Business Line of Credit for Bars and Taverns
A business line of credit lets a bar cover distributor bills, a slow January and small repairs from one approved limit, paying interest only while a balance is out. For costs that come around every month or every winter, it's the least expensive option a bar can hold. The hurdle is qualifying: funders want history, clean books and owner credit that holds up.
The bar's typical draws
Distributor payments
Draw to pay a distributor on delivery, then repay from the weekend's card batches. The line smooths the gap between buying and selling.
Seasonal slow weeks
The weeks after New Year's, and summer for bars in college towns, come every year. A draw covers rent and payroll until traffic returns.
Smaller repairs
Ice machines, glass washers and POS terminals fail at bad times. A draw handles them without a new advance.
What drawing for a slow month costs
Consider a bar with $70,000 in average deposits and a $32,000 line at 2% a month on the balance. It draws $14,700 for a slow month and repays in thirds.
| Step | Balance on the line | Cost that month at 2% |
|---|---|---|
| Draw in the slow month | $14,700 | $294 |
| After one repayment | $9,800 | $196 |
| After two repayments | $4,900 | $98 |
| Paid back | $0 | $0 |
All in, about $590, and the limit reopens once it's repaid. Staffing at drinking places (NAICS 722410) varies only 5.1 points by month in BLS data; your own statements set the slow month.
What funders look for from a bar
- Two years of business tax returns.
- Card processing and bank statements for several months.
- A liquor license in good standing.
- Personal credit for every owner.
Bars with daily advance debits usually need to pay those down, since line funders add every fixed payment to the picture.
Where the line doesn't belong
A full renovation, a kitchen buildout or buying a second location needs term financing. A line spent on a remodel won't be there when the cooler fails.
Keeping the limit open
Borrow for the gap, repay it when sales catch up and let the balance fall to zero between cycles. Funders review lines yearly, and one that stays drawn to the limit gets cut. A clean cycle gets raised.
Liquor license checks
Some funders check whether a license is tied to the location or the owner, since a transfer or suspension changes the bar's ability to sell. Keep license paperwork handy; it answers the question before it slows the file.
Quick answers
Can a bar qualify for a business line of credit?
Many can, with a couple of years open, clean tax returns, several months of steady card sales, a liquor license in good standing and solid owner credit. Bars carrying daily advance payments are usually asked to bring them down before a funder opens a line.
What should a bar use its line of credit for?
Costs that repeat and repay quickly, like distributor payments, rent in slow weeks and small equipment repairs. Renovations and new locations belong on term financing, so the line stays available for the next slow stretch.
Is a line of credit cheaper than an advance for a bar?
For recurring needs, usually. Interest runs only on the balance and only while it's out, while an advance charges its full fee regardless. An advance still fits emergencies, or bars that can't qualify for a line.
More for bars and taverns
- Same-day merchant cash advance for bars and taverns
- Second position MCA for bars and taverns
- MCA consolidation for bars and taverns
- Revenue-based financing for bars and taverns
- How funders read bars and taverns
- Business line of credit: how it works
Run your own numbers with the MCA APR calculator.
Want to see what fits a bar like yours?
Tell us your slow months and your open advances, and we'll shop the file with funders whose programs fit. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.