Nightclub Financing 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.
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.
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 lets you choose if you’d like to repay your loan in six or eight months. BlueVine fixes its interest rate at 4.8%. While you can manage your account online, it has customer support to guide you.
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 generally 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.
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.
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.