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Exciting Insight Into Nightclub Financing

Many entrepreneurs expect owning a nightclub to be full of fun and excitement. While this may hold some truth, it is also essential to consider just how much work is involved. To run a successful nightclub business, you will need a distinctive vision, unified staff, and a lot of spending money.

Financially reviewed by: Gordon Scott

At a Glance - Whether you already have a nightclub business set up, or are thinking about establishing a new one, an industry-specific business loan can help you access the funds you require to reach your goals. If you already own a nightclub, you could need money for new sound equipment, remodeling, and unexpected repairs. If you are establishing a new nightclub the expenses may be greater. 

A Quick Overview of The Best Nightclub Financing Options

Let’s take a look at the various loan categories outlined in this summary table. You can also select one of the recommended lenders to see what other services they offer.

Financing Need

Best Loan Type

Loan Features 

Recommended Lender

Startup capital

SBA loan

  • Amount: Up to $5 mil
  • Term: Up to 25 years
  • Interest: From 6% and up
  • Time to get the loan: Up to 2 weeks

Funding Circle

Operational expenses

Short-term loan

  • Amount: Up to $250,000
  • Term: Up to 18 months
  • Interest: From 14%
  • Time to get the loan: Up to 24 hours

BlueVine

Equipment

Equipment financing

  • Amount: Up to 100% of the value of equipment
  • Term: Up to 6 years
  • Interest: Between 4% and 40%, 8% - 13 % for amounts under $50K
  • Time to get the loan: Up to 48 hours 

SmartBiz

Emergencies and stock

Business line of credit

  • Amount: Up to $500,000
  • Term: Up to 18 months
  • Interest: Between 7% and 25%
  • Time to get the loan: Up to 24 hours

OnDeck

Cash flow

Merchant cash advance

  • Amount: Up to $500,000
  • Term: Repaid weekly or monthly
  • Interest: Up to 1.5% of sales
  • Time to get the loan: Up to 24 hours

Square Capital

Best Nightclub Financing Options Explained

It’s time to dance our way through each of the loan types included in the above table. We’ll share why we selected the recommended lenders for this specific industry, explaining how their services stand out from the competition.

1. National Funding - Best for SBA Loans

Small Business Administration (SBA) is a solid choice if you are obtaining startup capital for your new venture. With an SBA loan, lenders join forces with government entities to provide lower interest rates and longer investment periods. Of course, you need to be in a business that makes a profit and not an organization that works for charity.

Nightclubs are an excellent source of revenue. As such, lenders readily approve SBA loans for business in the nightclub industry. You can use the capital for the loan for all your initial setup costs. You will likely have several years to pay back the loan. This will give you enough time to plan out your marketing approach and build up a client base, which will ultimately let you meet your quarterly goals. 

Funding Circle is an approved SBA lender, delivering unique loan terms for women and minorities who want to open a bar or nightclub. Funding Circle will provide you with a dedicated account manager who will guide you and help you decide how to best use the funds. If you meet the loan requirements, you’ll receive finances within a few days.

2. BlueVine - Best for Short-Term Loan

Short-term loans are available as an alternative to SBA financing. You can use short-term loans to cover your operating expenses for the first year until your revenue stream kicks in. The short repayment period is ideal if you don’t want to spend too long repaying the loan.

Obtaining capital for your nightclub is only the beginning. You’ll need funds to pay for your daily utilities and operating costs until your business picks up, and starts attracting clientele. You may also need funds for scheduled and preventative maintenance.

BlueVine small business loans are a great solution for short-term funding needs. They provide a quick application process, fast approval, and funding help. So if your nightclub business needs a short-term loan and doesn’t have the time to wait, BlueVine is a top option. You can also manage your account online, and there is customer support to guide you. 

3. SmartBiz - Best for Equipment Financing

Equipment financing is a funding solution specifically geared toward obtaining the assets and machinery you need to operate your business. Equipment is essential for any nightclub business, which is why lenders may give such businesses a loan of up to 100% of the total purchase value. You will also be given a generous repayment period.

While SBA and short-term loans can help, they may not provide you with all the funding you need to purchase equipment for your nightclub. That’s why an equipment financing loan can be so valuable. You can also use equipment financing solutions to upgrade or buy new technology.

While SmartBiz is a renowned SBA lender, they also offer equipment financing loans. SmartBiz will advise you as to what you need to get your nightclub business started while offering you lengthy repayment periods. 

4. OnDeck - Best for Business Line of Credit

A business line of credit is a revolving loan where you draw out as much money as you need, from a capped amount. You will only pay interest on what you use. Also, once you start making repayments, the amount you pay back will become available again. A business line of credit can help you meet the cost of daily operations and may help you get through tough times. 

