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Bakery Financing: Best Business Loans to Consider in 2022

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
Personal Finance Expert

Reviewed by: Jen Hubley Luckwaldt, Personal finance Content Writer and Editor

Fact Checked by: Dr. JeFreda R. Brown, DBA, CFEI, and a highly respected financial expert

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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.

Bakery Financing: Best Business Loans to Consider in 2022

In this review we 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 methodology you can use to select the best option for your needs.

 

Bakery Financing and Loans - Best Options Overview

National Funding - Best For Bakery Equipment Financing

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.

Pros
Apply online in minutes
Excellent support via phone or email
No down payment required
Cons
Origination fee of 1% to 2%
Annual revenue requirement of $250,000 or more
No mobile app

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.

The Bottom Line

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.

Biz2Credit - Best for Commercial Real Estate

Biz2Credit

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.

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 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. All payments are drawn from your business receipts.

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. Term loans have a term of 12 to 36 months and rates starting at 7.99%.

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

Fora Financial - Best for Short-Term Loans

Fora Financial

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.

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 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 minimum in gross sales for a small business 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.

Bluevine - Best for Line of Credit

BlueVine

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.

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 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.

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

FundBox - Best for Quick Term Loans

FundBox

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 2 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 6 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

Torro - Best for Bakery Startup Capital

Torro

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 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
APR vary according to state law and may reach 36%

Torro has 2 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 6 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 $2 million.

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

SmartBiz — Best for SBA Loans

SmartBiz

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
Pre-qualification option
Flexible repayment terms
Top facilitator of SBA 7(a) loans
Not all business types qualify
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 2 years.

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 8.25% 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 $300,000, but repayment terms are between 2 and 5 years. Rates start at 7.99%. SmartBiz requires a credit score of 660 or above for term loans.

The Bottom Line

Busy bakery owners will enjoy the convenience of SmartBiz’s application process when compared to getting a loan from a bank.

Try SmartBiz

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.

 

Main Features of The Best Bakery Financing Options

CompanyMin. Credit ScoreMin. Time in BusinessMin. Annual RevenueLoan AmountInterest Rate
National Funding6002 years$250,000$150,0001.10 factor rate
Biz2Credit5756 months$250,000$25,000 to $2 million7.99% and up
Fora FinancialNone6 months$144,000$5,000 to $750,0001.1 to 1.3 factor rates
Bluevine6006 months$120,000Up to $250,0004.8% and up
FundBox6006 months$100,000Up to $150,0004.66% to 18%
Torro600 for new businessesNoneNoneUp to $500,000 ($150,000 for new businesses)Up to 36%
SmartBiz660 for term loans2 yearsSufficient cash flow$30,000 to $5 million8.25% 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 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

  1. 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 2 to 3 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 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.

Lindsay Frankel

Written by: 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
Jen Hubley Luckwaldt

Reviewed by: Jen Hubley Luckwaldt

Content Writer and Editor

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.

More about me
jefreda brown

Fact checked by: Dr. JeFreda R. Brown

DBA, CFEI and a highly respected expert in personal and business finance

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 to help others develop and maintain financial wellness.

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