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Bakery Financing: Best Business Loans to Consider in 2024
Running a bakery starts with the perfect recipe, but it doesn’t end there. Bakery owners need funding for equipment, retail space, advertising, hiring employees, and more. Bakery loans can help provide bakery owners with the startup or expansion capital they need to be successful.
Written by:Lindsay Frankel
Reviewed by: Jen Hubley Luckwaldt, Finance Content Writer and Editor
Fact Checked by: Dr. JeFreda R. Brown, Financial Expert
Bakery investment costs can be high, particularly if you’re purchasing commercial real estate. You’re likely to need business financing at some point in your business journey. Whether you’re starting a bakery business, opening a second shop, or just trying to cover some unexpected bakery expenses like replacement equipment, you have several bakery financing options to choose from.
We’ll go over what to look for in a bakery loan, as well as some of the top online lenders for every bakery business need.
Top Picks for Best Bakery Loans
- Lendzi - Best for Bakeries With High Revenue
- Backd - Best for Cheapest Interest Rates
- National Funding - Best For Bakery Equipment Financing
- SMB Compass - Best for Variety of Business Loans
- Biz2Credit - Best for Commercial Real Estate
- Bluevine - Best for Line of Credit
- Fora Financial — Best for Short-Term Loans
In this review, our experts highlight the terms, rates and fees of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.
Bakery Financing and Loans - Best Options Overview
Best Overall
Lendzi - Best for Bakeries With High Revenue
Factor Rate
Starting at 1.10
Loan Amounts
Up to $4 million
Min. Annual Revenue
$180,000
Key Features
- Borrow up to $4 million
- Min. credit score: at least 500
- Min. time in business: 6 months
- Equipment financing up to $2 million
- Business line of credit up to $250,000
- See your options without hurting your credit
- Flexible terms: 3 to 15 months
- Excellent customer reviews on independent review sites
- Get funding in as little as 24 hours
Pros & Cons
- Easy online application
- Applying does not affect credit score
- Bad credit accepted
- Excellent customer reviews
- Multiple lending options
- Competitive rates and fees
- Startups may not qualify
- Annual revenue requirements may be high
Overview
Lendzi ranks best for bakeries with high revenue and is also our top pick for overall lender. The company was founded in 2020 and is both a direct lender and a partner with more than 75 other lenders. This gives you, a bakery business owner, many loans and lenders to choose from. Lendzi specifically caters to those with bad credit or those who have been denied a loan elsewhere, so if that’s you, you may want to give Lendzi a chance to help secure the funding you need for your bakery business.
Main Features
Lendzi offers bakery business owners seven different loan products - including short- and long-term business loans, merchant cash advances, equipment financing, business lines of credit, SBA loans, and working capital loans. Merchant cash advances and working capital loans go up to $400,000 and are ideal for those with a credit score of 500-525 or higher. Equipment financing also requires a low credit score of just 550 and allows you to borrow up to $2 million in funding.
To qualify, Lendzi recommends $180,000 or more in annual income and at least six months of business history. After you apply, a Lendzi representative will contact you to review your loan options and discuss what you qualify for. This is a huge perk, as it gives you the chance to ask questions and get expert guidance on your loan of choice.
Lendzi knows running a bakery business can be costly. Just because you have bad credit, doesn’t mean you should be denied a loan. If you’re in need of funding for your bakery - whether that’s to cover day-to-day expenses or purchase new equipment - let Lendzi help you find the perfect loan for your business.
Backd - Best for Cheapest Interest Rates
Factor Rate
Starting at 1.10
Loan Amounts
Up to $2 million
Min. Annual Revenue
$200,000
Key Features
- Borrow up to $2 million
- Min. Credit Score: 640
- Min. Time in Business: 2 years
- Industry best factor rate for MCA - as low as 1.10
- APR for the Line of credit product starts at 35%
- Flexible repayment terms up to 16 months
- Get funding in as little as 24 hours
- Check your rate with a soft credit pull
Pros & Cons
- Easy online application
- Large loan amounts
- Flexible payment options
- Excellent reviews
- No collateral required
- Not available to startups
- Not all industries qualify
- Rates not disclosed
Overview
Running a bakery requires ongoing, daily expenses in addition to updating machinery, renovating the space, or building a second location. All of these things add up, but luckily, there is funding available to meet your unique bakery needs. Backd was founded in 2018 and they tailor all of their loans to fit your specific business. No two businesses are alike; and no two loans should be, either.
