Traditional business loans can be hard for restaurant owners to qualify for because the industry is generally considered risky. That’s why restaurant business loans are most often available through Small Business Administration (SBA) lenders, nonprofits or alternative business loan providers.
Compare these top lenders for restaurants, which include a variety of loan types with competitive rates, along with options for new restaurants or borrowers with lower credit scores.
With over 75 partner lenders and 11 different loan options, Lendio is one of the largest online business loan marketplaces out there. It can be a good choice when you need funding fast or just don't have time to shop around. Its partners offer business financing solutions that range from working capital to SBA loans, and bad credit options are also available. But a few of its loan offers can be on the pricey side, and you could be on the hook for an origination fee from some lenders.
Loan amount
$1,000 – $5,000,000
APR
Varies by lender
Min. Credit Score
580
With over 75 partner lenders and 11 different loan options, Lendio is one of the largest online business loan marketplaces out there. It can be a good choice when you need funding fast or just don't have time to shop around. Its partners offer business financing solutions that range from working capital to SBA loans, and bad credit options are also available. But a few of its loan offers can be on the pricey side, and you could be on the hook for an origination fee from some lenders.
Pros
Network of over 75 lenders
Fast funding available within 24 hours
Works with bad credit
Cons
Some loan options are expensive
Not a direct lender
Restaurants might not qualify for lowest rates
Loan amount
$1,000 – $5,000,000
APR
Varies by lender
Min. Credit Score
580
Loan term
3 months to 25 years
Requirements
Operate business in US for 6 months or more, have a business bank account, minimum 580 personal credit score, at least $8,000 in monthly revenue.
Merchant cash advances (MCAs) are typically a good fit for restaurants and an option for owners with less-than-ideal credit. Rapid Finance offers advance amounts from $5,000 to $500,000 with terms up to 18 months, giving you access to flexible funding to buy inventory, pay your staff or purchase new equipment. It also offers other financing solutions if you want to explore all your options. But it doesn't disclose rates and fees, and MCAs are typically more expensive forms of financing. Plus, MCAs typically require weekly or even daily repayments.
Loan amount
$5,000 to $500,000
Merchant cash advances (MCAs) are typically a good fit for restaurants and an option for owners with less-than-ideal credit. Rapid Finance offers advance amounts from $5,000 to $500,000 with terms up to 18 months, giving you access to flexible funding to buy inventory, pay your staff or purchase new equipment. It also offers other financing solutions if you want to explore all your options. But it doesn't disclose rates and fees, and MCAs are typically more expensive forms of financing. Plus, MCAs typically require weekly or even daily repayments.
Kiva offers crowdfunded microloans to businesses of all kinds, including restaurants. It doesn't charge interest or fees, and there's no collateral required. It also doesn't have a minimum credit score requirement, making it accessible to borrowers with lower scores. But you need a generous social network to contribute to your loan, and the whole process could take more than a month to get funded. It also has a low maximum loan amount of only $15,000.
Loan amount
$1,000 – $15,000
APR
0%
Kiva offers crowdfunded microloans to businesses of all kinds, including restaurants. It doesn't charge interest or fees, and there's no collateral required. It also doesn't have a minimum credit score requirement, making it accessible to borrowers with lower scores. But you need a generous social network to contribute to your loan, and the whole process could take more than a month to get funded. It also has a low maximum loan amount of only $15,000.
Pros
No interest or fees
No collateral required
No minimum credit score
Cons
Low maximum loan amount
Relies on social network to qualify
Funding can take up to 45 days
Loan amount
$1,000 – $15,000
APR
0%
Loan term
6 months to 3 years
Requirements
Have at least ten friends and family members willing to contribute to your loan, live in the US, ages 18+, not in bankruptcy or foreclosure, not under any liens, not engaged in: multi-level marketing, direct sales, pure financial investing or illegal activities
National Funding is a direct lender and connection service that specializes in equipment financing. You can qualify for an equipment loan of up to $150,000 with fair credit and just six months in business — slightly different from its other business loan offerings. And it has a specialized program for financing restaurant equipment, both new and used.
