Best Restaurant Business Loans in 2023
Chloe Della Costa is a freelance copy editor and writer with a degree from Bard College. She specializes in copy editing and fact-checking content related to personal finance, insurance, and business.
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Running a restaurant can be expensive. Restaurant loans can help relieve some of the financial burdens by covering essential operating costs, such as paying staff, maintaining equipment and keeping the kitchen stocked.
Here are our top picks of loans for restaurants, along with tips for choosing which type of restaurant financing suits your business needs.
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What are restaurant business loans?
Some lenders offer specific restaurant loans, while others provide small business loans that can be used for various restaurant-related expenses.
The eligibility requirements vary between lenders but typically include a minimum time in business, monthly or annual revenue stipulations and a credit check. Startups might find it challenging to secure restaurant funding, although alternative options like crowdfunding might help get your restaurant up and running.
Best restaurant business loans
Here are our top picks for small business loans for restaurants.
- Fora Financial: Best for working capital loans
- OnDeck: Best for short-term loans
- Fundbox: Best for quick approvals
- Funding Circle: Best for established restaurants
- Taycor: Best for restaurant equipment
- Credibly: Best for bad credit
- Bluevine: Best for a business line of credit
- SBA 7(a): Best for large expenses
Fora Financial: Best for working capital loans
Pros
Short time-in-business requirement
Low credit score requirement
Cons
Monthly gross sales of $12,000 needed to qualify
No open or dismissed bankruptcies from the past year
Fora Financial offers working capital loans between $5,000 and $1,500,000 for small businesses, including restaurant owners. There are no restrictions on how to spend the funds, making it an ideal choice for buying inventory, hiring employees, launching a competitive advertising campaign or whatever your restaurant needs. Additionally, Fora Financial doesn’t require collateral, and you could receive funding in as little as 72 hours following approval.
OnDeck: Best for short-term loans
Pros
Can help build business credit
May be able to get same-day funding
Cons
Businesses in Nevada, North Dakota and South Dakota aren’t eligible
Annual gross revenue of $100,000 needed to qualify
If your restaurant needs a quick infusion of cash, OnDeck offers short-term loans from $5,000 to $250,000. Although OnDeck doesn’t provide a specific restaurant loan, you can apply the small business funds to various restaurant expenses. Note that you’ll likely need to provide a personal guarantee and make daily or weekly repayments.
Fundbox: Best for quick approvals
Pros
No hidden fees
Only pay interest on the amount used
Cons
Annual gross revenue of $100,000 needed to qualify
You can’t borrow more than $150,000
Fundbox prides itself on its speedy approval process — you can receive a decision regarding your application within minutes. You can access up to $150,000 with Fundbox’s business line of credit if approved. You’re free to use the money for any restaurant expense as you see fit, but the repayment term is limited to 24 weeks.
Funding Circle: Best for established restaurants
Pros
Fixed interest rate with a fixed monthly payment
Can help your business build its own credit
Cons
Not available in Nevada
Lack of transparency regarding interest rates
Funding Circle offers several options for restaurant financing for those with a solid credit score and who’ve been in business for at least two years. You can choose from a business term loan, line of credit or SBA 7(a) loan. Start by inquiring online, and a dedicated account manager will contact you to discuss options. Funding Circle may require a lien on your business assets and a personal guarantee.
Taycor: Best for restaurant equipment
Pros
No minimum revenue requirements
Ideal for startups
Cons
A personal guarantee may be required
Includes a document fee (not publicly disclosed)
Whether you need to upgrade your Italian pizza oven or invest in a 12-burner cooktop, an equipment finance loan can help cover your restaurant’s big-ticket items. Taycor is our top choice for equipment financing because it doesn’t impose a minimum monthly or annual revenue requirement, and it lends to newly established businesses. You can receive up to $2,000,000 in equipment financing while enjoying flexible payment options, such as deferred and semiannual payments.
Credibly: Best for bad credit
Pros
Multiple loan options
Low credit score requirement
Cons
Daily or weekly payments required
High monthly revenue requirement
Credibly offers several types of business loans for restaurants. Financing options include working capital loans, 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 a low credit score requirement of 500, this is an ideal choice for anyone with a bad or limited credit history. However, your business must have at least $15,000 in average monthly revenue to apply.
Bluevine: Best for a business line of credit
Pros
Quick access to funds
Only pay for what you use
Cons
Weekly repayment schedule
Monthly revenue of $40,000 needed to qualify
If your restaurant needs an extra cash infusion from time to time, a Bluevine business line of credit offers revolving funds up to $250,000. Apply these funds to new equipment, payroll, repairs and more. Bluevine offers financing for businesses that have been running for at least 24 months and requires a somewhat higher credit score of 625 to qualify, so your restaurant business will need to be fairly established for it to be a viable option.