Main Features
Backd offers bakery businesses working capital loans up to $2 million and business lines of credit up to $750,000. Payments are flexible, and no collateral is required. If you’re looking to expand your bakery or fund a one-time project, a working capital loan should suit your needs. If, on the other hand, you are wanting to have extra funds at your disposal at any time, we recommend a business line of credit.
To qualify, you need to be in business at least one year, have $200,000 or more in annual revenue, have a 640 or higher FICO score, be in business for at least 2 years, be based in the U.S., and have a business checking account.
Running a bakery is stressful, but the finances shouldn’t be. Let Backd find the right lending solution for you and get you the funds you need quickly and efficiently. It takes just a few minutes to apply and if approved, funds can be in your account within 24-48 hours.
National Funding - Best For Bakery Equipment Financing
Factor Rate
Starting at 1.10
Loan Amounts
Up to $500K
Min. Annual Revenue
$250,000
Key Features
- Min. Time in Business: 6 months
- Min. Credit Score 600
- Borrow up to $500,000 in working capital
- Equipment financing up to $150,000
- Factor rate From 1.10
- Fast funding
- Early payment discounts
- Equipment financing repayment 2-5 years
- Working capital repayment 4 months - 2 years
Pros & Cons
- Apply online in minutes
- Excellent support via phone or email
- No down payment required
- Origination fee of 1% to 2%
- Annual revenue requirement of $250,000 or more
- No mobile app
Overview
National Funding’s equipment loans can help you cover the expensive equipment you need to run your bakery and serve your customers with the best baked goods. Depending on your finances, you may be able to lock in up to $150,000 to pay for ovens, mixers, bakeware, pastry blenders, and more.
Main Features
National Funding’s equipment loans go up to $150,000 with repayment terms between 2 and 5 years. The pay rate starts at 1.10 and you’ll repay your loan on a monthly basis. To qualify for an equipment loan, you’ll need a credit score of at least 600, at least 2 years of business history, $250,000 or more in annual revenue, and an equipment quote from a vendor.
If you have plans to buy new or used equipment for your bakery and earn at least $250,000 in annual revenue, an equipment loan from National Funding should be on your radar. You don’t have to put any money down and can prequalify without any impact on your credit.
SMB Compass - Best for Variety of Business Loans
Interest Rates
Starting at 7.99%
Loan Amounts
$10K - $10 million
Min. Monthly Revenue
$20,000
Key Features
- Loans up to $10 million
- Min. credit score: can go as low as 550 for certain loans
- Min. time in business: 1+ years in business, no startups
- Funding times: 5 to 7 days for term loans and 24 - 48 hours for line of credit
- Flexible terms: 2 – 10 years for term loans
- Interest Rates: starting at 8.99% for term loans
- Applying does not impact credit score
- Nine loan products to choose from
Pros & Cons
- Low, competitive rates
- Large loan amounts
- Loan terms up to 25 years
- Excellent customer service
- Poor credit not accepted
- Not available in all states
- Must be in business at least one year
- High revenue requirements
Overview
SMB Compass offers a variety of business loans to bakery owners, making them a great option for those that know they need a loan, but aren’t sure what would be best for them. Common loans used by bakery owners and offered by SMB Compass include business term loans, business lines of credit, equipment financing, and invoice factoring. Customer service is excellent, and a representative will help you find the right loan for your business. To qualify for most loans, you’ll need a credit score of 650 or higher, $20,000 per month in revenue, and one year of business history.
