bar business

Best Bar Business Loans

Owning a bar business can be costly, and can cause financial strain and pressure. In particular, the initial phase of the business can incur a lot of expenses. To help get your bar business off to a good start, you may wish to look at online loan providers for funding options.

Financially Reviewed by Thomas J. Brock

At a glance Bar owners in the United States often have difficulty obtaining financing for their operations. You will have to meet the eligibility requirements to get any type of loan for your bar business. In the case of a bank loan, it can be extremely difficult to meet all their eligibility criteria. Luckily, however, in recent times there has been a development of new alternative online lending providers. This has given bar businesses more access to small business funding. This article covers the top small business funding opportunities for bar businesses, all in one place. 

A Quick Overview of the Best Bar Business Loans

Here are the top loan types that can serve you before the opening date and during the operation of your bar.

Financing Need

Best Loan Type

Loan Features 

Recommended Lender

Construction, renovation, and opening expenses

Term loan

  • Amount: $5,000-$500,000
  • Over a 3-36 month period.
  • Rates as low as 11.89% APR
  • Time to get the loan: 14-30 days


Construction, renovation

SBA loan

  • Amount: Up to $5 million
  • Term: Up to 25 years
  • Interest: As low as 4.75%
  • Time to get the loan: Up to 2 weeks


Current expenses

Line of credit

  • Amount: Up to $500,000 ($100,000 for smaller businesses)
  • Term: Typically, Up to 18 months
  • Interest: As low as 4.80%
  • Time to get the loan: Up to 24 hours


Liquid capital against future income

Cash advance

  • Amount: Up to $500,000
  • Term: Repaid weekly or monthly
  • Interest: Up to 1.50% of sales
  • Time to get the loan: 24 hours

Square Capital

Buy inventory, invest in marketing campaigns, staff salaries, taxes, and permits

Short-term loans

  • Amount: Up to 500,000
  • Term: Up to 15 months
  • Interest: No interest rate, only one-time factor rate 
  • Time to get the loan: Up to 24 hours

Fora Financial

Best Bar Business Loans Explained

Let’s now take a detailed look at each of the loan types outlined above to better understand how they can help your bar business at different stages of its development.

1. OnDeck - Best for Short-Term Loan

Term loans are generally offered by banks or credit organizations. Term loans follow a periodic schedule and are predictable with fixed lower-end interest rates. They may vary in size and structure, depending on your eligibility and in terms of your agreement. 

Private lending companies might suggest more stringent terms and higher rates than banks. A term loan can cover various building and construction expenses and working capital.

OnDeck is our recommended lender for long-term loans. If you are searching for a trustworthy operator with solid customer support and flexible loan plans, OnDeck is for you. 

2. SmartBiz - Best for SBA Loans

Although it can be a bit difficult to qualify for an SBA loan, it may be worth your efforts. The interest rates are lower than most other loan options, and generally speaking, you can trust the lender as they have government authority backing. 

SBA loans are short-, mid-, or long-term, depending on the approved amount and the credit history of your business.

Your specific business goal will determine which SBA loan will work best for your business. If you are looking for working capital, a 7(a) loan is a good option. This loan type is also popular with startup companies. If you want to buy real estate or equipment, however, an SBA 504/CDC loan is a more suitable option. 

SBA loan lenders must be licensed by the government. Our lender of choice for this category is SmartBiz. SmartBiz provides an online marketplace. You can go to this marketplace to find the best loan option for your bar business. 

3. Fundbox - Best for Line of Credit

Bar operation can be tedious. You will need to purchase a lot of inventory and this is just the beginning. A business line of credit is a great solution if you need money to meet your current expenses. A business line of credit is money that you can access immediately. What’s great is that if you pay the money you use back within a certain time period, the lender won’t count this money against the interest you need to pay. 

The amount you can loan will vary based on your current or expected income. However, if you need a few hundred thousand dollars you likely won’t need collateral. 

Although you will be able to max out the line of credit, you may want to manage it in a more savvy way. It is more advisable to keep the money for an urgent situation - such as during the low season or when you need money to make a large inventory purchase. 

