Restaurant Loan - Check Eligibility, Interest Rate, Benefits & Apply Online

Types of Business Loans for Restaurant

You may borrow different types of restaurant Business Loans to cover various needs. These include the following:

Asset-Based

These are long-term restaurant equipment loans primarily meant for acquiring property or equipment required for the restaurant business. You can obtain these loans to purchase inventory, machinery, or real estate, and the asset you are buying itself serves as collateral. The lender can seize the asset if you fail to repay the loan on time.

Term-Based

Term-based restaurant loans offer ample loan amounts for longer tenures. You can consolidate your investment capital for the enterprise and set up a restaurant business without worrying about finances. These are more appropriate loans for big-ticket investments and expenses. You can get up to Rs 50 lakh for a tenure of up to 60 months from Hero FinCorp.

Working Capital

These are shorter-term loans you may use to cover short-term capital needs during off-seasons, such as staff salaries, utility bills, inventory purchases, etc. When the cash flow is slow, these loans help you stay afloat without feeling the brunt. For instance, if you open an ice cream parlour, the business may slow down during winter. At such times, a working capital loan helps cover regular expenses associated with the business.

Government schemes

The government runs several loan schemes to offer small Business Loans for restaurants and other types of businesses. These loan schemes come with ample amounts and reasonable interest rates, making funding accessible and affordable. One such scheme is Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE), which can offer loans quickly. If eligible, apply for a government-supported small Business Loan to finance your restaurant business.

Restaurant Loan Eligibility Criteria

Although restaurant Business Loans are easily accessible, you must fulfil the lender’s eligibility criteria to qualify. Some eligibility conditions include the following:

Guarantor

Usually, you must provide a guarantor to obtain a start-up loan. A guarantor will guarantee repayment if your business fails and you default on the loan. However, you may skip this requirement if you have successfully run the restaurant for around five years.

Down Payment

Small Business Loans for restaurants usually do not require any down payment. However, you may invest your savings into the business and borrow the additional amount you need for the setup. So, check the lender's requirements before applying for a Small Business Loan.

Collateral

Many reputable loan companies like Hero FinCorp provide collateral-free restaurant financing without requiring assets. However, if you are looking for a low-interest loan for a bad credit score, consider applying for a secured loan to get easy approval. Ensure timely repayment to save your asset and regain ownership after the term ends.

Credit Score

The credit score is a vital parameter loan providers consider when evaluating your loan application. A high credit score indicates responsible credit behaviour, ensuring high repayment capacity and prompt repayment. Therefore, check your lender’s minimum credit score requirement before applying for an SME Loan.

Experience and Expertise

Start-ups have a high chance of failure within the first few years. That is why finance providers pay attention to your experience and expertise in the restaurant business to measure your chances of success. Most lenders have minimum experience requirements to accept SME loan applications.

Interest Rate on Restaurant Equipment Loan

Here are a few details you must know about restaurant Business Loans available through Hero FinCorp: