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Restaurant Business Loans: Best 7 Funding Options

With some of the lowest profit margins of any industry, running a restaurant is expensive. Restaurant owners often need financial support to hire staff, buy inventory, and invest in marketing. A restaurant business loan can provide that support.

Restaurant Business Loans
Susan Guillory
Written by:Susan Guillory
Professional Intuitive Business Coach and Content Writer

Reviewed by: Sarah Brooks, Personal Finance Writer and Editor

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Low profit margins, ever-increasing costs of food, and payroll expenses make it challenging for even the most seasoned restaurants to stay afloat. Sometimes restaurant owners need extra cash to get through difficult times, such as needing to replace an industrial freezer, or to expand their business by opening a second location.

In either instance, a small business loan can be just the ticket. In this article, we’ll look at the criteria for choosing a restaurant business loan and meet lenders who can help.

Our Top Picks for Best Restaurant Business Loans

nationalfunding
  • Best Overall for Equipment Loans and Leasing
  • Fast funding
  • Early payment discounts
  • Best for bad credit loans
Min. Credit Score
Min. Credit Score 600+
Loan Amount
Loan Amount $250K-$500K
Loan Repayment
Loan Repayment 2-5 years
kabbage
  • No prepayment penalties and no origination fees
  • Easy application process
  • Monthly fee : 2-9% for 6 month loans, 4.5-18% for 12-month loans, 6.75-27% for 18-month loans
Min. Credit Score
Min. Credit Score 640
Loan Amount
Loan Amount $2K-$250K
Loan Repayment
Loan Repayment Up to 18 months
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

How to Choose the Best Restaurant Business Loan

If you’re a restaurant owner who could use some extra cash, you might be wondering where to start in finding funding for restaurants. There are many options for financing, including short-term loans, business lines of credit, restaurant startup loans, equipment financing, and more.

Our experts have done the hard work and narrowed down the best restaurant business loans using the following factors to rank lenders.

  • Loan features: Each lender offers different loan amounts, rates, and repayment terms to restaurant owners.
  • Application process: Some loan applications require more information than others, and some companies provide instant decisions and fast funding.
  • Interest rates and fees: Each lender can set its own interest rates, and may also charge additional fees like origination fees.
  • Qualification process: Each lender looks at different criteria to determine eligibility of a borrower, including credit score, annual revenue, and business history requirements.
  • Customer support: We look for lenders that provide easy access to customer service through a variety of channels, including email, chat, and phone.
  • Online user reviews: We looked at customer reviews on independent review sites like Trustpilot to understand how well a lender works with customers.
  • Perks and bonuses: Some lenders offer extra perks to borrowers, such as reduced interest on secondary loans, payment flexibility, and mobile apps.

Best Restaurant Business Loans for 2022 - Full Overview

Considering the factors above, here are some of the lenders who provide the best restaurant business loans.

1. National Funding - Best For Restaurant Equipment Financing

If you’ve made some less-than-great financial decisions in the past that have negatively impacted your credit score, you may have trouble finding a restaurant business loan. National Funding, however, has lower requirements to qualify and looks at criteria other than your credit to determine eligibility.

Pros
Bad credit not an issue
High approval rates
No collateral required
Cons
Fees can be high
Payments are daily or weekly

National Funding offers both small business loans and equipment financing and leasing. With its loans, you can borrow between $5,000 and $500,000, and with its equipment financing, up to $150,000.

To qualify, you only need a credit score of 500 or more, which is much lower than most other restaurant loan options. You’ll also need an annual revenue of at least $100,000 and a minimum of $1,500 in the bank. You can’t have a bankruptcy on your credit report over the last 12 months, and you must be in business for at least 12 months.

The Bottom Line

You shouldn’t be limited in the financing options you have available to you if you had bad credit, and at National Funding, your financial situation won’t keep you from getting a restaurant business loan.

2. Kabbage - Best for Fair Monthly Revenues

Kabbage, backed by American Express, offers lines of credit for restaurant businesses ranging from $2,000 to $250,000. Kabbage is best for businesses with fair monthly revenue amounts. Most lenders prefer at least $100,000 in annual revenue, but Kabbage only requires $3,000 monthly revenue. If your restaurant experiences slow seasons that bring your monthly revenue down, a line of credit from Kabbage is a great option to help bridge the gap and get you through to the next busy season.