Loan amount
Up to $150,000
APR
Not stated
Min. Credit Score
600
National Funding is a direct lender and connection service that specializes in equipment financing. You can qualify for an equipment loan of up to $150,000 with fair credit and just six months in business — slightly different from its other business loan offerings. And it has a specialized program for financing restaurant equipment, both new and used.
Pros
Lending program for restaurant equipment
Accepts fair credit
Only requires six months in business
Cons
Not always a direct lender
Not transparent about costs online
Requires $250,000+ in annual sales
Loan amount
Up to $150,000
APR
Not stated
Min. Credit Score
600
Requirements
6 months in business, fair to excellent credit, equipment quote from vendor.
BlueVine offers easy-to-use lines of credit that can get your inventory funding within hours of requesting a draw. It doesn't require you to use your inventory as collateral, and rates start as low as 7.8%. But it's not for partnerships or sole proprietorships. Your restaurant must be registered as a corporation or LLC to qualify. It's also not available in a few states, including Nevada, so Vegas-based restaurants will need to look elsewhere for financing.
Loan amount
Up to $250,000
APR
As low as 7.8%
Min. Credit Score
625
BlueVine offers easy-to-use lines of credit that can get your inventory funding within hours of requesting a draw. It doesn't require you to use your inventory as collateral, and rates start as low as 7.8%. But it's not for partnerships or sole proprietorships. Your restaurant must be registered as a corporation or LLC to qualify. It's also not available in a few states, including Nevada, so Vegas-based restaurants will need to look elsewhere for financing.
Pros
Draw requests available within hours
Fair credit OK
Rates start at a low 7.8%
Cons
Partnerships and sole proprietors are ineligible
Not available in NV, ND or SD
Typically requires weekly payments
Loan amount
Up to $250,000
APR
As low as 7.8%
Min. Credit Score
625
Loan term
Up to 12 months
Requirements
1 year in business, corporation or LLC, 625 FICO score, $120,000 in annual revenue, no bankruptcies
SmartBiz is an online platform that connects you with Small Business Administration (SBA) loans and guides you throughout the application process. The packaging services make it much easier for restaurant owners to navigate this paperwork-heavy, small-business loan program. And APRs are some of the most competitive around, if you qualify. But funding can take weeks or months, and there are packaging fees, closing costs and SBA guarantee fees to consider. You may also need a down payment, depending on the loan.
Loan amount
$50,000 – $350,000
APR
Prime Rate, plus 3% to 5.75%
Min. Credit Score
660
SmartBiz is an online platform that connects you with Small Business Administration (SBA) loans and guides you throughout the application process. The packaging services make it much easier for restaurant owners to navigate this paperwork-heavy, small-business loan program. And APRs are some of the most competitive around, if you qualify. But funding can take weeks or months, and there are packaging fees, closing costs and SBA guarantee fees to consider. You may also need a down payment, depending on the loan.
Pros
Connects with SBA lenders
Packaging services
Also offers non-SBA loans
Cons
Long turnaround times
Charges packaging fees and closing costs
May require an SBA guarantee fee
Loan amount
$50,000 – $350,000
APR
Prime Rate, plus 3% to 5.75%
Min. Credit Score
660
Loan term
10 years
Requirements
660+ credit score, 2+ years in business, $50,000+ in annual revenue, no bankruptcies or foreclosures in past 3 years
Loan amount
$50,000 – $350,000
APR
Prime Rate, plus 3% to 5.75%
Min. Credit Score
660
Best for new restaurants
Accion Opportunity Fund business loans
7.2
Great
Accion Opportunity Fund is a nonprofit community development financial institution (CDFI) lender. It specializes in funding newer businesses and provides coaching and mentoring to help your restaurant survive those volatile first few years. And it works with borrowers of all credit types. But it requires a blanket lien on loans over $50,000, rates can reach as high as 28.99% and you may have to pay an origination fee.
