For many chefs, food enthusiasts, and hospitality professionals, owning their own restaurant is the perfect realization of the American dream. Creating a business with a singular vision is a wonderful thing, but it takes hard work, and lots of cold, hard cash. Like any business, it’s almost always necessary in the restaurant industry to secure financing from an outside lender. We’ll look at the three most common ways potential restaurant owners can realize their dream.

Apply for a Traditional Bank Loan

In the long run, the least expensive financing option for entrepreneurs in the restaurant industry is the traditional bank loan. Much like a person, car, or mortgage loan, the borrower applies with a bank or credit union, who then evaluates their credit and ability to pay back. With a new company, an additional level is added: the business model. Banks need to see that you have done your homework by analyzing the market, knowing how competitive the field is, and projecting a multi-year plan to turn a profit. The process may be a bit slow, as approval must pass through several levels, but the rates and terms are typically good.

Apply for a Line of Credit

A line of credit may be a better way into the restaurant industry for some potential owners. While a bank loan will give you the cash that you apply for, a line of credit is a form of financing in which the borrower is approved up to a specified dollar amount. Once the approval is in place, the borrower may draw whatever they need and only pay interest on what they use. Because the risk is slightly lower, this process is a bit quicker than traditional loans, and approval is slightly easier.

Apply for a Small Business Administration Loan

The United States Small Business Administration (SBA) provides loans by working as a guarantor with traditional banks or credit unions. If you do not have sufficient credit to get a bank loan on your own, if you apply for an SBA loan and receive approval, the SBA will work with the bank by assuming the responsibility for a large portion of the borrowed sum. By having a government agency agree to cover defaulted payments, the banks are more willing to release funds as their risk has been cut down.

If your dream is to become a restaurant owner, evaluate these options, determine which is most appropriate for you, and start gathering your documents and building your plan!