Pros
Straightforward application
Fair monthly revenue accepted
Only pay interest on what you use
No prepayment penalties
Cons
Confusing fee structure
Need to be in business at least one year


Kabbage lines of credit range from $2,000 to $250,000 with six, 12, and 18-month terms. Rather than an interest rate, they charge a monthly fee based on the amount you borrow. Six-month term fees range from 2-9%, 12-month term fees range from 4.5-18%, and 18-month term fees range from 6.75-27%. You do not need to provide any collateral, but you will need to sign a personal guarantee. To qualify, you need a minimum credit score of 640, $3,000 per month in revenue, and be in business for at least 12 months.

The Bottom Line

A line of credit from Kabbage is a great financing option for restaurants that have been in business for at least one year and have low monthly profits. You only pay loan fees on the amounts that you use, and once you pay it back, you’re able to use it again.

Try Kabbage

3. Biz2Credit - Best For No-Restriction Financing

Some lenders specify what you can use a business loan for, but Biz2Credit has few, if any, restrictions on its loans. You can use them to buy kitchen equipment, purchase a building for your restaurant, hire a sommelier, or get inventory.

Biz2Credit offers working capital loans, term loans, and commercial real estate loans. You’ll get a decision back in as little as 24 hours, and you can get your funds within 72 hours of approval.

Pros
Few restrictions on loan use
Fast decision and funding
Quick application
Cons
Amounts under $25k not available
Annual revenue requirement is high
Loan rates may be high

With Biz2Credit’s three loan programs, you can borrow from $25k up to $6 million, though term loans cap out at $500k. You can repay your loan over 36 months.

Qualifications for a loan with Biz2Credit vary, depending on the loan:

  • Working Capital Loan
  • Credit score: 575+
  • Time in business: 6+ months
  • Annual revenue: $250k
  • Term Loan
  • Credit score: 660+
  • Time in business: 18+ months
  • Annual revenue: $250k
  • Commercial Real Estate Loan
  • Credit score: 660+
  • Time in business: 18+ months
  • Annual revenue: $250k
  • Must already own commercial property

The Bottom Line

If you want to spend your restaurant loan on something that falls outside of the parameters allowed with other lenders, Biz2Credit is a good fit. And if you want your cash fast, Biz2Credit can deliver, with faster turnaround times than many other lenders.

Try Biz2Credit

4. Fora Financial - Best for Early Payoff Discounts

If you need cash now but know you could repay the loan before the maturity date, a business restaurant loan from Fora Financial is your best bet. Fora Financial is one of few lenders who offers early payoff discounts, as low as 10 cents on the dollar.

Fora offers small business loans and merchant cash advances, with fast application turnaround and funding.

Pros
Early payoff discounts
Fast decision and funding
Minimum requirements to qualify
Cons
Rates may be higher than others
Details on early payment discount not disclosed

With Fora Financial’s small business loans and merchant cash advance, you can borrow from $5,000 to $750,000. Small business loans need to be repaid within 15 months, and merchant cash advances have no set repayment terms. There are no restrictions on use, and no collateral is required.

To qualify for a small business loan, you’ll need to be in business for at least six months and have $12,000 or more in monthly gross sales. To qualify for the merchant cash advance, you’ll need to be in business for at least six months and have at least $5,000 in credit card sales. Both loans require that you have no open bankruptcies.

The Bottom Line

While some lenders state that they have no prepayment penalties, Fora goes one step further and actually offers discounts to businesses who pay their loans off early. That money you save can be reinvested in your restaurant.

5. Fundbox - Best for Line of Credit

You may not be able to predict when you need cash for your business. You might need to buy an industrial mixer this week, then pay for a broken pipe in a few months. If you want to be prepared for when you do need cash, whether now or in the future, a line of credit from Fundbox is worth looking into. Having a line of credit can get you access to cash when you need it rather than a lump sum all at once.

And if a line of credit isn’t the right fit, Fundbox also offers a term loan up to $150,000.

Pros
Quick application
Upfront fees
Flexible payment options
Cons
Credit score requirement may be high for some
Can only borrow $150k

Fundbox’s line of credit allows you to borrow funds, pay them back,  then borrow them again, which means your restaurant will always have access to the capital it needs. You can repay the line of credit over 12 or 24 weeks.

