This article from Aspenspring Business Loans in Durango, Colorado answers which loan fits a restaurant expansion: a restaurant business loan for the build-out, equipment financing for the kitchen, and working capital for closure weeks, with an invented remodel split three ways, the records partners read, and how to get restaurant funding for a renovation.
Restaurant Business Loan for an Expansion: The Direct Answer
Split the project by what each dollar buys. Walls, plumbing, electrical work and finishes have no resale value and suit a term loan. Ranges, refrigeration and furniture can secure an equipment loan. The weeks of lost sales during construction, and the months before a new room fills, are a cash gap for a line of credit or a working capital loan. Funding the whole project with one product can mean paying for the mismatch somewhere.
La Plata County, CO counted 68 full-service and 67 limited-service restaurants with paid employees in 2023, 135 in all (our arithmetic, County Business Patterns 2023), and 11 drinking places. Accommodation and food services employed 4,193 people across the county, more than any other sector (County Business Patterns 2023).
A Worked Remodel Split Three Ways
Illustration only, invented figures: a $120,000 expansion adds a second dining room. Of that invented total, $48,000 is kitchen equipment and furniture and $72,000 is construction. The construction, over 84 months at an invented 10.5%, costs about $1,214 a month; the equipment, over 60 months at an invented 10%, about $1,020 a month; together about $2,234 a month (our arithmetic).
The restaurant also expects 3 weeks with the kitchen closed. At $14,000 a week of rent, payroll kept on and suppliers, that is a $42,000 cushion (our arithmetic), held as an undrawn line of credit or a small working capital loan.
How to Get Financing for a Restaurant Renovation: Sizing It Against New Sales
Illustration only, invented figures: a 40-seat room that turns 1.5 times a night with a $38 average check, open 26 days a month, adds about $59,280 a month in sales (our arithmetic). After food and labor costs, only part of that is left to pay the $2,234 of invented new payments, and the room may take months to fill. A partner reads the restaurant's current sales and margins to judge whether the existing business carries the payments while the new room builds.
The restaurant page has more on kitchen equipment and restaurant lenders.
How to Get a Business Loan for a Restaurant Business Adding Seats
- Card processing statements and bank statements for the last year or more.
- Profit and loss statements showing food and labor costs.
- Tax returns for the years the partner names.
- The lease, with the landlord's consent to the work and the term remaining.
- Contractor bids and equipment quotes.
- The permit or permit application for the work.
How to Get Restaurant Funding When the Lease Is Short
A partner financing a build-out wants the restaurant to stay long enough to pay it off. If the lease has two years left and the loan runs seven, renewing or extending the lease before applying removes the mismatch. A landlord contributing a tenant improvement allowance reduces the amount to finance. City permits for the work come from the City of Durango; the license guide covers the city and state licenses.
How to Get a Loan for a Restaurant Around Durango, CO: Steps
- Split the project into construction, equipment and cash gap.
- Get written bids and quotes for each part.
- Set the combined payment against current monthly cash flow, not the hoped-for sales.
- Confirm the lease term and the landlord's consent.
- Call (970) 238-5207 or send the online form with the three amounts.
Equipment financing and term loans each have their own page with worked figures.
Patio, Bar Counter or Second Location: Matching the Expansion Type
Not every expansion is a second dining room. A patio adds seats with furniture, heaters and a permit, and little construction; much of it can sit in an equipment loan. A bar counter adds plumbing, refrigeration and a liquor license question, so it mixes construction, equipment and licensing. A second location is a new business in all but name: a new lease, a new kitchen, new staff and months before sales cover costs.
The second location is the case where a partner reads the first restaurant most closely, because the first one's cash flow carries the second until it stands alone. Owners weighing that step can run the numbers twice: once with the new place reaching its expected sales, and once with it reaching half of them, and check that the first restaurant still covers every payment in the weaker case. A request built on the weaker case leaves room for the months the new place takes to find its customers.
By Aspenspring Business Loans · Updated