Main Features
SMB Compass offers nine different types of small business loans to bakery owners. Their mission is to make loans more accessible to small business borrowers by providing cost-effective and flexible lending solutions. SMB Compass business loans range from $10,000 to $10 million with terms up to 25 years. Rates start at 7.99% for qualified borrowers. The lender has currently provided more than 1,200 U.S. businesses with more than $250 million in financing. To apply, simply fill out their easy online application. It takes just a few minutes and will not impact your credit score. If approved, funding can be dispersed within 24 hours.
Whether you need a small loan to cover a slow season in your bakery or a large loan to purchase new equipment, SMB Compass can help. They offer nine different types of loans, fast funding times, competitive rates, flexible terms, and excellent customer service. Qualifications are strict, but if you meet them, SMB Compass is worth your time in applying. Head over to their online application to get started today!
Biz2Credit - Best for Commercial Real Estate
Interest rates
Starting at 7.99%
Loan Amounts
$25K to $500K
Min. Annual Revenue
$250,000
Key Features
- Working capital up to $2 million
- Term loans up to $500,000
- Term loan interest rate starts at 7.99%
- Loan Repayment 12-36 months terms
- Variable APR depending on the applicant
- Funding in 72 hours
- Soft credit pull
Pros & Cons
- Dedicated funding specialists
- Flexible payment options
- Fast funding within 48 hours of approval
- Borrow up to $6 million for commercial real estate
- Huge knowledge center and business toolkit
- Higher rates than what banks typically charge
- Not open to startups
- $250 to $400 closing fee
- Longest term is 36 months for CRE
Overview
Bakery owners looking to invest in a retail space to expand their business will appreciate the large loan amounts and fast funding time that Biz2Credit offers through its lending partners. However, Biz2Credit commercial real estate loan isn’t an option for new business owners.
Main Features
Biz2Credit offers commercial real estate loans to borrowers who typically have an existing property. You’ll need a minimum credit score of 660, 18 months in business, and over $250,000 in annual revenue to qualify. You can borrow between $250,000 and $6 million and repay your loan in 12 to 36 months. Rates start at 10%, and funding is available in a timely manner. Biz2Credit also offers working capital loans with varying terms and rates. You can get a working capital loan with a 575 credit score, 6 months in business, and an annual revenue over $250,000. The minimum borrowing amount is $25,000 and the maximum amount is $2 million-plus. Biz2Credit’s working capital loan offers daily, weekly, or biweekly payments. The lender also offers a term loan. However, you’ll need a score of at least 660 and at least 18 months in business, and an annual revenue over $250,000 for this business loan. The minimum borrowing amount is $25,000, and you can take out a maximum of $500,000.
For bakery owners who need funding for a new property quickly or who can’t qualify for a traditional bank loan, Biz2Credit is a great alternative option with few fees and an easy application process.
Bluevine - Best for Line of Credit
Interest rates
Starting at 6.2%
Loan Amounts
Up to $250K
Min. Annual Revenue
$480,000
Key Features
- Funding up to $250,000
- Min. credit score: 625
- Min. time in business: 6 months
- Interest rates as low as 6.2%
- Loan Repayment 6-12 months terms
- Quick and simple application
Pros & Cons
- Quick and easy application process
- Same-day funding
- Credit lines up to $250,000
- Rates as low as 4.8%
- Excellent independent customer reviews
- Extended customer support hours
- No prepayment penalties
- Not open to startups
- Longest term is 12 months
- Not available to bakeries in all states
Overview
Some bakery owners may have ongoing expenses or cash flow issues for which a business line of credit would work perfectly. With Bluevine, you can borrow only what you need and pay it back at a low interest rate. Plus, you can get funding the same day. Bluevine also offers a business checking account.
Main Features
You’ll need at least 6 months in business, $10,000 in monthly revenue, and a 625 FICO score to qualify for a line of credit from Bluevine. You can be approved for up to a $250,000 credit line, which you can draw as much as you need from and repay in fixed payments over 6 or 12 months. Interest rates start at just 4.8% and there are no prepayment penalties, but keep in mind only the most creditworthy customers will qualify for the lowest rates.
For bakery owners who need ongoing access to cash and want to pay lower rates than with a credit card, BlueVine is an ideal solution. It can specifically help smooth out bakery cash flow issues, and low rates are available to creditworthy customers.
