Nightclubs and bars are unique businesses. If you are an owner looking for a loan in this industry, choosing a small business financing partner that understands your unique challenges is key.
Nightclubs and bars are designated a high-risk loan industry. As cash businesses, with a relatively unpredictable customer base and lack of high-quality collateral, these establishments are not ideal customers for banks. Many owners like yourself also tend to need smaller loans, under $500,000, which banks have a hard time seeing as profitable.
Financing for All Types of Bars
Whether you own a nightclub, dance club, pub, microbrewery taproom, cocktail lounge or pool hall, your financing needs and options are relatively the same. Since many owners like you have had trouble obtaining a bank loan, many have turned to alternative business financing to meet their needs. Cash advance and daily pay products can be harmful to your business, as they put unnecessary pressure on your cash flow. Fundation small business loan products are designed to give business owners like you the financing you need, with terms that will enable your business to grow.
Typical Reasons a Bar Loan is Needed
Working Capital: Your overhead costs are high, and after slow weeks, there can be gaps in your cash flow. Having a working capital loan product that will help you fill these gaps without requiring daily payments and high interest rates is key. If you currently have a daily pay product to meet your need for working capital, Fundation can refinance your high-cost debt with a bar or nightclub loan and save you money.
Expansion: Business owners like you look to expand by opening new locations, adding a stage, adding another bar or renovating their existing space to accommodate more tables. To make these investments, you will need a larger business expansion loan over a longer period of time.
Furniture and Fixtures: Keeping an updated look and feel to your establishment will keep customers happy and keep them coming back for more. All nightclubs and bars frequently need to freshen up their space by replacing the basics: chairs, bar stools, tables and light fixtures are some most commonly updated items.
Repairs and Maintenance: Not only does the furniture need to be constantly cleaned or replaced to keep your nightclub or bar up-to-date, but the exterior of your establishment needs to look inviting, your bathrooms need to be clean and working, and your kitchen and bar equipment have to be well maintained. In this industry, appearance is crucial; also, you must maintain safety features, such as emergency lighting.
Food and Beverage Expenses: Managing food and beverage costs for your business is one of the hardest parts of running a nightclub or bar. The contract with your distributor is costly, and managing your existing revenue stream with this specific overhead cost can be difficult. You always should pay your distributor on time because if you don’t, your credit will be adversely affected. Figure out the best way to store your liquor and food purchases, so that none of the purchased inventory goes to waste. Ensure that your servers aren’t over-pouring.
Utilities: Utilities for nightclubs and bars are an ongoing monthly cost that can be quite high, depending on the size and location of your establishment. Owners pay thousands of dollars every month in electrical bills, heating or air conditioning, and water. Managing these costs so that you have money set aside for them is important in running your business. During slow times, having extra working capital funds to help pay off these expenses can help.
Taxes: While you’re busy running your business, it can be easy to miss the nuances of various tax requirements. Hiring an accountant or a CPA—one who understands all aspects of your business operations—to ensure that you’re making the proper payments could be a wise investment. Taking a bar loan to pay these taxes isn’t always ideal, but many business owners in your position do so.
Advertising and Marketing: While word of mouth still works to bring in new customers, some forms of advertising and marketing have proved to increase the number of people coming through your door. Advertising and marketing cost money. You will want to invest in local advertisements, potentially have a social media manager, and invest in building a website and web presence that can help get the word out about your nightclub or bar.
Learn more about the small business loans that Fundation has to offer and how to get the financing you need for your nightclub or bar today.
The information contained on this page is for general informational purposes only. It is not legal advice and should not be relied upon in making borrowing decisions. Fundation loans are subject to lender approval.
Fundation combines the benefits of a bank loan with the ease and efficiency of an online lender. We offer conventional loans with competitive rates to businesses with varying credit profiles. Our technology allows us to deliver capital in as few as 3 business days through streamlining the collection and evaluation of customer information and conducting the majority of the lending process electronically. As a direct lender, we use our own capital to originate and hold the loans we make, so that we can focus on building relationships with our customers. Our dedicated customer relationship model enables us to understand each unique borrower’s business. This level of service, coupled with our best-in-class products, is why many of our customers come back to us repeatedly for more capital.