March 01, 2023

Own a Cafe Business: Understanding Financing and Business Loans For Coffee Shops & Cafes

If you’re interested in getting into the coffee industry, you might be considering a business loan to open a cafe. Getting a coffee loan can jumpstart your business and give you the funds you need to get a trendy space, furnish it well, hire your staff, and make sure your drinks are top-tier.

Here’s what you need to know about a loan for coffee shop owners and how one might benefit you.

Can You Use a Business Loan to Open a Cafe?

A cafe loan can be a helpful solution when you need additional capital to get your coffee shop up and running. A business loan for coffee shop owners from Fora can be as low as $5000 or much higher, giving you the flexibility to get exactly as much as you need for your company’s needs.

If you’re just a few steps away from successfully opening your coffee shop and just need a few more thousand dollars for equipment or marketing, one of our loan options can help. Below, we’ll explore some of the specifics of a business loan for cafe owners and how one can benefit you.

What Are Business Loans For Coffee Shops?

A business loan for a coffee shop is a type of loan that you can use to cover several different types of expenses. You can use your cafe finance loan to renovate, upgrade your shop’s equipment, or even open a second location.

Different Types of Business Loans for Cafes

There are several different types of business loans for cafes. We’ll highlight a few that you should know about below:

  • Term Loans are extremely common in the business world. With these loans, you can get up to $1 million for your company, which you will repay with interest over time. While this type of loan has plenty of benefits, including quick access to money upfront, a term loan can also be harder to get approved.
  • SBA Loans (Small Business Administration Loans) allow you to borrow up to $5 million and have long repayment terms. These loans are also known for their low interest rates. However, SBA loans often take a very long time to get approved and are only accessible to borrowers with exceptional credit.
  • Business Lines of Credit are loans that give you access to funds that fall within your credit limit. It’s relatively easy to get approval for these loans, but they can also be more limited depending on your creditworthiness.
  • Equipment Loans are specifically for new gear that your business needs to scale and increase functionality. In many cases, businesses use loans to cover vehicles, but a coffee shop owner could also use one for a brand new espresso machine or roaster.

How Business Loans for Cafes Work

A business loan for coffee shop owners is simpler than you might think. When you get a small business loan from us, you go through a simplified process that skips the excessive documentation and long months of waiting that you might experience with a different lender.

With a business loan for coffee shop owners, you get access to between $5000 and $1.5 million in working capital. We perform just one soft credit check to make sure you qualify, then a full credit check on approval, keeping the overall credit checks to a minimum.

Once you’ve qualified and have your loan, you’re eligible for discounts for paying early. You can even increase the amount you’ve borrowed after you’ve paid off at least 60% of your initial loan.

One of the best aspects of getting a business loan to open a cafe with us is our collateral-free terms. Without collateral, you don’t need to sign anything away to get the funds your business needs.

Our business loans give prospective and current coffee shop owners the ultimate flexibility and autonomy they need. Whether you want to upgrade your branding, get new equipment, or make sure payroll keeps on rolling, one of our business loans can help.

Uses For Cafe Loans

There are multiple uses for a cafe loan, and you don’t need to use your loan for only one of the purposes listed below. Simply think of these examples as possible useful avenues for your new capital:

  • Buying Equipment is one of the most popular uses of funds from a cafe loan. If your coffee shop can’t seem to compete with the other spots in town, a better cold brew system or automated pour over machine could seal the deal. The umbrella of “equipment” can also include new tables and chairs, new merchandise, and more.
  • Expanding is another common use for a coffee shop loan. If you’re curious about how to open a food truck to sell your coffee alongside some tasty breakfast bagels, a business loan might be exactly what you need.
  • Renovating your space can be another beneficial use for a coffee shop loan.

How Much Capital Is Needed For a Coffee Shop?

The restaurant failure rate is concerningly high, so it’s crucial to know how much capital you really need to keep your coffee shop afloat during those tough first few years. In general, the capital requirements for a coffee shop fall between $80,000 and $300,000. Factors like your location, the size of your space, and whether your shop is dine-in or takeout only can affect costs drastically.

What to Do Before Applying for a Cafe Business Loan

Before applying for a cafe business loan, it’s essential to make sure that you:

  • Know what you’ll be using your capital for
  • Have the required credit score to qualify
  • Have a payoff plan for your loan

Eligibility Requirements for Cafe Business Loans

The primary eligibility requirement for a coffee shop loan is a qualifying credit score. If you meet the credit requirements, you can generally qualify for a loan.

How to Get a Business Loan for a Coffee Shop

The best place to get a business loan for your coffee shop is through our team at Fora Financial. Our lending programs offer the flexibility you need and come at a variety of capital ranges. The simplified process makes it easy for you to get what you need quickly and easily.

Tips to Open a Coffee Shop After You Secure Funding

When you’re ready to open your coffee shop and have the funding you need, follow these tips as you get started:

  • Location matters most when trying to attract plenty of customers. Look for an area that isn’t already oversaturated with coffee shops; if there are already plenty of coffee spots in the area, you may struggle to pull their customers away to your shop.
  • Train your baristas well and make sure you know everything you need to know about the specialty coffee industry. Having personal knowledge of coffee will help you deliver a terrific cup to your customers every time.
  • Perform quality control checks regularly to make sure your drink are consistently delicious.

Business Loans For Coffee Shops with Fora Financial

If you’re ready to get started with the approval process for your business loan, click here. Our team is ready to walk you through every step until you secure the funding you need.