Best Restaurant Business Loans in July 2024

Restaurant loans can help cover essential operating costs, such as paying staff, maintaining equipment and keeping the kitchen stocked. You can get a restaurant business loan from a traditional bank, credit union or online lender.

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By Jill A. Chafin | Edited by Abigail Bassett and Janet Schaaf | June 28, 2024

Restaurant business lenders at a glance

SBA: Best restaurant loan for large expenses

Up to $5,000,000

Prime + 3.00%

Up to 300 months

680 (recommended)

24 months (recommended)

Pros

  • Large funding amounts to cover a range of business needs
  • Interest rates are capped per SBA limits
  • Long repayment terms

Cons

  • Collateral required for loans over $50,000
  • Longer processing times compared to other lenders
  • Charges an annual service fee

Why we picked it

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With up to $5,000,000 in financing, an SBA 7(a) loan can help you tackle more significant restaurant expenses like commercial real estate, expansions, equipment or even refinancing business debt.Backed by the Small Business Administration (SBA), SBA loans have capped interest rates and extended repayment terms, helping business owners who might struggle qualifying for traditional financing. Having a FICO Score of 680 or higher will increase

Read more about SBA loans

Taycor Financial: Best restaurant loan for equipment financing

$500 to $2,000,000

4.99%

12 to 84 months

550

Startup

Pros

  • No minimum revenue requirements
  • Offers 100% financing with no down payment
  • Quick funding times

Cons

  • Personal guarantee may be required
  • Charges a document fee (not publicly disclosed)
  • Stricter eligibility requirements apply for equipment refinancing

Why we picked it

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Whether you need to upgrade your Italian pizza oven or invest in a 12-burner cooktop, Taycor Financial can help with 100% equipment financing and no down payment required. As one of our top picks for equipment loans for bad credit, Taycor’s flexible eligibility criteria make it an ideal choice for newly established businesses and low-credit borrowers.You can receive up to $2,000,000 within 24 hours after approval with several repayment options, including deferred and semiannual payments.

Read our Taycor Financial loan review

OnDeck: Best restaurant loan for short-term loans

$5,000 to $250,000

27.30%

Up to 24 months

625

12 months

Pros

  • Funds can be used for a range of purposes
  • On-time payments can help build business credit
  • Same-day funding is available

Cons

  • Annual revenue of $100,000 needed to qualify
  • Doesn’t lend to businesses in North Dakota
  • High interest rates

Why we picked it

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If your restaurant needs a quick infusion of cash, OnDeck offers short-term business loans from $5,000 to $250,000. Although OnDeck doesn’t provide a specific restaurant loan, funds can be used for various expenses like upgrading equipment, hiring employees, purchasing inventory and consolidating business debt.OnDeck states that businesses must have a strong credit profile with a steady cash flow to qualify for the lowest rates. The average rate for an OnDeck term loan is 60.9% APR, which is significantly higher than other online lenders. Additionally, you’ll likely need to provide a personal guarantee and make daily or weekly repayments.

Read our OnDeck loan review

Bluevine: Best restaurant loan for lines of credit

$6,000 to $250,000

Not disclosed

6 or 12 months

625

24 months

Pros

  • Only pay interest for what you use
  • No maintenance fees or prepayment penalties
  • Funds available as soon as 24 hours

Cons

  • Doesn’t lend to businesses in Nevada, North Dakota or South Dakota
  • Short repayment terms
  • High annual revenue needed to qualify

Why we picked it

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A Bluevine business line of credit offers revolving funds up to $250,000 with quick funding times and no hidden fees. You only pay interest on the withdrawn amounts and can use the funds for new equipment, payroll services, marketing campaigns, repairs and more.While Bluevine has a low minimum credit score requirement, businesses must generate at least $480,000 in annual revenue to qualify. Additionally, Bluevine doesn’t lend to all industries or all states.

Read our Bluevine loan review

Credibly: Best restaurant loan for working capital

$5,000 to $600,000

Factor rates starting at 1.11

3 to 24 months

500

6 months

Pros

  • Low credit score requirement
  • Multiple loan options available
  • Same-day funding available

Cons

  • Daily or weekly payments required
  • High annual revenue requirements
  • Factor rate makes it hard to compare with other offers

Why we picked it

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Credibly offers a working capital loan with funds up to $600,000, along with additional financing options like merchant cash advances (MCAs), equipment financing and business lines of credit. Members of the National Restaurant Association may be eligible for 60% off Credibly’s 2.50% origination fee.With lenient credit score and business history requirements, Credibly’s loans for restaurant businesses can help startups and low-credit borrowers access the capital they need to grow and expand their restaurants. However, businesses must earn at least $180,000 in annual revenue to qualify.

