Sterling, CO restaurants and cafes fund kitchen equipment with equipment financing, dining room remodels with term loans, and food orders and payroll with working capital or a line of credit. Card-sales advances are a fourth option, but they are not loans and their total cost needs checking first.
Brookmark Financial in Sterling, Colorado explains how restaurants fund equipment, remodels and day-to-day costs, and passes requests to funding partners who decide.
Kitchen equipment on an equipment loan
Ranges, fryers, ovens, hood systems, walk-in coolers, reach-ins, dish machines and ice makers are kitchen equipment, and equipment financing carries them with the equipment as security. Used kitchen equipment can be financed too, though partners look closely at its condition.
A hood system is part installed equipment and part building work, because it involves ductwork, fire suppression and a roof penetration. The building work may need permits and the landlord's approval, and a partner may treat it as a build-out rather than equipment.
Ask the dealer for the cash price, the delivery and installation cost, and the warranty in writing. A partner pricing kitchen equipment wants to see each of those lines, and an owner comparing two offers needs them to see where the money goes.
Restaurants and other eating places counted 32 employer establishments and 510 paid employees in Logan County, CO in 2023 (County Business Patterns).
Dining room remodels on a term loan
New booths, flooring, lighting, restrooms, a bar or a patio are a remodel, paid back over years from the sales the room brings in. A term loan fits it. Get a contractor's bid and check permits before sizing the request.
Ask the landlord whether the lease includes an improvement allowance, and make sure the lease runs at least as long as the loan. A restaurant that remodels and then loses its lease is still paying for the remodel.
Working capital for food orders and payroll
Food orders, payroll and utility bills come due weekly, and sales vary from week to week. Working capital covers a known gap, such as payroll while a catering contract pays; a line of credit covers repeat orders. Illustration only, invented figures: an $8,200 food and supply order carried on a line for 30 days at an annual rate of 12% costs about $80.88 in simple interest (our arithmetic).
Payroll is the cost that cannot wait. A restaurant with a biweekly payroll knows the dates months ahead, and it can mark the weeks where sales have run thin in past years. That record, from the restaurant's own bank statements, is what a partner reads to size a line or a short loan.
Full-service restaurants counted 15 employer establishments with 258 paid employees, and limited-service restaurants 13 with 215 paid employees, in Logan County, CO in 2023 (County Business Patterns).
Card-sales advances compared with loans
A merchant cash advance gives the restaurant a sum now and collects a share of each day's card sales until a total, set by a factor rate, is reached. It is not a loan. Restaurants with steady card sales are the kind of business these providers look for, and the cost can be high. Compare any advance with a line of credit or working capital loan on the total dollars collected or repaid, over the same period.
Read the holdback against the slowest month of card sales the restaurant has had, not the average. If the holdback would squeeze payroll in that month, the advance is too large.
A walk-in cooler and a booth refit: one illustrated restaurant plan
Illustration only, invented figures: a restaurant replaces a walk-in cooler for $19,000 and refits its booths for $27,000. The cooler on an equipment loan at an annual rate of 10% over 48 months is about $482 a month; the booths on a term loan at an annual rate of 11% over 60 months are about $587 a month. Together that is about $1,069 a month (our arithmetic), and about $58,353 in total payments.
If the plan only works in a busy week, trim it: finance the cooler now, because a failed cooler costs food and sales, and wait on the booths until a season of sales supports the second payment.
The restaurant can test the plan by asking whether its weekly sales, after food and labor costs, carry those payments in a slow week as well as a busy one.
Questions Sterling, CO restaurant owners bring up about funding
Owners ask whether a new restaurant can get funding (some partners consider newer businesses, often with more weight on the owner's experience), whether used equipment counts (yes, with partners that check its value), and whether the liquor license can be financed (it is a regulated license; ask the partner, and see counsel for the rules).
Another frequent question is whether one loan can cover the kitchen and the room together. It can, as a single term loan, but splitting them lets the cooler sit on equipment financing secured by the cooler itself, and keeps the remodel loan smaller.
The industries hub has more restaurant notes. Send a request through the request form or by phone.
By Brookmark Financial · Updated
