and overhead, consider equipment financing to replace your restaurant equipment and stay on top of your expenses. To qualify, you’ll need:
- 1+ Years in business
- 630+ Credit score
- 100k+ Verifiable annual income
Get Recovery Loans for Restaurants today with BitX Funding
COVID-19 had an unprecedented effect on the economy, impacting all businesses, but especially restaurants. As essential businesses, restaurants worked overtime to keep the economy going and provided a level of normalcy for the nation. As we enter post-covid, restaurants are flourishing and seeing a lot of new business.
However, many restaurant owners require funding to return from the pandemic fully. Fortunately, you can get the recovery loans you need for your restaurant with the right resources and a quality lender. If you’re a restaurant owner looking for funds to thrive in the years to come, contact BitX Funding today.
Published by Chris Davies, Creative Copywriter at The Labate Group in Westport, CT.