Read our Credibly loan review

Fundbox: Best restaurant loan for startups

Up to $150,000

4.66% for 12-week term 8.99% for 24-week term

3 or 6 months

600

6 months

Pros

  • Short business history requirement
  • No hidden fees
  • Next-day funding available

Cons

  • Annual revenue of $100,000 needed to qualify
  • Short repayment terms
  • Doesn’t fund all industries

Why we picked it

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Restaurateurs looking for restaurant startup loans with no hidden fees can consider Fundbox’s business line of credit to purchase inventory, supplies, equipment and more. Fundbox offers quick approvals, with funds hitting your bank account as soon as the next business day.While Fundbox has flexible eligibility requirements, you need at least $100,000 in annual revenue to qualify and not all industries are eligible. Note that repayment terms are on the shorter time, with a maximum term of 24 weeks.

Read our Fundbox loan review

Fora Financial: Best restaurant loan for bad credit

$5,000 to $1,500,000

Factor rates starting at 1.10

4 to 18 months

570

6 months

Pros

  • Low credit score requirement
  • Short time-in-business requirement
  • Early payoff discount

Cons

  • High annual revenue requirement
  • Doesn’t report to credit bureaus
  • Only offers two funding options

Why we picked it

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Fora Financial offers bad credit restaurant loans to borrowers with credit scores as low as 570. Once approved, you could receive funds within 24 to 72 hours with no restrictions on how to spend the money.While some lenders charge prepayment penalties on business loans, Fora Financial rewards you for paying off your debt early. Collateral isn’t required, but there is a high origination fee — either 3.00% of the loan amount or $300, whichever is higher. You must have an annual revenue of $180,000 or higher to qualify.

Read our Fora Financial loan review

Funding Circle: Best restaurant loan for established restaurants

$25,000 to $500,000

15.22%

6 to 84 months

660

24 months

Pros

  • Can help build business credit
  • Fixed interest rate with a fixed monthly payment
  • Quick funding times

Cons

  • Not available to startups or new businesses
  • Collateral and personal guarantee required
  • Doesn’t fund all industries

Why we picked it

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Funding Circle is an online lender offering quick restaurant financing for well-established companies that have been in operation for at least two years with a solid credit score. A dedicated account manager is ready to help you find the right funding solution for your needs, with options such as business term loans, lines of credit and SBA loans.Funding Circle may require collateral, a lien on your business assets and a personal guarantee. The full range of interest rates are not disclosed in advance.

Read our Funding Circle loan review

What are restaurant business loans?

Some lenders offer specific restaurant loans, while others provide small business financing that can cover various restaurant-related expenses.

The eligibility requirements vary based on the lender and loan type typically include a minimum time in business, monthly or annual revenue stipulations and a credit check.

Startups might find it challenging to secure small business loans for restaurants, although alternative lenders and crowdfunding could help get your restaurant up and running.

What are restaurant business loans used for?

Most restaurant loans offer flexibility in how you can spend the funds. The exception is debt refinancing and buying property — in which case, you’ll need to find a lender specializing in these areas.

Here are some examples of how to spend your restaurant loan:

  • Payroll
  • Inventory
  • Remodeling
  • Software
  • Marketing
  • Website design
  • New menus
  • Upgrade equipment
  • Office equipment
  • Staff uniforms

Types of restaurant loans

Whether you need help covering day-to-day expenses for your small restaurant or want to expand into a franchise, you’ve got multiple restaurant funding options at your fingertips. Here’s a quick overview of the common types of small business loans that could be used for restaurant expenses.

Working capital loan

A working capital loan is a flexible form of restaurant financing that can cover expenses like daily operating costs, payroll, rent, supplies and more. However, a working capital loan isn’t ideal for long-term purchases, such as commercial real estate.

Rates and terms will vary, with some lenders requiring daily or weekly payments.

Business term loan

A small business term loan provides a lump sum of cash, allowing you to tackle more significant projects. Short-term loans typically need to be repaid within three to 24 months, whereas long-term business loans offer repayment terms up to 120 months.