A term loan from Fundbox gives you a lump sum all at once, with a set 24 or 52 week repayment plan. If you’re looking to make a large, one-time purchase, a term loan may be a better fit.

To qualify, your business must be U.S.-based, be six months old or older, and have annual revenues of $100,000 or more. You must also have a FICO score of at least 600, and you need a business checking account.

The Bottom Line

If having access to funds whenever you need them is appealing, check out Fundbox. Its line of credit is ideal for restaurants that have an ongoing need for working capital.

Try Fundbox

6. Bluevine - Best for Loan + Interest Checking

Having all your business financing services with one company saves your restaurant time and money. Bluevine offers both lines of credit up to $250,000 and a business checking account with an unheard-of 1.2% interest rate. Use what you make in interest to repay your Bluevine line of credit or put it back into your restaurant.


Pros
Low interest rates
Fast application approval
Funds available on demand
Business checking account available
Cons
Short repayment periods
Not available in every state
Credit score requirement may be high for some

Bluevine’s line of credit is available up to $250,000, and must be repaid in six or 12 months. There are no monthly fees or prepayment penalties.

To qualify, your U.S.-based business must be in operations for at least six months, with at least $10k in monthly revenue. You’ll also need a personal credit score of at least 625.

The Bottom Line

If you like having your business checking with the same company you borrow money from, Bluevine could be a good fit. And with the possibility of earning 1.2% in interest, you can make money from your efforts.

Try BlueVine

7. Credibly - Best for SBA Loans

If you have great credit and an established restaurant, you may qualify for a loan backed by the Small Business Administration (SBA). Credibly has SBA lending partners that can help you get low-interest loans with long repayment terms if you qualify.

Pros
Easy to qualify
Fast loan funding
Many types of loans available
Cons
Fees vary, depending on lender
May include origination fees
Daily or weekly payments

Credibly offers many types of loans, including:

  • Working capital loan
  • Long-term loan for business expansion
  • Line of credit
  • SBA loan
  • Merchant cash advance
  • Equipment loan

SBA loans for restaurants can be used as working capital, to consolidate debt, to purchase equipment, to buy real estate, and more. To qualify for an SBA restaurant loan, you must be in business for at least two years and have no outstanding tax liens, nor bankruptcies or foreclosures over the last three years. You must have $100,000 or more in annual revenues and a personal credit score of at least 620.

The Bottom Line

If you qualify for an SBA loan, you can pay less to get the funds you need to help your restaurant grow. Credibly works with many lending partners, and will match you with the one that best fits your needs.

Try FundBox

Best Restaurant Business Loans - Main Features

Company Min. Credit Score Min. Time in Business Min. Annual Revenue Loan Amount Interest Rate
Biz2Credit 575 6 months $250k $25k - $6 million Starting at 7.99%
Fora Financial 500 6 months $12k monthly $5k to $750k 10-30%
Kabbage 640 1 year $3k monthly $2k to $250k 6-month loan: 2-9%,12-month loan: 4.5-18%,18-month loan: 6.75-27%
Fundbox 600 6 months $100k Up to $150k Starting at 4.66%
Bluevine 625 6 months $10k monthly Up to $250k Starting at 4.8%
Credibly 620 2 years $100k Up to $20 million Starting at 6.99%
National Funding 600 1 year $100k Up to $500k unknown

What Can Restaurants Use Business Loans For?

The cost of opening and operating a restaurant can run between $95,000 and $2 million, depending on your detailed business plan. Half of all restaurant owners start businesses using personal savings, so having a clear vision of your dream helps you plan and know how much financing for restaurants you’ll need. Listed below are current estimates for the essentials:

  • Rent and building fees: The median monthly cost of rent is $5,000, and depending on the location and size of the building, it could cost much more.
  • Food costs: The average amount of food costs run 28%-35% of sales, with steakhouses exceeding this at 40%.
  • Operations: Expect to spend $10,000-$100,000 to cover the cost of equipment, depending on the restaurant size.
  • Labor expenses: The number of employees, their salaries, and benefits typically range from 28%-35% of gross profits.
  • Insurance fees: Approximately $180 a month will buy restaurant insurance that can offer some protection when unexpected events occur.
  • Technology costs: Monthly costs of $100-$400 for technology, such as point-of-sale terminals, handheld and at-table sale systems, self-order kiosks, digital displays, cash drawers, and printers.
  • Marketing expenses: Low-budget marketing costs average about $1,000 a month. This may include branding, the website, and social media.