Fora Financial - Best for Short-Term Loans
Factor Rate
1.15-1.40
Loan Amounts
$5K-$1.4 million
Min. Monthly Revenue
$12,000
Key Features
- Min. time in business: 6 months
- Min. credit score: 550+
- Borrow up to $1.4 million
- Factor rate from 1.15 to 1.40
- Ideal for plenty of industries
- Approval not solely credit based
- Early payoff discounts
Pros & Cons
- Offers loans as small as $5,000
- Get a free quote without hurting your credit
- No restrictions on use
- Open to fair credit borrowers
- Funding in as little as 72 hours
- Early payoff discounts
- Not available to startups
- 2.5% origination fee
- Longest term is 15 months
Overview
Fora Financial offers short-term loans for small businesses that bakery owners might use to update equipment, deal with cash flow issues, or purchase inventory. Fora Financial also offers merchant cash advances, which can be helpful for business owners who plan to repay their loan from future bakery orders.
Main Features
Fora Financial offers 2 products that would work well for bakery owners — a small business loan and a merchant cash advance. With a small business loan, you can borrow anywhere from $5,000 to $750,000 with term lengths between four and 15 months and factor rates between 1.1 and 1.9. Merchant cash advances are available in the same amounts but are repaid through remittance of a percentage of your bakery’s credit card earnings. If you know you’ll have orders coming in soon but need cash in the meantime for any reason, Fora Financial could be the perfect solution for your bakery. You’ll need 6 months in business and no open bankruptcies for either option, plus a minimum of $5,000 in credit card sales for a merchant cash advance or $12,000 in credit card sales for a small business loan.
Fora Financial is a great fit for bakeries because of the availability of small loans and multiple options for repayment that work with bakery businesses. However, it’s not an option for startups.
Main Features of The Best Bakery Financing Options
Backd4.5
Lendzi4.5
National Funding4.1
Biz2Credit4
Bluevine4
Fora Financial4
Torro3.9
- Min. Credit Score - 640
- Min. Time in Business - 12 months
- Min. Annual Revenue - $200,000
- Loan Amounts
- Working capital loans: up to $2 million
- Business lines of credit: up to $750,000
- Interest Rate - Not specified
How to Choose the Best Bakery Financing and Business Loan
- Loan features: Pay attention to the loan amounts offered, and don’t borrow more than you need. You should also ensure the lender offers a term with monthly payments you can afford.
- Application process: Decide if you need fast funding and choose a bakery loan accordingly. You should also aim for an easy application process that allows you to check your rate without hurting your credit.
- Interest rates and fees: Look for a loan with the lowest interest rate and the fewest fees that still fulfills the needs of your bakery.
- Qualification process: Many lenders have minimum requirements for your business age, annual revenue, and personal credit score. If you’re a new small business, go ahead and eliminate any options you don’t qualify for. If you have poor credit, pay attention to lenders that have looser credit requirements.
- Customer support: Ensure the lender offers customer support hours that are convenient for you. If your bakery is open during business hours, you might want a lender with extended hours or a live chat feature.
- Online user reviews: Read what other bakery owners have to say about each lender on independent review websites such as Trustpilot, ConsumerAffairs, and Credit Karma. If there are complaints that deter you, choose another lender.
- Perks and bonuses: If your bakery has cash flow issues, consider a lender with payment flexibility. As a busy bakery owner, you’ll also want to look for online account management tools, and you may prefer a lender that offers mobile functionality.
What Are the Costs of Running a Bakery?
