Profit making in the hospitality industry, especially the restaurant business, is a tricky affair. Most restaurant ideas are born out of a passion for cooking, but running a successful restaurant or hotel needs much more than just culinary skills. You must ensure that the working capital of your hotel or restaurant starts strong and is built up as much as possible so that your business stays afloat. The following points delineate the need for working capital finance for hotels and restaurants:
When a restaurant finds itself facing more demand than it can cope with, or if it realizes that it can rake in more revenue and profits by expanding its square footage and seating, a working capital loan can go a long way in helping you reach that goal.
Just one employee is not enough to run a restaurant or hotel. Needless to say, you need a number of teams on board, including cooks, waiters, food preps, managers, etc. Consequently, paying them on a daily or weekly basis is of prime importance, as your business cannot function without them. If you face a deficit in funds, a working capital loan can prove to be of huge help when it comes to paying your employees on time.
Like all businesses, hotels and restaurants also have need a makeover or some doses of modernization to attract more customers. Having old tables, old flooring, and the same decor for years will make your hotel/restaurant feel outdated, thus limiting the customers that patronize your business. It is imperative to update and upgrade your dining establishment with a working capital loan.
There is hardly a day when there is zero expense for any given business. Few businesses have contingency plans to deal with emergency working capital financing needs because few have enough savings put aside for emergencies. Thankfully, when there are emergencies, restaurants can turn to working capital finance for meeting their requirements.
It goes without saying that every restaurant and dining establishment need a variety of equipment for cooking as well as serving. These include ovens, stoves, ranges, hoods, heating bars, salad bars, mixers, dishwashers, and so on. A hotel financing is extremely necessary when it is time to replace such equipment.
Purchase of real estate
While many hotels and restaurants lease the commercial space, they use to run their business, some others own the building they operate in. Restaurant owners who are on the lookout to purchase real estate property will need to fall back on working capital finance.
Running a business can be expensive and at some point, nearly every company will seek one loan or the other. Unfortunately, at times a company may take on so much debt that repaying it puts immense strain on the restaurant’s cash flow. By consolidating multiple restaurant loans or restaurant cash advances into a single payment, the strain may be considerably lessened.
As mentioned earlier, restaurants may need to take a loan or advance to cover an emergency expense. However, since time is of the essence, the only option may be to obtain a high interest rate loan or cash advance, but the repayments may be extremely expensive in terms of putting stress on cash flows. When there is a high interest loan involved, it is advisable to go for refinancing which will be more affordable.
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