SBA 7(a): Best for large expenses
Pros
Interest rates have a maximum limit
Long repayment terms
Cons
Collateral typically required for loans over $25,000
Longer time to funding
With up to $5,000,000 in financing, an SBA 7(a) loan can help you tackle large restaurant expenses such as purchasing real estate, new equipment or possibly refinancing existing business debt. Extended repayment terms allow you to use the funds now without the pressure to pay the loan back immediately. Keep in mind that having a credit score of at least 680 will increase your likelihood of approval.
Types of restaurant loans
Whether you have a small restaurant or want to expand your popular franchise, you’ve got multiple financing options at your fingertips. Here’s a quick overview of the common types of small business loans, along with nonloan financing solutions to consider.
Working capital loan
A working capital loan is a flexible form of short-term financing that can cover your restaurant’s expenses, such as 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, and some lenders may require daily or weekly payments. Because of its flexibility in how you apply the funds, it’s an ideal choice when researching small business loans for restaurants.
Example
Diana has a long list of expenses for her restaurant. Each item doesn’t cost much, but she’s hoping to tackle everything within a few months. She decides a working capital loan is her best bet since it’ll allow her to check off multiple items without needing to apply for separate loans. Once the funds are deposited into her account, she orders new plates, repaints the dining room walls, purchases holiday gifts for her staff and upgrades her restaurant’s website.
Business term loan
A small business term loan provides your restaurant with a lump sum of cash, allowing you to tackle immediate needs or more expensive purchases. Short-term loans typically need to be repaid within 12 to 36 months, whereas you have around 60 months to repay long-term loans.
Term loans may require collateral depending on whether they’re secured or unsecured, but providing collateral may secure a more attractive interest rate.
Example
Diana’s restaurant bills are piling up. She gets a short-term loan to pay a vendor’s outstanding invoice. Later, she gets a long-term loan to remodel the dining area to attract more customers. Her business booms, and she repays both loans within their specified time frames.
Business line of credit
You might want to consider a business line of credit if you need access to revolving funds to cover gaps in your restaurant’s cash flow. If approved, you can draw funds up to your credit limit as often as needed. Once you repay the funds, you can withdraw again and again.
Similar to a term loan, a line of credit may require collateral. Interest rates can vary, but you’ll only pay for what you use. Overall, this is an ideal option if you want some emergency cash on hand.
Example
Diana notices that her restaurant’s business dips every year in August. She applies for a business line of credit, allowing her budget extra breathing room. She keeps the account active, even though she only uses it for one month per year.
Equipment financing
Purchasing, upgrading and maintaining equipment is probably one of the most significant restaurant expenses. Lenders generally finance up to 80% of your equipment’s costs — though some may offer financing with no down payment — and some allow you to purchase used equipment. The lender uses the equipment as collateral, which it will seize if you default on your loan.
Example
Diana’s restaurant has been in business for over five years. The kitchen equipment is experiencing significant wear and tear, so she applies for an equipment finance loan. Once approved, she places an order for a new commercial oven, refrigerators and a state-of-the-art dishwasher.
Commercial real estate loan
If you’re looking to purchase real estate for your restaurant, you’ll want to apply for a commercial real estate loan. 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 going as high as $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.
Example
Diana decides to open a second restaurant located downtown. She finds an ideal property and approaches her bank for a commercial real estate loan. Because she has a decent annual revenue, a solid credit score and a 40% down payment, her loan is approved.
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 to 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
- CDC/504 loans: Up to $5,500,000 for commercial real estate or heavy equipment purchases
- Microloans: Up to $50,000 for general business purposes
You can apply with a lender that offers SBA loans, such as a traditional bank or online lender.
Example
Diana’s business continues to grow and expand. Her credit score is over 680, so she decides to apply for an SBA 7(a) loan. She receives approval for $5,000,000 and uses the funds to build an extension to her existing restaurant, hire new staff, launch a TV campaign, redesign her menus and upgrade the entire kitchen.
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 each credit card transaction.
MCAs tend to have lenient credit requirements and are ideal for those who expect a boom in sales in the coming months.
Example
Diana’s restaurant experiences a big dip in sales over the summer months. She knows that business bounces back in the fall once college students are back in town. She applies for a merchant cash advance to catch up on bills, trusting that the upcoming months will be enough to cover the advance.
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 approaches the customers to collect the payments, adding a fee for the service before sending the remaining amount back to you.
Since the funds are collected from the customers, their credit scores matter more than yours. But your business will need to have a steady flow of invoices in order for this to be a viable financing method.
