Five Ways That a Business Line Of Credit Can Help Your Restaurant or Bar

When it comes to running your restaurant or bar it’s important to ensure that you always have the capital on hand to keep operations running smoothly while not disrupting your guest's experience, but this can be challenging, especially when large unforeseen costs threaten your cash flow. What is the best way to be able to meet the needs and expectations of your customers without creating a detrimental gap in your cash flow?

A business line of credit can be a great tool for restaurant and bar owners to meet and overcome the day-to-day challenges that come with running a successful business. Read our five ways that your restaurant or bar can use business lines of credit to effectively improve your customers' experience and discover how Backd’s Business Line of Credit can help your business today!

What is a business line of credit?

A business line of credit is a type of loan offered by financial institutions to businesses. It allows them to draw funds up to a specified limit as needed, repay the borrowed amount, and re-borrow up to the limit as needed, rather than receiving the total amount of the loan in one lump sum. A line of credit is typically used for short-term working capital needs, such as managing cash flow or covering unexpected expenses.

How Can A Business Line Of Credit Help A Restaurant or Bar?

1. Managing Seasonal Fluctuations

As any seasoned bar or restaurant owner will know, seasons can bring with them fluctuations in cash flow. If your bar is based near a university campus you may see a stiff decline in income outside of the semester, if you operate a restaurant in a holiday hotspot then summers may bring more money, but the following season could bring a big drop in footfall.

Restaurants often experience ups and downs in business throughout the year, and a line of credit can provide a flexible source of financing to cover cash flow gaps during slow periods. 

2. Purchasing Inventory

The success of a bar or restaurant hinges on having a constant supply of fresh products. A kitchen needs to be stocked with the freshest ingredients in order to plate fantastic dishes for your customers, but constantly doing so can have an impact on a restaurant or bar owner’s cash flow, especially during seasonal fluctuations or slower periods. 

A business line of credit can provide a quick source of funding to make these purchases without dipping into operating capital, allowing operations to continue without sacrificing the freshness of the dishes and drinks that your customers crave. 

3. Upgrading Equipment

As time goes on equipment will break and newer, state-of-the-art equipment will be innovated in order to help improve the efficiency of kitchens and bars. But this can be a costly endeavor that, if ignored, can have even more expensive consequences. Correctly maintaining equipment and tools while running a business will help you avoid on-the-spot replacements or emergency breakdowns that could be a detriment to the health of your business.

Keeping up with the latest kitchen equipment and technology is important for many restaurants, and a line of credit can be used to finance these upgrades without having to divert funds from other areas of the business.

4. Expanding the Business

When a bar or restaurant succeeds, it’s natural for the owner to want to capitalize on the buzz and look towards expansion to bring in additional income while catering to a wider market. Expanding a bar or restaurant can be a costly venture though, one that eats into a lot of capital on hand. 

Restaurants that are looking to open new locations or expand their existing operations can use a business line of credit to finance the upfront costs of these projects, minimizing the blow to their current working capital and providing flexible spending. 

5. Managing Cash Flow Emergencies

Emergencies in cash flow are just one of the many problems that can arise when running a bar or restaurant. The causes of these emergencies can range from unexpected repairs to having to pay increased bills, these can put a strain on a bar or restaurant's cash flow, which in turn can make it difficult for an establishment to keep its head above water.

A business line of credit can be a great tool to have on standby for when emergencies occur by providing quick and flexible access to funds to help manage these unexpected expenses. Business lines of credit help businesses take more control over their cash flow while keeping the business running smoothly.

Business Line of Credit Options

With a max amount of $750K, Backd offers the highest option for a business line of credit with favorable terms and competitive rates. Backd’s business line of credit is also a revolving line that reloads as you pay the balance, so you will always have funds on hand to help support your bar or restaurant.

Business Line of Credit with Backd

When it comes to finding a financial solution to help your restaurant or bar grow, Backd is here to help. 

Backd’s Business Line of Credit is one of the best on the market with competitive rates and terms that actually allow your business to grow. Backd offers business lines of credit of $50K up to $750K with terms of 6 or 12 months.  If you’re considering taking out a business line of credit then apply with Backd today. Our application only takes 3 minutes to complete with funding arriving in your account in just 24 hours. Don’t wait to get the funding that your business needs to grow, take the first step and apply with Backd today.