---
title: "Restaurant Alternative Funding: Flexible Options for Growing Restaurant Groups"
url: https://burnaze.com/article/967134da-717d-4f5d-b251-e5a9a8fe147e
source: "1851 Franchise"
original_url: https://1851franchise.com/capitalspring/restaurant-alternative-funding-when-does-it-make-sense-2727145
category: "Restaurants"
industry: "Restaurants"
topics: ["Finance & M&A"]
published: 2024-08-31T13:08:03.000Z
modified: 2026-11-01T01:05:48.481Z
image: https://newimage.1851franchise.com/cdn-cgi/image/quality=85,format=webp,width=1280,height=720/story/featureImage/66de0d61cd25687fe468c819b54494368799.jpg
---

# Restaurant Alternative Funding: Flexible Options for Growing Restaurant Groups

**TL;DR:** Restaurant alternative funding options, such as term loans and private equity lending, offer flexible terms for growing restaurant groups. These alternatives often provide more flexible terms, but usually come with higher interest rates.

*originally published in 1851 Franchise on 2024-08-31. [Read the original](https://1851franchise.com/capitalspring/restaurant-alternative-funding-when-does-it-make-sense-2727145).*

## Story

Securing funding for a restaurant can be particularly challenging, especially when traditional bank loans — which offer favorable repayment terms — are difficult to obtain due to the perceived high risk associated with the industry.

As reported by Bar & Restaurant News, restaurateurs who find bank loans unsuitable have alternative financing options available, such as term loans, Small Business Administration loans, online lenders, merchant cash advances, private equity lending, peer-to-peer investors and crowdfunding. These alternatives often provide more flexible terms, such as “amortization light” structures that reduce cash flow burdens and “pay-in-kind” interest features, which allow restaurants to defer interest payments until they are more financially stable.

However, the convenience and flexibility of alternative funding usually come with higher interest rates, making it more appropriate for larger restaurant groups that need significant capital for acquisitions or partner buyouts. Smaller or single-location restaurants might benefit more from local community banks, which offer lower rates and personalized guidance. While private equity firms and direct lending can bypass some bureaucratic processes, they require restaurateurs to share ownership and profits, which may not align with every business owner’s goals.

Those who wish to maintain full control over their business might prefer traditional bank loans or explore online lenders and lines of credit instead.

## Entities

- 1851 Franchise (publication)
- private equity (topic)
- Finance (sector)
- Small Business Administration (regulator)
- restaurant financing (topic)
- small business loans (topic)
- alternative funding (topic)
- Bar & Restaurant News (company)

---
Originally reported by 1851 Franchise (https://1851franchise.com/capitalspring/restaurant-alternative-funding-when-does-it-make-sense-2727145). Summarized by Burnaze (https://burnaze.com/article/967134da-717d-4f5d-b251-e5a9a8fe147e).