Secured business term loans require collateral but typically have more attractive interest rates and flexible terms.

Business line of credit

A business line of credit is ideal for covering occasional gaps in your restaurant’s cash flow. Once approved, you can draw funds up to your credit limit as often as needed, only paying interest on the withdrawn amounts.

Similar to a term loan, a line of credit may require collateral. Interest rates can vary, with some lenders charging additional maintenance and withdrawal fees.

Equipment financing

Equipment loans typically finance up to 80% of the equipment and machinery needed for your restaurant, although lenders like Taycor Financial offer 100% financing with no down payment required. Since the equipment acts as collateral, equipment financing tends to have less strict eligibility requirements, although lenders can seize your purchased equipment if you default on your loan.

Recently established businesses can consider applying with alternative lenders that offer restaurant equipment financing for startups.

Commercial loan

If you need to purchase real estate for your restaurant or franchise, a commercial loan could help. To qualify, your restaurant must occupy at least 51% of the property you wish to finance.

Traditional banks and online lenders offer commercial real estate loans up to $5 million. You’ll likely need to provide a 20% to 40% down payment, with the restaurant acting as collateral if you default on the loan.

SBA loan

The U.S. Small Business Administration (SBA) offers a partial guarantee and sets interest rate limits for SBA loans, making them an affordable option for restaurant financing. The SBA generally recommends having a credit score of 680 or higher to increase your chances of approval.

Your SBA options include:

  • 7(a) loans: Up to $5,000,000 for general business purposes, with terms up to 300 months.
  • CDC/504 loans: Up to $5,500,000 for commercial real estate or heavy equipment purchases, with terms up to 300 months.
  • Microloans: Up to $50,000 for general business purposes, with terms up to 72 months.

You can apply with an SBA-approved lender through a traditional bank, credit union or online lender.

Merchant cash advance

Although a merchant cash advance (MCA) isn’t technically a loan; it’s a viable way to access quick cash for your restaurant. The MCA lender provides a lump sum of funds in exchange for a portion of your restaurant’s future income, including a set percentage of credit card transactions.

MCAs tend to have lenient credit requirements, making them an ideal choice for those who expect a boom in sales in the coming months.

Invoice factoring

Invoice factoring is another way to catch up on unpaid bills. Basically, you sell your restaurant’s outstanding invoices to a factoring company to receive advance funding. The factoring company then collects customer payments on your behalf, subtracting a service fee before sending the remaining balance to you.

Since the funds are collected from the customers, their credit scores matter more than yours. But your business must have a steady flow of invoices for this to be a viable financing method.

How to get a business loan for a restaurant

Here are the general steps you need to take to get a restaurant business loan.

1. Determine your funding needs

Creating a business budget can help you calculate how much you need to cover essential expenses for your restaurant. Make sure you can afford the scheduled repayments to avoid getting too far in debt. You’ll also want to research the different loan types to find the best fit for your business needs.

How much money do you need to open a restaurant?

The total cost of opening a restaurant depends on multiple factors, such as location, rent, equipment and food availability. According to Toast, average restaurant startup costs range from $175,000 to $700,000 and beyond.

You can calculate your own estimates by looking at typical startup costs, such as:

Read our full guide on how to start a business to learn more.

2. Evaluate your qualifications

You can usually find a lender’s list of restaurant loan requirements online, such as minimum credit score, annual revenue and whether additional collateral is required. While alternative lenders usually have more lenient qualification requirements, they typically charge higher fees with less flexible repayment terms.

Check your credit scores in advance to know your eligibility options. Boosting your credit score could help you qualify for more competitive restaurant loans in the future.

3. Research and compare restaurant lenders

Once you’ve figured out your funding needs and your business qualifications, you can search for potential lenders that match your criteria. Pay attention to hidden fees like prepayment penalties and annual maintenance fees, which can make the loan’s overall cost higher than expected. Also, check that the lender reports payments to all three of the major credit bureaus to help you build your business credit.

You can also read small business lender reviews in advance to stay aware of any predatory lenders.

4. Gather required business documents

Once you find your ideal lender, you’ll need to ensure you have all the necessary paperwork in order. While the exact requirements vary by lenders, here are some standard documents you may need to provide:

5. Apply and review offers

Most restaurant loan applications can be completed online, although certain traditional banks might require an in-person visit.

