Finimpact

Best Bakery Loans: Turn Your Dream Into Reality

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.

Best Bakery Loans: Turn Your Dream Into Reality
Lindsay Frankel
Written by:Lindsay Frankel
Personal Finance Expert

Bakery investment costs can be high, particularly if you’re purchasing commercial real estate. You’re likely to need 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 lenders for every type of bakery business need.

Our Top Picks for Best Bakery Loans

biz2credit review
  • Multiple loan types available
  • Funding in 48h
  • Soft credit pull
credit score
Min. Credit Score 600+
loan amount
Loan Amount $25K - $6M
loan repayment
Loan Repayment 12-36 months
forafinancial
  • Ideal for plenty of industries
  • Approval not solely credit based
  • Early payoff discounts
Credit Score
Min. Credit Score 550+
Loan Amount
Loan Amount $5K-$750K
Loan Repayment
Loan Repayment 4-15 months
bluevine
  • Quick and simple application
  • Competitive interest rates
  • Available to customers with relatively low credit scores
Credit Score
Min. Credit Score 600+
Loan Amount
Loan Amount $5K-$250K
loan repayment
Loan Repayment 6-12 months

How to Choose the Best Bakery Financing Option

When choosing a bakery loan, there are some factors you should consider. When choosing our top lenders, our experts evaluated the following:

  • 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.

Best Bakery Finance Options for 2022

1. Biz2Credit — Best for Commercial Real Estate

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 isn’t an option for new business owners.

Pros
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
Cons
Higher rates than what banks typically charge
Not open to startups
$250 to $400 closing fee
Longest term is 36 months for CRE

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 within 48 hours after approval.

Biz2Credit also offers working capital loans with varying terms and rates along with term loans. You can get a working capital loan with a 575 credit score and six months in business, but you’ll need a score of at least 660 and at least 18 months in business for a term loan. The minimum borrowing amount is $25,000, and you can take out a maximum of $500,000 for term loans and $2 million for working capital. Term loans have a term of 12 to 36 months and rates starting at 8.99%.

The Bottom Line

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.

Try Biz2Credit

2. Fora Financial — Best for Short-Term Loans

Fora Financial offers small, short-term loans for small businesses that bakery owners might use to update equipment, deal with cash flow issues, or purchase inventory. Fora offers both small business loans and merchant cash advances, which can be helpful for business owners who plan to repay their loan from future bakery orders.

Pros
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
Cons
Not available to startups
2.5% origination fee
Longest term is 15 months

Fora Financial offers two 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 1.3. 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 six 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 loan.

The Bottom Line

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.

3. BlueVine — Best for Line of Credit

Some bakery owners may have ongoing expenses or cash flow issues for which a 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.

Pros
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
Cons
Not open to startups
Longest term is 12 months
Not available to bakeries in all states

You’ll need at least six months in business, $10,000 in monthly revenue, and a 600 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 six or twelve 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.

The Bottom Line

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.

Try BlueVine

4.FundBox — Best for Quick Term Loans

For bakery owners who need a lump sum of cash quickly that they can use for any business purpose, FundBox is one of the best term loan providers. The lender offers transparent pricing with few fees and funding as soon as the next business day.

Pros
Provides both term loans and lines of credit
No application fee or origination fee
No prepayment penalties
Transparent website with pricing tools
Excellent independent customer reviews
3-day grace period on line of credit payments
Highly-rated mobile app
Cons
Rates are higher than at a bank
Only two repayment terms
Term loans in beta and may not be available to all applicants

You can borrow up to $150,000 from FundBox, either as a term loan or a line of credit. For term loans, you can choose a 24-week repayment term with a starting rate of 8.33% or a 52-week repayment term with a starting rate of 18%. With a line of credit, you can borrow as needed and repay your draws over a 12-week term with a starting rate of 4.66% or a 24-week term with a starting rate of 8.99%. To qualify, you’ll need to be a U.S.-based business with at least $100,000 in annual revenue, a business bank account, and a 600+ personal FICO score. FundBox is also looking for applicants to have at least six months in business.