Example
Diana’s restaurant offers catering services. She has several customers who haven’t paid their outstanding balances, making her behind on her mortgage payment. She reaches out to an invoice factoring company, successfully sells those invoices and uses the funds to catch up on her mortgage payments.
Business credit card
Business credit cards are another nonloan type of financing that can be helpful in times of need. Furthermore, you can earn rewards for your purchases and even write off the interest as a business expense.
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 for small purchases on a short-term basis.
Example
Diana wants to print flyers, brochures and new menus for her restaurant. She has a business credit card that provides 5% back for office supply store purchases, so she heads to Staples to design and print, putting the $2,000 purchase on her business credit card. She pays the bill in full when she receives the statement, avoiding any interest charges. Furthermore, she receives $100 in cashback rewards.
Crowdfunding
Even though crowdfunding isn’t an official loan product, it’s beneficial for those who don’t qualify for traditional loans or can’t find a decent rate with alternative lenders.
You can create a campaign on a crowdfunding platform such as GoFundMe or Kickstarter, allowing friends, family and even strangers to contribute to your ultimate goal. In return, you can offer discounts, access to VIP events, complimentary meals and more. Although it does rely on the generosity of others, it’s free money you don’t need to pay back.
Example
Diana is in the early stages of dreaming of her restaurant. She has a good business plan in place and has her eyes on the location, but she lacks the startup funds to make it a reality. She tries launching a campaign on GoFundMe and is delighted to receive enough capital to get the ball rolling. Once her business hits the six-month mark, she can reach out to lenders for an official restaurant loan to further expand her restaurant.
How to apply for a restaurant business loan
Once you find your ideal lender, you’ll need to ensure you have all the necessary paperwork in order. Banks and other financial institutions tend to require similar information for small business loans.
Here are some standard documents you may need to provide:
- A personal financial statement
- Profit and loss statements
- Balance sheets
- Projected financial statements
- Business certificates and licenses
- Income tax returns
- Loan application history
- Resume
- Business history
- Business lease
Lenders usually appraise your operation to ensure you’re capable of repaying the loan in full. They’ll typically review how long your restaurant has been open, its annual revenue and if your goals seem realistic and achievable. They may also look at how well you manage your business, your personal credit score and how much of your own money is at stake in the restaurant.
Compare restaurant financing options
Figuring out how to get a loan for a restaurant is only part of the process. Once you’ve found a few ideal lenders, you’ll want to crunch the numbers to ensure you’re getting the best deal.
Here’s a quick overview of our top lenders for restaurant loans.
| Lender | Best for | Max amount | Time in business | Key benefits |
|---|---|---|---|---|
| Fora Financial | Working capital | $1,500,000 | 6 months | Low credit score requirement (500) |
| OnDeck | Short-term loans | $250,000 | 12 months | Same-day funding |
| Fundbox | Quick approvals | $150,000 | 6 months | Receive a decision within minutes |
| Funding Circle | Established restaurants | $500,000 | 24 months | Dedicated account manager to help with business financing decisions |
| Taycor | Restaurant equipment | $2,000,000 | Less than 24 months | No minimum monthly or annual revenue requirement |
| Credibly | Bad credit | $400,000 | 6 months | Members of the National Restaurant Association can receive a discount on origination fees |
| Bluevine | Business line of credit | $250,000 | 6 months | Restriction-free funds to use for various expenses |
| SBA | Large expenses | $5,000,000 | 36 months | Capped interest rates |
How we chose our picks for best restaurant business loans
We selected each lender featured on our list of the best restaurant business loans based on the types of loans offered, interest rates and terms, time in business and minimum revenue requirements.
The loans featured in this review all meet the following criteria:
- Eligibility with a credit score of 500 or higher
- Time in business of six months or more
- Loans suitable for common restaurant expenses
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 Kabbage’s specific restaurant loans.
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.
Most SBA loans aren’t accessible for startups since they require a minimum of three years in business. However, you can use an SBA loan to cover restaurant-related expenses if you meet the loan’s criteria.
Additionally, there are SBA loans for franchises — meaning you can receive help opening a branch of an established restaurant chain. Check the SBA franchise directory to determine whether your restaurant is eligible for financing.
In general, most business loans require collateral such as equipment, vehicles, inventory, real estate or accounts receivable. In addition, they may require a personal guarantee. However, certain loans are available without collateral, but you’ll likely need to pay a higher interest rate.
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
Yes. Bad credit business loans can help business owners finance their dreams despite having low or impacted credit. Typically, you’ll still need to show proof of revenue, collateral and a strong business plan, along with other criteria.
Alternatively, you can try boosting your credit score before applying for a restaurant loan. Having a higher credit score may help unlock better interest rates and terms.