Funding times will vary based on the type of lender and loan. For SBA, traditional bank and credit union loans, approval and funding times can take up to two months or longer. If using an online lender, funds could be disbursed within one to three business days after approval.

How to compare restaurant loans

Comparing the following loan details can help you choose the best restaurant loan for your needs:

Interest rate: Check if the business loan interest rate is variable or fixed. If the lender charges a factor rate, try to convert it before accepting the offer in order to properly compare other offers.

The lower the interest rate, the more you can save in the long run. However, you can always refinance your business loan if you find a better rate later.

Repayment term: Some lenders require daily or weekly payments, while others charge monthly or seasonal payments. While a longer repayment term can give your budget extra breathing room, you’ll likely pay more interest over the life of the loan.

  Use our business loan calculator to estimate how much you could borrow.

Time to fund: If you need funds fast, a quick business loan can provide funding in as little as 24 hours. The fastest business loans, however, tend to come with higher rates and fees.

Additional fees: Review your business loan agreement to ensure you understand all the fees, such as origination fees, late charges and business loan prepayment penalties.

Loan purpose: Not all business loans cover restaurant expenses. Talk to the lender before signing the dotted line to ensure the loan funds can be used for your business’s operational and equipment expenses.

Alternatives to restaurant loans

In addition to small business restaurant loans, here are some other funding options to consider:

Small business grants

Small business grants are provided by federal, state or local government organizations, as well as private companies and nonprofit foundations. The funds can be used to help start, grow or expand your business, or to help boost the economy in high-need areas. While business grants can be competitive, it’s worth the time and effort of applying to access free money for your restaurant.

Business credit card

Business credit cards are another type of financing that can help cover low-cost and everyday expenses. You can earn rewards for your purchases and even write off the interest as a qualified business tax deduction.

However, some business credit cards come with an annual fee, and almost all charge higher interest rates than regular business loans. Because of this, it’s best to use them on an as-needed basis, making sure to pay off the balance in full each month.

Crowdfunding

You can create a campaign on a crowdfunding platform such as GoFundMe or Kickstarter, allowing friends, family and your fan base to contribute to your restaurant goals. In return, you can offer discounts, access to VIP events, complimentary meals and more. Although it does rely on the generosity of others, crowdfunding provides free money you don’t need to pay back.

How we chose the best restaurant loans

We reviewed the leading restaurant lenders to determine the overall best eight restaurant loans. To make our list, lenders must provide funding options suitable for restaurant expenses while meeting the following criteria:

  • Minimum time in business: Options available to all stages of restaurant ownership, from startups to those operating for 24 months or longer.
  • Minimum credit score: Personal credit score requirements of 680 or lower.
  • Repayment terms: Loan products that offer a range of repayment terms from three to 300 months.
  • Rates and fees: We prioritize lenders with competitive rates, limited fees, flexible repayment terms, a range of loan amounts and APR discounts.
  • Repayment experience: We consider each lender’s reputation and overall business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide customer perks, like free business coaching or business rewards.

Frequently asked questions

It used to be much harder to secure business financing for restaurants, especially with traditional banks. This was because lenders often viewed the restaurant industry as unpredictable and risky. However, there are now a variety of lenders that offer restaurant financing, such as Credible partnering with the National Restaurant Association.

Even if you lack a robust personal or business credit score, or are just launching your restaurant, there are options. For example, you can try a bad-credit business loan or start a crowdfunding campaign to jump-start your restaurant.

If you can meet the SBA loan requirements, you can use the funds to cover restaurant-related expenses like purchasing real estate, furniture or equipment; hiring staff; printing menus and more.

Additionally, there are SBA loans for franchises if you want to open a branch of an established restaurant chain. Check the SBA franchise directory to determine whether your restaurant is eligible for financing.

Note that most SBA loans aren’t accessible for startups since they require at least two to three years of business history to qualify, although women-owned business and minority entrepreneurs might qualify for an SBA microloan.

In general, most restaurant business loans require collateral such as equipment, vehicles, inventory, real estate or accounts receivable to reduce lender risk. In addition, they may require a personal guarantee.

If you can’t provide collateral, you could consider an unsecured business loan or a startup loan with no money, but be prepared that these loan types typically come with higher fees and less-flexible repayment terms.

Some lenders offer restaurant loans to borrowers with credit scores as low as 500. However, having a good credit score of 670 or higher can help you qualify for the most competitive offers.