Finding financing for restaurants in Canada isn’t easy. Restaurants burn through cash fast. Between food costs, payroll, rent, equipment maintenance, and the fact that one slow month can throw everything off it’s hard to keep capital available for the things that come up. And they always come up. A walk in fridge breaks down on a Friday night. You need to hire three more people before patio season. A supplier wants payment upfront for a bulk order that saves you money long term but you don’t have the cash sitting there right now.
Banks aren’t built for this. By the time they approve anything the fridge has been broken for six weeks and patio season is half over. There are lenders that move faster than banks and actually work with restaurants.
Why Restaurants Struggle with Bank Loans
Banks consider restaurants high risk. The failure rate in the industry is higher than most other sectors and banks know that. Even if your restaurant has been profitable for five years and you’re doing strong sales every month the bank still sees “restaurant” on the application and gets cautious.
Then there’s the collateral issue. A lot of restaurant owners lease their space. The equipment might be financed. There’s not much for a bank to hold onto if things go wrong. Add in a credit score that’s taken some hits and most banks won’t even get past the initial review.
How Financing for Restaurants Works Through Revenue Based Funding
At Canada Capital we look at your sales. Restaurants have daily transactions coming through debit, credit, and cash. That gives us a clear picture of what your business is doing just from your bank statements.
We advance you capital against your future receivables. Fixed cost, daily or weekly repayment, terms from a few months up to two years. No collateral, no personal guarantee. Your restaurant’s revenue is what qualifies you.
A restaurant doing $30,000 a month in sales is going to get a different offer than one doing $120,000 a month. If you want to understand more about how revenue based financing works we wrote a detailed breakdown here.
What Restaurant Owners Use It For
The things that can’t wait. Kitchen equipment that needs replacing now not in three months. Renovations that bring in more customers. Hiring before a busy season so you’re not scrambling when it hits. Stocking up on inventory when a supplier offers a deal you don’t want to miss.
We’ve also seen restaurant owners use it to get through January and February when sales drop and the bills don’t. Or to cover the gap between catering jobs where the invoice doesn’t get paid for 30 or 60 days but your staff needs to get paid this Friday.
Seasonal Cash Flow and Restaurant Financing
This is where restaurants get hit hardest. Summer is packed. December is strong. But January through March can be brutal depending on where you are in Canada. Revenue based financing for restaurants helps bridge those gaps because the payments adjust with your sales. Slower month means lower payments. You’re not stuck with a fixed bank loan payment that doesn’t care whether you had 200 covers last week or 50.
What Does Financing for Restaurants Cost
More than a bank loan. No collateral means the lender takes on more risk. Restaurant industry being considered high risk adds to that. You see the total cost before you sign. Payment amounts, term length, everything. We go into cost comparisons between this and bank loans in our post here.
Whether the cost makes sense depends on what you’re using the money for. If a $20,000 equipment repair means your kitchen stays open and keeps generating $30,000 a month in revenue the math works out.
Restaurant Funding Options
We offer revenue based financing, unsecured business loans, business lines of credit, and small business capital. Apply here and we’ll look at your numbers.