The Bottom Line

FundBox offers term loans that are quick, easy, convenient, and free of most fees that lenders commonly charge, making them a great choice for bakery owners who need fast cash and don’t want to worry about fees.

Try Fundbox

5.Torro — Best for Startup Capital

Torro is one of the few online lending platforms that offers starting capital to new business owners. Torro can connect new bakery owners with a lender that can supply enough startup capital to rent a retail space and get the bakery up and running. Funding is fast and repayment terms are flexible.

Pros
Open to new businesses
Lenient on credit requirements
Funding as soon as the next business day
A variety of options with no restrictions on use
Excellent independent customer reviews
Live chat support
Low APRs
Cons
New businesses can borrow a maximum of $150,000

Torro has two loan programs with different requirements and features. The SLOC program for new and existing business owners requires a credit score above 600 and fewer than 5 inquiries on your credit report in the past 90 days. You can borrow up to $150,000.

The BVR program is open to bakeries that have been in business for at least six months. You’ll also need at least $10,000 in monthly gross income, but a credit check may not be required. You can get access to up to $500,000. Terms for all products range from six months to ten years and APRs range from 5.99% to 12.99%.

The Bottom Line

Bakery owners who need startup capital will find Torro to be one of the few options with low rates, fast funding, and great customer service. The variety of funding options to choose from is also great for the varying needs of bakery owners.

Try Torro

6. SmartBiz — Best for SBA Loans

SmartBiz is the top facilitator of SBA 7(a) loans less than $350,000. Loans backed by the Small Business Administration may appeal to bakery owners because they typically have lower rates and higher borrowing limits. SmartBiz offers both SBA loans and term loans, with a variety of options to suit the unique needs of your bakery.

Pros
Quick and easy online application
Low rates starting at 4.75%
Pre-qualification option
Flexible repayment terms
Top facilitator of SBA 7(a) loans
Cons
Customer service only during business hours
Restrictive qualification criteria
High minimum borrowing amount
Funding time can be lengthy

To qualify for a loan from SmartBiz, you’ll need to have been in business for at least two years. A 650 minimum credit score is required for SBA loans and a 660 minimum credit score is required for term loans. SmartBiz SBA loans come in amounts between $30,000 and $5 million with repayment terms ranging from 10 to 25 years. Interest rates start at 4.75% and you’ll also pay closing costs, an application fee, and possibly an SBA guarantee fee. SmartBiz term loans also come in amounts between $30,000 and $5 million, but repayment terms are between two and five years. Rates start at 6.99%.

The Bottom Line

Busy bakery owners will enjoy the convenience of SmartBiz’s application process when compared to getting a loan from a bank and will appreciate the low rates and high limits that SmartBiz offers.

Try SmartBiz

Best Bakery Financing Options — Feature Comparison

Company

Min. Credit Score

Min. Time in Business

Min. Annual Revenue

Loan Amount

Interest Rate

Biz2Credit

575

6 months

$250,000

$25,000 to $2 million

7.99% and up

Fora Financial

None

6 months

$144,000

$5,000 to $750,000

1.1 to 1.3 factor rates

BlueVine

600

6 months

$120,000

Up to $250,000

4.8% and up

FundBox

600

6 months

$100,000

Up to $150,000

4.66% to 18%

Torro

600 for new businesses

None

None

Up to $500,000 ($150,000 for new businesses)

5.99% to 12.99%

SmartBiz

650

2 years

Sufficient cash flow

$30,000 to $5 million

4.75% and up


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 two to three 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

    1. First, 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.
    2. 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.
    3. Check your rate with two to three lenders that offer a product you can qualify for.
    4. Submit a formal application with the lender of your choice.
    5. 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.
    6. 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 two or three 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.

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    About the Author

    Lindsay Frankel

    Lindsay Frankel

    Personal Finance Expert

    Personal finance expert with 3 years experience specializing in researching, writing, and editing insurance, loans, and credit cards content.

    More about me