Top 8 Ways to Finance a Restaurant Business

Here are the top financing options for restaurant owners:

  • Equipment financing – With this loan, you can buy the equipment to improve your restaurant or make any large equipment purchases.
  • SBA loan – This loan offers lower interest rates and longer repayment terms than other types of small business financing.
  • Business line of credit – Allows you to draw on the funds, pay them back, then use them again. You only pay interest on the amount you use.
  • Startup business loan – This is a loan you can take before you open a restaurant, as you don’t need to have a business to qualify.
  • Invoice factoring – The lender provides a lump sum of about 80% of the invoice value, and they then collect the money from the original owners. It is beneficial for restaurants that rent out their space and get late payments.
  • Unsecured business loan – The unsecured loan does not require any collateral, and it is usually followed by a more significant risk and higher interest rates.
  • Commercial real estate loan – A commercial real estate loan is used if you need to renovate your existing space or purchase another building to expand your business.
  • Merchant cash advance – This is the last resort when it comes to restaurant financing. The MCA is paid back with a percentage from future credit/debit card transactions, and the repayment terms last until the whole loan is paid off. A merchant cash advance is one of the most expensive forms of borrowing for restaurant owners.

Applying for a Restaurant Loan

The process of applying for a small business loan as a restaurant owner is similar to any other small business loan. Here is what you need to consider prior to applying for small business loans for restaurants:

  • Ensure you have a credit score of at least 600, preferably 680.
  • Ensure you have annual revenue of at least $100,000.
  • Ensure all your legal and financial documents are in order.

Financial documents include your business plan, financial statements, tax returns, collateral, and any legal business documents, among others.

These are the basics. To increase your credit score, the most important thing you can do is pay all of your bills on time and ensure you don’t max out your credit cards. Your rating will rise with time as long as you are responsible for the repayment schedule.

Conclusion

Having access to working capital can empower your restaurant to go further, whether that’s by hiring more staff, investing in equipment that makes it easier to serve customers, or expanding to another location. A restaurant business loan can help your business meet those needs, allowing you to focus on the day-to-day operations of running your restaurant.

Frequently Asked Questions(FAQ)

Do Banks Give Loans for Restaurants?

Any restaurant that is up and running can get a business loan through a bank if they meet the bank’s qualifications. It typically takes longer to get financing for restaurants from a bank than an online lender, though, so keep that in mind when deciding.

Is It Hard to Get a Loan for a Restaurant?

Assuming you meet the minimum requirements of credit score and annual revenue, getting a business loan for a restaurant is no different than any other type of small business wanting a loan.

Can I Get a Loan to Buy a Restaurant?

You can use a restaurant loan for short-term or long-term business requirements, including purchasing a property. Bank loans, SBA loans, secured loans, credit loans, and equipment financing are funding options available for purchasing a restaurant.

Can I Get a Restaurant Business Loan With Bad Credit?

Yes, certain online lenders offer funding for restaurants even if credit is less-than-ideal. You will be subject to higher rates and fees, though.

Why Do You Need a Restaurant Business Loan?

There are many uses for a restaurant loan, including purchasing equipment, paying salaries, opening another location, or even paying for the daily expenses that come with running a restaurant. Small business loans for restaurants can help pay these costs.

Can I Get an SBA Loan for a Restaurant?

Yes. If you fulfill the qualifying conditions, getting an SBA (7)(a) loan is among the best options. The SBA (7)(a) is a small business loan that helps businesses with many expenses, including real estate, working capital, and equipment.

About the Author

Susan Guillory

Written by: Susan Guillory

Intuitive Business Coach and Content Magic Maker

Susan Guillory is an intuitive business coach and content magic maker. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.

More about me
Sarah Brooks

Reviewed by: Sarah Brooks

Personal Finance Writer and Editor

Sarah Brooks is a personal finance writer and editor with more than 10 years of experience. She specializes in personal and business loans, mortgages, auto loans, and credit cards.

More about me

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