You may not always have the necessary funds to replenish your stock or repair equipment. Also, you might not be able to wait two weeks for loan approval, particularly if there’s an emergency at your nightclub. With instant access to money, a business line of credit could be the perfect solution.

OnDeck is a top provider for a business line of credit for businesses within the entertainment industry. If you pay your loan back sooner than expected, you may receive a discount on the settlement and an increase in the capped amount. OnDeck also approves small business funding relatively quickly.

5. Square Capital - Best for Merchant Cash Advance

A merchant cash advance is a lump sum amount that you will be required to repay according to bank card sales. The lender will hold back a percentage of your sales until the end of the payment period. This money will then be used to cover your interest. However, if you don’t earn a minimum amount weekly or monthly, the lender may ask you to provide funds out of your own pocket.

Nightclubs typically receive bank card payments on a nightly basis. You may even have clients that accumulate tabs, which they then pay for at the end of the evening. With so many cards being swiped, you’ll be able to pay back your merchant cash advance loan in no time.

Square Capital works together with registered members providing them with merchant cash advances. Square Capital will provide you with financing before offering you their selection of card machines. These card machines will be linked to your account and will hold back the percentage that you owe the lender. 

Recommended Reading: Best Bar Business Loans

How Much Does it Cost to Open a Nightclub?

The cost involved with setting up and owning a nightclub will vary according to the approach you choose to adopt. There is no one amount, as there are a multitude of variables to take into account. We will outline some general numbers for you to mull over before outlining the typical expenses you will encounter when you open a nightclub.

If you are establishing a nightclub or pub from the very beginning, you are looking at investing between approximately $100,000 to $800,000. You may be able to lower this amount to $25,000 if you take over another nightclub business that has already been created. However, this figure can get to as much as $100,00 if you want to establish a specialty club and buy new equipment.  

These figures are estimates of once-off costs that you will need to invest when starting your business. There are other expenses, including running costs, such as utilities, rental, insurance, food and alcohol inventories, taxes, payroll, permit fees and the like. When all is said and done the loan amount you will require will vary depending on how much work you want to put into your nightclub.

Industry Trends & Reasons Why A Nightclub or Bar May Require Financing

It is relatively straightforward to establish a nightclub or bar in the entertainment industry, as capital costs can be low in comparison to other startup businesses. Yet, this does result in more competition between nightclubs and bars. There are several ways for a recent or existing nightclub to stand out from the competition, which can involve adapting to the ever-changing technology and demands of the nightclub business scene. However, staying up-to-date, and being adaptable, requires a big budget, that’s why researching the various sorts of financing options available for your business is essential. 

  • Payroll: top bartenders are essential, but they can also ask for high salaries according to their experience. Likewise, inventory should be a financial priority for a nightclub. You cannot make a profit if you don’t stock alcohol to sell to your clientele. Sometimes, a business can be slower than other times, however, you will still be reliant on capital to buy inventory. Looking over your financing and loan options may help you out when times are slow. 
  • Social media and marketing: a lot of industries are falling behind due to the intricacies of social media marketing. While many nightclubs and bars employ social media, some of them are not relying on these tools as much as they should be. Even small things like prompting clients to check in on Facebook when they are at your club can help you boost your likes, which may also attract customers. Some nightclubs even provide people with incentives for doing so, such as a discount on a drink. 
  • Renovations and expansions: ensuring that your business has the right look to accompany your ambiance is a must. Furthermore, it is important for bars and nightclubs to remain relevant and to cater to younger adults. This will help your business remain ahead of the competition. However, these things can be expensive. That’s where financing options can help.
Recommended Reading: Best Spa Business Loans

How to Choose the Best Nightclub Financing

In this article, we have gone over the best nightclub financing options. However, you will need to be discerning when you approach a lender for a loan. In essence, you must do your homework before you choose a lender. 

Clearly you should go for a loan that best suits you. Consider, are you comfortable paying off the loan amount over five years, or do you want to pay it back quicker? Some loan agreements have penalties for repaying the loan too soon. 

Also, be sure to note how quickly you can get funding from the various sources you research. Obviously if you have an emergency situation you can’t wait three weeks to have it dealt with. You may want to know about financing options that you can access on demand. 

See Our Additional Guides on Industry-Specific Loans

Bottom Line

Running a nightclub can be a challenging and rewarding career, however, you will need the capital and funds to operate your business and make it a success. There are a variety of factors to take into account before you approach a lender for nightclub financing. We hope this page has provided you with greater insight into what you need to do to find the right loan and financing for your nightclub business.