Finimpact

Best Restaurant Business Loans

Running a restaurant can be expensive. With some of the lowest profit margins of any industry, restaurants 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
Intuitive Business Coach and Content Magic Maker

With low profit margins and ever-increasing costs for food, not to mention payroll expenses, it can be 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 and still cover their bills.

They may also need financing if they’re thriving and ready to expand to 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

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
Fundbox review
  • No monthly fees or prepayment penalties
  • Same-day or next-day funding
  • Best for business lines of credit
Credit Score
Min. Credit Score 600+
Loan Amount
Loan Amount $5K - $150K
repayment
Loan Repayment 6-12 months

How to Choose the Best Restaurant Business Loan?

If you’re one of those restaurant owners who could use some extra cash, you might be wondering where to start in finding the right restaurant business loan. How can you find a reputable lender? Who offers the best rates?
Not to worry. Our experts have done the hard work to find 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 lots of information, while others are short and sweet. 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. Restaurant owners may pay more for short-term financing.
  • 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 also look 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 like reduced interest on secondary loans, payment flexibility, and mobile apps.

Best Restaurant Business Loans - Full Overview

Considering the factors above, here are some of the lenders who provide financing to restaurants.

1. 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.

Qualifying 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

2. Fora Financial - Best for Early Payoff Discounts

Sometimes you need cash right now but know you could repay the loan before the maturity date. In that case, wouldn’t it be nice to get a discount on the loan for your restaurant? 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, and have up to 15 months to repay it. There are no restrictions on use, so you can use your loan for whatever your restaurant needs, 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.

3. 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. Having a line of credit, like the one Fundbox offers, 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 then borrow them again once you repay them, 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.

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 to qualify, and you need a business checking account.

The Bottom Line

If having access to funds whenever you need them is appealing, rather than being limited by a loan that’s gone once you spend the funds, check out Fundbox. Its line of credit is ideal for restaurants that have an ongoing need for working capital.

Try Fundbox

4.BlueVine - Best for Loan + Interest Checking

Having all your business financing services with one company saves your restaurant time and money. BlueVine, which offers lines of credit up to $250,000, also offers a business checking account that offers 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
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 600.

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

5. Credibly - Best for SBA Loans

If you have great credit and have 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
Its SBA loans can be used as working capital, as debt consolidation, to purchase equipment, to buy real estate, and more. To qualify for an SBA 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. You as the business owner must be a U.S. citizen or legal permanent resident and have 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, so you can choose the one that best fits your needs.

Try FundBox

6. National Funding - Best For Companies with Bad Credit

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 also 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.

Best Restaurant Business Loans - Features Comparisons


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

n/a

6 months

$12k monthly

$5k to $750k

10-30%

Fundbox

600

6 months

$100k

Up to $150k

Starting at 4.66%

BlueVine

600

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

500

1 year

$100k

Up to $500k

unknown

What Can Restaurants Use Business Loans For?

Restaurant startup costs 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 funding you’ll need. Listed below are current estimates for the essentials:

  • Food costs: The average amount of food costs run 28%-35% of sales, with steakhouses exceeding this at 40%.
  • Operations: $10,000-$100,000 will cover equipment depending on the restaurant size.
  • Labor costs: The number of employees, their salaries, and benefits should range from 28%-35%
  • Rent and building fees: Owning your space averages $178 per square foot, while leasing averages $159 per square foot.
  • Hidden costs: 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, but not limited to, point-of-sale terminals, handheld and at-table sale systems, self order kiosks, digital displays, cash drawers, and printers, could provide a significant return on your investment.
  • Marketing costs: Low-budget marketing costs average about $1,000 a month. This may include branding, the website, and social media, to name a few.

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 is not as much as a funding option, but it provides a safety net for borrowers to get a loan from another lender.
  • A business line of credit – a type of loan that can be handy, as you can use it at your discretion, and use as much of it as you need, and 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, and you can use it to build your business.
  • Invoice factoring – this type of loan is interesting for restaurant owners who are dealing with slow-paying accounts. The lenders provide 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 vehicle loan – it is not exactly a friendly loan for conventional restaurants, but it is a perfect option for catering businesses, food trucks, and food delivery services.
  • 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.

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. Often, restaurant owners tend to have tight profit margins, making it more difficult for them to get financing. So, it is wise to go the extra mile and prepare your loan application. Thus, before you go and apply for a loan, here is what you need to consider:

  • 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.
  • 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.

    How Do You Finance a New Restaurant?

    Whereas banks are most attuned to analysis of past performance, alternative lenders are eager to assess a restaurant’s upcoming expectations. Among alternative financing options for new restaurants are equipment lending and cash advances against merchant credit card sales.

    Alternative financing lenders tend to have more lenient borrowing qualifications than traditional banks and provide greater repayment flexibility. However, SBA guaranteed loans from banks to new restaurants are possible. For example, an experienced restaurant manager with a sound business plan for a new restaurant is an SBA loan candidate.

    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 expand to another location.

    Frequently Asked Questions (FAQ)

    Do Banks Give Loans for Restaurants?
    Any restaurant that is up and running may get a loan. Some bank lenders and certain merchant cash advances could specify that a restaurant must be open for over a year. Non-traditional lenders with an established history of underwriting might offer loans to restaurants that have been in operation for just 30 days.
    Is It Hard to Get a Loan for a Restaurant?
    It can be hard to receive a restaurant business loan, as lenders view the industry susceptible to change. Many lenders do provide loans supported by the Small Business Administration (SBA) that you can use to purchase an existing restaurant, establish a new location, or get working capital.
    Can I Get a Loan to Buy a Restaurant?
    Many restaurant start-ups have difficulty securing funding without a guarantor and an asset to provide as collateral. Yet, as the restaurant industry develops, banks provide restaurant loans for partnership firms, sole proprietorships, and limited companies. 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?
    Increasing your personal credit score influences your eligibility for a business loan. However, this takes time. If you require urgent capital and can’t wait, some lenders might provide your restaurant with a loan without considering your personal or business credit score.
    Why Do You Need a Restaurant Business Loan?
    There are many uses for a restaurant loan. A restaurant loan can offer working capital to, for example, buy new equipment, buy inventory, pay salaries, expand the offer, buy ingredients, pay bills, and more. There are many funding options out there: from alternative to direct lenders.
    Buy a Restaurant Using a Loan or Opening a New Restaurant?
    It is an entirely personal choice. If you already have experience, then you can open a new restaurant. Still, for this, you’ll have to apply for a different type of loan, namely a startup business plan, or use other financing channels like crowdfunding and more.
    What Type Of Restaurants Are Eligbale For Business Loans?
    The eligibility criteria for a business loan for a restaurant vary from lender to lender.
    Here are some eligibility criteria commonly used by lenders:
    • If the loan is requested for an existing restaurant, the restaurant must have been in business for six months.
    • The lender will likely ask for a minimum turnover if the restaurant is currently in operation.
    • The restaurant business cannot be on a blacklist for small business loans.
    • The lender must approve the location of the restaurant.
    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 commercial loan that helps small businesses with many expenses, including real estate, working capital, or equipment.

    Related Loan Picks

    About the Author

    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