Successfully starting and running a restaurant can require substantial funding. In addition to standard operating costs and rent, you’ll likely have many unexpected expenses like repairs or food spoilage. Meanwhile, you have to keep your pantries stocked, your staff paid and customers coming into your doors. Luckily, there are a variety of financing options that can help.

Your best choices for financing depend on some key factors. These include whether your restaurant is in a startup phase or has an established track record, as well as the loan amount and your plans for the money. It’s important to do your research so you know what’s required to obtain specific types of funding and what the repayment terms are. Having clear, organized financial records will help you, regardless of the loan type.

Small Business Administration (SBA) Loans

One option for restaurant financing is a loan that’s backed by the U.S. Small Business Administration (SBA). The SBA partners with banks to guarantee portions of small business loans so that lenders are more confident about taking on the risk. SBA loans often have lower down payments and longer repayment terms than some other types of loans.

Line of Credit

A line of credit is a convenient way to obtain funding so that your restaurant can cover unpredictable needs as they arise. You typically only pay the costs on what you use and exploring this option in advance will help you be prepared if you need the money. Some potential situations for using a credit line are slack periods when business slows, repairs, unexpected cost increases or a major purchasing opportunity such as a sale on equipment.

Equipment Loan

A broken oven or failed air conditioning system won’t necessarily leave you out in the cold. An equipment loan can help if you need to replace defunct equipment or purchase large items. For this type of loan, the equipment serves as its own collateral, which can help if you can’t or don’t want to put up other assets as collateral. Terms for payback often run from 12 to 60 months, but make sure that the loan doesn’t extend beyond the useful period of the equipment.

While running a restaurant can be rewarding, it also comes with a constant array of costly challenges. It’s important to have the capital you need to deliver excellent food and customer service as well as be prepared for emergencies. Understanding your financing options can help you prepare for the various situations you might encounter.