5 Short-Term Business Loans for Restaurants

Revel Blog | Sydney Kida | November 11, 2020 |

It takes money to make money, especially in the food and beverage industry. Restaurants need financing to cover everything from inventory to payroll, but traditional loans can be painfully slow to secure. Fortunately, you can find several short-term business loans that'll get you the cash you need—when you need it—to cover practically any business use case. Short-term business loans (also known as working capital loans) give your restaurant quick access to cash to address your immediate needs. Whether your commercial refrigerator unexpectedly breaks or you need to hire extra help to satisfy seasonal demand, short-term business loans can help your business through it all.

Short- Term Business Loans: What Are My Options? 

When it comes to short-term loans, you have several options to cover a variety of use cases:
  • Business line of credit: Enjoy flexible capital that's there when you need it
  • Merchant cash advance: Trade tomorrow's earnings for money today
  • Invoice factoring: Turn your outstanding invoices into cold, hard cash
  • Business credit card: Extend your working capital with simple financing that fits in your wallet
  • Short-term loan: Secure a significant sum of money in as a little as 24 hours
Below, we'll cover the nitty-gritty details of each of these short-term loan options.

Business Line of Credit

A business line of credit gets your restaurant the money it needs before it even needs it. You can secure a line of credit in advance to keep as a financial safety net, cover emergencies, or supplement your cash flow. It's always there if you need it, but there are no consequences for keeping it untouched in your back pocket. However, if you do need to tap into your line of credit, you only pay interest on funds you borrow—not the full amount. Since it is revolving credit, once you repay the borrowed portion, your funds become available to use again—no need to reapply for financing. A business line of credit is a must-have financing tool for restaurant owners. Due to seasonal demand, ongoing inventory restocking, and the restaurant industry's everyday surprises, it's important you have capital on hand to tackle any situation.

Merchant Cash Advance

Sometimes you need tomorrow's cash today, and it's worth taking a cut to make it happen. When that's the case, a merchant cash advance can get you out of a bind. A merchant cash advance allows you to trade your future earnings to get access to capital now. With a merchant cash advance, you'll receive a lump sum of cash. Then, you'll repay the loan by contributing a portion of your business's daily sales. A merchant cash advance doesn't require collateral, and it's typically easy to qualify—allowing you to get approved and financed in as little as 24 hours. Time is money, and sometimes it's more expensive to wait for tomorrow's cash. While a merchant cash advance isn't the cheapest financing option out there, it's quick and reliable.

Invoice Factoring

Invoice factoring (also known as accounts receivable financing) empowers you to sell your unpaid invoices at a discount to gain quick access to capital. If your clients are notoriously slow at paying their bills, it might be worth using invoice factoring to accelerate your cash flow. Plus, you save valuable time that might have been spent following up on outstanding debts yourself. And you can qualify even if you don't have stellar credit. Factoring companies care more about the credit of the company that owes you. Look for customers who'll always pay you on time, but know that invoice factoring can cover your finances if they fall short. Time to fund is quick, so don't wait around sitting on your unpaid invoices for too long. Get the cash you need to keep your restaurant moving.

Business Credit Card

Much like a personal credit card, your restaurant can use a business credit card to extend your working capital. In addition, your credit card will also earn you valuable cashback rewards, points, and other perks—like a 0% introductory rate. You can use a business credit card on practically any business expense at any time, anywhere. Whether you need to pick up immediate supplies at the grocery or fix up the restaurant to adapt to COVID-19 demands, you can rely on your credit card to get the job done. Business credit cards are revolving credit. This means you get access to the cash again once you repay the portion you've used. Qualifying for a credit card is easy, making it a great credit-building tool for new business owners and restaurants. Use your credit card responsibly, and you'll build your credit to qualify for bigger, cheaper loans down the road.

Short-Term Loan

Short-term loans give your business access to a significant sum of cash in a short amount of time. Whether you need capital to weather a storm, finance a project, or cover emergency costs, trust that a short-term loan can get you the financing you need with lightning speed. Terms can be as short as three months or as long as three years, making it affordable for any restaurant owner who needs quick access to cash. You'll need a decent credit score and a couple of years in business to qualify for a short-term loan, and you might need to provide collateral, too. When time is money, trust a short-term loan to get you the short-term business financing you need—fast.

Save Your Restaurant With a Short-Term Business Loan

Restaurants operate on notoriously thin margins, and it doesn't take much to rock your cash flow off balance. When you need access to capital but can't wait around on the traditional month-long financing process, turn to one of these short-term business loans. Stay on top of all your finances with Revel's financial tools. Easily manage your bookkeeping with Revel's payments integrations and empower your customers with flexible payments like split bills, bar tabs, store credit, and more. With greater control and insights into your financial health, you can keep your business moving in the right direction—even if it needs a short-term small business loan from time to time. Learn more about how Revel can take your restaurant to the next level.