Best 5 Business Financing Options for F&B Owners

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It is not uncommon to hear Food & Beverage (F&B) business owners having trouble getting financing for their businesses.

With lesser support for its startup financing and working capital, it is the trigger reason why a number of F&B businesses fail.

Clearly, the market needs to realize much easier access to F&B financing for these entrepreneurs to achieve their business goals immediately.

But with more and more alternative lenders funding “riskier” small businesses, accessing restaurant financing is getting easier and easier for F&B owners.

Whether you’re a seasoned seasoning veteran or just getting ready to fire up the grill, we’ve got some good news: There are more F&B business financing available now, making funding your F&B ownership dreams much more achievable.

Here’s a quick list of the best F&B financing options available:


1. Equipment financing:

Good for one-off purchases of restaurant equipment.

Equipment financing refers to a loan used to purchase business-related equipment, such as a restaurant oven, a vehicle or a cash register machine for instance.

Equipment loans offer periodic payments that include interest and principal over a fixed term.

As security for the loan, the lender may require a lien on the equipment as collateral against your debt. Once the loan is paid in full, you own the equipment free of any lien.

The structure of an equipment loan may also impose a lien upon additional business assets or require a personal guarantee.

Failure to pay your loan may result in the repossession of your business assets or your personal assets—in the case of a personal guarantee. A careful review of the loan terms is vital to understand one’s F&B business.


2. Working capital loans:

Good for F&B owners who need capital for a variety of business expenses associated with running an outlet

A working capital loan is a loan that is taken to finance a company's everyday operations.

These loans are not used to buy long-term assets or investments and are used to provide the working capital that covers a company's short-term operational needs instead.

Those needs can include costs such as payroll, rent and debt payments. This way, working capital loans are simply corporate debt loans that are used by a company to finance its daily operations.

Sometimes an F&B company does not have adequate cash on hand or asset liquidity to cover day-to-day operational expenses and, thus, will secure a loan for this purpose.

F&B Companies that have high seasonality or cyclical sales usually rely on working capital loans to help with periods of reduced business activity.

READ: Starting A Business - How is a Business Loan Different from a Personal Loan?


3. Inventory financing:

Best for F&B owners who hold a lot of inventory that turns over quickly.

Inventory financing is an asset-backed, revolving line of credit or short-term loan made to a company so it can purchase products for sale.

The products or inventories then, serve as collateral for the loan if the business does not sell its products and unable to repay the loan.

Inventory financing is especially useful for businesses that must pay their suppliers in a shorter period than it takes them to sell their inventory to customers.

It also provides a solution to seasonal fluctuations in cash flows and can help a business achieve a higher sales volume - for example, by allowing an F&B business to acquire extra inventory to sell during the peak seasons (holidays, festivities, events, etc.)


4. Lines of credit:

Best for restaurant owners experiencing busy and slow seasons, who need flexible access to capital.

A line of credit (LOC) is an arrangement between a financial institution—usually a bank—and an F&B owner that establishes the maximum loan amount the owner can borrow.

The borrower can access funds from the line of credit at any time as long as they do not exceed the maximum amount (or credit limit) set in the agreement and meet any other requirements such as making timely minimum payments.

It has built-in flexibility, which is its main advantage. F&B owners can request a certain amount, but they do not have to use it all.

Rather, they can tailor their spending on the LOC to their needs and owe interest only on the amount they draw, not on the entire credit line.

In addition, borrowers can adjust their repayment amounts as needed, based on their budget or cash flow. They can repay, for example, the entire outstanding balance all at once or just make the minimum monthly payments.

5. Dropee’s SME Working Capital Financing:

Dropee & Grab Financial Services Malaysia have partnered up to help boost your cash-flow with SME Financing

This is the fastest and simplest way to fund your F&B business:


I. It’s simple

F&B owners can easily apply online within minutes with minimal documents and no collaterals required.

II. It’s flexible

They can get working capital financing up to RM 200,000  with a payback period between 6 to 12 months.

III. It’s fast

Instant notification on their financing application in as short as 7 working days.


To know more information about this on how to grow your business with Dropee SME Working Capital Financing, click HERE and our team will reach out to you asap!