The 7 Best Restaurant Business Loans for 2020
Running a restaurant can be an expensive endeavor. Startup costs alone can exceed $300,000. And after the doors open, you’d be responsible for ongoing operating expenses like marketing, staff training, inventory and tools. Access to capital can be difficult for restaurant owners because many banks and other lenders see their businesses as risky investments. Alternative lenders may be an option when traditional banks aren’t.
Our top picks for the best restaurant business loans in 2020:
Where to get restaurant business loans
|Lender||Products||Loan amounts||Time to funding after approval||Min. requirements|
|Fora Financial||Business loans||$5,000 to $500,000||72 hours||
|Kabbage||Business lines of credit||$1,000 to $250,000||Up to 3 business days||
|National Funding||Business loans and equipment financing||Loans: $5,000 to $500,000
Equipment financing: Up to $150,000
|OnDeck||Business loans and business lines of credit||Loans: $5,000 to $500,000
Lines of credit: Up to $100,000
|1 to 3 business days||
|Credibly||Business loans and merchant cash advances||Up to $400,000||48 hours||
|Balboa Capital||Business loans and equipment financing||Loans: $5,000 to $250,000
Equipment financing: Up to $250,000
|The Business Backer||Business loans, lines of credit and purchase of receivables||Loans: Up to $200,000
Lines of credit: $5,000 to $100,000
Purchase of receivables: Up to $200,000
|1 to 2 business days||
We’ve chosen these alternative business lenders because in addition to targeting restaurants, lenders on our list also had to meet the following criteria:
- Maximum loan amounts between $200,000 and $500,000, because restaurant owners may need to cover fairly expensive items, like large orders or new equipment.
- No more than one year in business required.
- Funding available in one to three business days.
Fora Financial offers restaurant business loans between $5,000 and $500,000 to cover daily working capital needs, like hiring employees or buying inventory. Applicants could be approved in 24 hours and receive funding in 72 hours following approval.
Fora Financial uses factor rates to express interest, which are written as decimal figures rather than percentages. You would multiply the factor rate by your loan amount to determine the total cost of your financing; however, Fora Financial does not publicly disclose its factor rates. It also charges an origination fee of 2.00%.
Not knowing rates is a disadvantage when it comes to comparing Fora’s costs with other companies, but it does have some of the most lenient time-in-business requirements on our list: six months, in addition to $12,000 in gross monthly sales and no open bankruptcies.
Kabbage’s business lines of credit can help restaurant owners meet daily or seasonal business needs. Business lines of credit between $1,000 and $250,000 are available from Kabbage. You could withdraw as little as $500 from your credit line as needed.
Withdrawals from your credit line must be repaid on a 6-, 12- or 18– month schedule. Kabbage also charges a monthly fee ranging from 1.25% to 10.00%. Around the middle of your term, that fee drops to 1.25%. Each month, you would owe an equal portion of your principal amount plus the monthly fee.
Kabbage requires just one year in operation to be eligible for a line of credit. Businesses must also generate at least $50,000 in annual revenue or $4,200 in monthly revenue in the past three months. Kabbage does review applicants’ credit, but there is no minimum credit score required to be eligible. You could receive funds within three days of approval.
National Funding provides restaurant owners with business loans between $5,000 and $500,000 to pay for daily expenses, as well as equipment financing up to $150,000 to lease or purchase assets. Borrowers can make daily or weekly payments on four- to 24-month terms. National Funding does not disclose rates for its short-term business loans or the cost of equipment financing. In addition to interest rates that are likely high, you will also most likely have to pay an origination fee. However, it offers one of the lowest minimum required credit scores on our list.
To be eligible for an online business loan from National Funding, applicants need one year in business, $100,000 in gross sales and a personal credit score of at least 500. Equipment financing requires just six months in business and a credit score of 575 or higher. After approving your application, National Funding could deposit your loan in your account in as few as 24 hours.
Restaurant owners can apply for small business loans and business lines of credit from OnDeck to cover their expenses. OnDeck’s loans are available between $5,000 and $500,000 with terms from 3 to 36 months. APRs start at 11.89%.
OnDeck’s line of credit is available up to $100,000 with weekly repayment schedules. APRs could be as low as 10.99%. Lines of credit have a $20 monthly maintenance fee that could be waived for six months if you withdraw at least $5,000 within the first five days of opening your account.
For both products, OnDeck requires one year in business, a personal credit score of at least 600 and annual revenue of $100,000 or more. You could receive funds in one to three business days after approval.
In partnership with the National Restaurant Association, Credibly offers business loans and merchant cash advances to restaurant owners in need of funding. Members of the National Restaurant Association may be eligible for 60% off origination fees.
Credibly’s working capital and business expansion loans are available up to $400,000 with 6-, 18– or 24-month terms, depending on how you plan to use funds. Merchant cash advances are also available up to $400,000 and payments are taken out of daily credit card sales for 3– to 18-month terms. Credibly requires six months in business and at least $15,000 in monthly revenue. If approved, you could receive funding in 48 hours.
Interest rates start at 9.99% for business expansion loans. For working capital loans and merchant cash advances, Credibly uses factor rates to express interest, which are written as decimal figures rather than percentages; you would multiply your factor rate by your amount to determine the total balance you’d owe. Credibly’s factor rates start at 1.15, as of Feb. 19, 2020, and also charges a series of fees: a 2.50% origination fee for its loans and an underwriting fee of 2.5% and a $50 monthly administrative fee for its advance.
Balboa Capital provides restaurant business loans between $5,000 and $250,000 with repayment terms spanning 3 to 18 months. APRs start at 4.00%, but could range much higher. Restaurant owners could also apply for Balboa Capital’s equipment financing, available up to $250,000 with terms between 24 and 60 months.
To be eligible, you must have one year in business, $300,000 in annual revenue and good credit, though Balboa Capital does not specify a certain score. Same-day funding may be available, depending on your loan amount.
The Business Backer
The Business Backer offers small business loans, lines of credit and merchant cash advances for restaurant owners:
- Small business loan: Up to $200,000 with terms between 4 and 18 months.
- Line of credit: Between $5,000 and $100,000 with 12– to 24-months terms.
- Purchase of receivables: Up to $200,000 with daily, weekly or semi-monthly payments until debt is repaid. Terms unavailable.
Monthly interest rates for The Business Backer’s small business loan range from 1.70% to 4.30%. Loans come with origination fees up to 3.00%, but you could choose to increase the fee to 8% to offset interest costs. Lines of credit comes with fixed monthly interest between 3.30% and 6.00%. Purchase of receivables come with factor rates from 1.2 to 1.47 as of Feb. 19, 2020, and a purchase fee up to 3%, though you could increase it to 8% to reduce your factor rate.
Eligible restaurant owners must have one year in business, $180,000 in annual revenue and a credit score of at least 550 to qualify for a loan or cash advance; a line of credit requires just $50,000 in annual revenue and a credit score of 560. Funds may be available in one to two business days.
How to apply for a restaurant business loan
When it comes to applying for restaurant business loans, each lender may require different information before it guarantees financing. However, banks and other financial institutions require much of the same information.
Some of the common documentation you may be asked to provide could include:
- A personal financial statement
- Profit and loss statements
- Balance sheets
- Projected financial statements
- Business certificates and licenses
- Income tax returns
- Loan application history
- Business history
- Business lease
Lenders typically perform an appraisal of your operation, taking a look at how long your business has been open, how much your restaurant makes every year and determining whether you can pay back the amount you’re requesting within the term length of the loan. They may also look at whether you can manage your business effectively, how good your personal credit history is and how much of your own money is at stake in the business.