If you're worried about your credit score and are still in need of a line of credit, Fundbox is a great option. It offers loans for small businesses with 500 and higher and doesn't require collateral.

4. Square Capital - Best for Merchant Cash Advance

To receive a cash advance from a lender, you will need to sell part of your future bank deposits or credit card sales to a financial organization. You will receive a lump sum, which you can use immediately, in return. You will need to meet minimum sales requirements to maintain this financial interaction. (Note that a cash advance is, technically speaking, not a loan.) 

If you're experiencing time-sensitive financial difficulties, a cash advance may be a good option. If, for example, some of your regular clientele have open tabs you can apply for a cash advance.

Square Capital is a top cash advance provider. To qualify for this loan type, you have to be a Square service merchant. Square Capital’s automatic payback is very convenient as it is completely automated and direct links to your point of sale system.

Bar loans

5. Fora Financial - Best for Short-term Loans

The short-term loans that Fora Financial offers have flexible payments that make them a good choice for any bar business. They also make the application as easy as possible and are quick to finalize the entire process. A loan can be approved in just 24 hours and money deposited in only 72 hours.

Many aspects of a bar business can be improved with the use of cash from a short-term loan. New equipment, renovations, expansions, and additional staff can add to the value of the company after receiving a loan.

Qualifying for a short-term loan from Fora Financial is relatively uncomplicated and the process can be done online. A company needs to have been in operation for a minimum of six months before applying, and it should make more than $12,000 per month in gross sales.

Recommended Reading: Exciting Insight Into Nightclub Financing

How Much Does it Cost to Open a Bar Business?

As a bar owner you may find that you are often struggling to cover the costs of rent, expensive drinks, utility bills, and marketing. Bars may not suffer from seasonality, as much as a hotel on the beach does, but a bar does often experience changes in pace during the course of a year.

Savvy managers may have money put aside for at least six months, however, most bar businesses primarily rely on the money they get from their customers. 

Let’s take a look at some of the expenses bar owners will have to incur. 

  • Rent or real estate purchase: You'll either be renting or buying your bar location. Although renting adds a substantial amount to your monthly expenses, buying will require a huge amount of starting capital.
  • Construction or renovations: Not all spaces come as you imagine them. Chances are that you'll need to do at least some renovations and construction work. As such you will also need to pay for permits, materials, and workers.
  • Sound and lighting: A bar business should have a wow factor to set you apart from the competition. Sure it can be a topical or design element, but having professional lighting and sound equipment is often necessary for bars.
  • Taxes, licenses, and permits: When you serve alcohol and food you will need to pay a fee to the local authorities. Learn what these fees are and include them in your financial plan.
  • Utilities: Utilities will be one of your largest recurring payment categories. You will also need to account for heating and cooling during the warm and cold seasons.
  • Payroll: While you might need to consider contractor payments when you are starting out, your basic payroll will be predictable and constant.
  • Marketing: While word-of-mouth and events might help you with your advertising, don't forget to invest in your online presence. Use social media ads to expand your audience and promote your brand.
  • Inventory: Drink mixers, cocktail glasses, and attributes all cost money. These are part of your brand, so you might want to spend a little on these items. Alcohol and soft drinks purchases may take up a large bulk of your resources, both in the initial stage and during operation. 
Recommended Reading: Best Vending Machine Financing for 2021

How to Choose the Best Bar Business Loans

Before you sign a loan agreement you will need to ensure that you will have enough money to pay back your loan. You will also need to make sure that you have the finances you need to meet your day-to-day expenses.

Savvy bar owners always know how to use credit to their advantage. To do this, you will need to time your loan repayments so that you can make the most of your loan money and so you won’t need to pay unnecessary interest. 

You will also need to carefully compare all your loan options. Take your specific bar loan circumstances into account when comparing and choosing the loan you want to apply for.

Recommended Reading: Best Photography Business Loans

See Our Additional Guides on Industry-Specific Loans

Bottom Line

With so many moving parts and expensive purchases, running a bar business can be financially demanding. Luckily, many credit organizations are willing to work with new bar businesses. With a properly thought-out loan plan, you'll be able to choose a lender - from those featured on this page - that best suits your business requirements.  Good luck!