The average startup investment for a bakery is between $10,000 and $50,000, according to restaurant software company Toast. The costs will depend on the size of your bakery, but here are some estimates, according to ZenBusiness
- Business registration, licenses, and permits: $1,500 to $3,500
- Insurance: Around $2,000
- Advertising and website: Around $9,000
- Space rental: Varies by city and size, but around $2,500 per month plus a deposit
- Utilities: Varies, but around $1,000 to $2,000
- Furniture, improvements, and decor: $5,000 to $25,000
- Bakery equipment Around $20,000
- Ingredients for baked goods: $5,500
- Staff wages: $8,000 to $13,000
- Point of sale technology: About $1,000 plus monthly costs
- Franchise fee: Varies by company, but around $30,000 to $100,000
How to Use Bakery Financing
You can use bakery financing for almost any business need. That includes things like:
- Launching your business
- Acquiring a retail space
- Renovating, furnishing, and/or decorating the space
- Hiring staff
- Paying for bakery equipment
- Paying for food/inventory
- Everyday operations
- Refinancing an existing business loan
- Expanding your business
How to Qualify for Bakery Financing
To improve your odds of getting approved, take the following steps:
- Check your personal credit score at AnnualCreditReport.com. Look for and dispute any errors, and pay down your debt balances as much as possible before applying for financing.
- Narrow down your options. Most lenders disclose their minimum requirements, so you can eliminate any options you don’t qualify for.
- Pre-qualify with 2 to 3 small business lenders. This will give you an idea of whether you’ll be approved, but it’s not a guarantee.
- Make sure to follow the instructions and include all the necessary paperwork. Leaving anything out could slow down the process, and loan denials sometimes occur when an applicant doesn’t provide sufficient documentation.
How to Apply for a Bakery Business Loan
- Decide what type of bakery financing will be best for your business: Determine whether you’d like a line of credit, secured equipment financing, funding for commercial real estate, or something else.
- Gather the necessary documents: including your business plan, income tax returns, financial statements, accounts receivable and accounts payable, and any legal documents that may be required.
- Check your rate with 2 to 3 lenders that offer a product you can qualify for.
- Submit a formal application with the lender of your choice.
- Read the fine print and make sure you understand the full cost of borrowing and the terms of your agreement with the lender. If you’re happy with your offer, go ahead and sign and accept.
- Wait for the funds to be deposited into your business bank account.
Financial Growth Tips for a Bakery
- Offer more product choices: Provide your customers with a range of portion sizes to choose from, and consider offering healthy, gluten-free, or vegan treats to reach more customers.
- Offer more services: Consider offering custom baked goods or delivery to reach more customers.
- Differentiate your bakery: Ensure your bakery stands out from the competition. Whether that’s having a theme, offering nostalgic products, or doing something different with the decor, give your customers something unique to talk about.
- Invest in new marketing strategies: Send coupons via direct mail or try social media advertising. Reach out to media outlets if you’re hosting an event or offering a promotion. Vary your strategy to reach the most people.
- Cut costs: Find ways to cut costs, whether that’s buying in bulk, investing in efficient energy solutions, or something else.
- Encourage customer reviews: Make sure your bakery has a presence on Google, Yelp, and TripAdvisor. Encourage happy customers to leave a review.
Conclusion
It’s possible to generate a lot of revenue from a bakery, but most bakery business owners will need some help with financing along the way.
Bank business loans are always an option, but for those who can’t qualify or want funding faster, the options on this list provide a great alternative. Some are better for new business owners or those with poor credit than others. It’s a good idea to compare 2 or 3 lenders before formally applying.
Aim for the least costly loan that you can qualify for and that meets your repayment needs. And make sure the application and repayment process is convenient. That way, you can focus on what you do best - baking sweet treats for others to enjoy.
Written by: Lindsay Frankel
Personal finance expert with 3 years experience specializing in researching, writing, and editing insurance, loans, and credit cards content.
More about me
Reviewed by: Jen Hubley Luckwaldt
Jen Hubley Luckwaldt is an editor, writer, and content strategist with a focus on personal finance, careers, and DEI. A small business owner for over a decade, Jen helps publications and brands create and optimize B2B and B2C content.
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Fact checked by: Dr. JeFreda R. Brown
Dr. JeFreda R. Brown is more than a financial consultant: she’s an avid teacher and subject matter expert who helps people—individuals and groups in a business setting—master the skills they need to achieve lasting financial wellbeing. As Founder and CEO of Xaris Financial Enterprises, it is her passion and life goal...
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