Loan amount
$5,000 – $250,000
APR
9.99% to 28.99%
Min. Credit Score
570
Accion Opportunity Fund is a nonprofit community development financial institution (CDFI) lender. It specializes in funding newer businesses and provides coaching and mentoring to help your restaurant survive those volatile first few years. And it works with borrowers of all credit types. But it requires a blanket lien on loans over $50,000, rates can reach as high as 28.99% and you may have to pay an origination fee.
Pros
No stated minimum credit score
Restaurant training and mentoring
Rates start at 9.99%
Cons
Blanket lien on loans over $50,000
Rates as high as 28.99%
May require origination fee
Loan amount
$5,000 – $250,000
APR
9.99% to 28.99%
Min. Credit Score
570
Loan term
12 to 36 months
Requirements
12+ months in business, $100,000+ in annual revenue, must own 20% of the business
Loan amount
$5,000 – $250,000
APR
9.99% to 28.99%
Min. Credit Score
570
Best for restaurant-specific financing
ARF Financial Flex Pay business loans
ARF Financial is an alternative lender that offers specialized financing programs for specific industries, including restaurant loans. It offers unsecured lines of credit, working capital loans, flex pay loans and bridge loans to the restaurant industry. You can borrow up to $725,000 as an unsecured loan or $1,000,000 if you put up collateral. But it doesn't disclose rates or fees online, and loan terms are fairly short relative to the loan size.
Loan amount
$5,000 – $1,000,000
APR
Not stated
Min. Credit Score
551
ARF Financial is an alternative lender that offers specialized financing programs for specific industries, including restaurant loans. It offers unsecured lines of credit, working capital loans, flex pay loans and bridge loans to the restaurant industry. You can borrow up to $725,000 as an unsecured loan or $1,000,000 if you put up collateral. But it doesn't disclose rates or fees online, and loan terms are fairly short relative to the loan size.
Pros
Loan programs made with restaurants in mind
Up to $725,000 in unsecured financing
No collateral required
Cons
Doesn't disclose rates online
Relatively short loan terms
Slightly longer turnaround for an online lender
Loan amount
$5,000 – $1,000,000
APR
Not stated
Min. Credit Score
551
Loan term
Up to 36 months
Requirements
30+ days in business, $100,000 annual revenue
Loan amount
$5,000 – $1,000,000
APR
Not stated
Min. Credit Score
551
Best for franchises
ApplePie Core business loans
6.8
Standard
ApplePie Capital is one of the only lenders out there that specializes strictly in franchise financing. Its term loans start at $100,000, but it's one of the few providers that accepts new franchises, and it doesn't require personal collateral. But beyond that, it doesn't disclose what you need to qualify or what range of interest rates it charges. ApplePie Capital may also charge origination fees and prepayment penalties. Down payments are typically 15% to 20% of the loan amount.
Loan amount
$100,000 – $5,000,000
APR
Not stated
Min. Credit Score
660
ApplePie Capital is one of the only lenders out there that specializes strictly in franchise financing. Its term loans start at $100,000, but it's one of the few providers that accepts new franchises, and it doesn't require personal collateral. But beyond that, it doesn't disclose what you need to qualify or what range of interest rates it charges. ApplePie Capital may also charge origination fees and prepayment penalties. Down payments are typically 15% to 20% of the loan amount.
Pros
No personal collateral required
Range of loan options
Specializes in franchise financing
Cons
May charge origination and prepayment fees
Rates aren't listed
Doesn't disclose requirements to qualify
Loan amount
$100,000 – $5,000,000
APR
Not stated
Min. Credit Score
660
Loan term
Up to 10 years
Requirements
Not stated
Loan amount
$100,000 – $5,000,000
APR
Not stated
Min. Credit Score
660
Types of restaurant business loans
SBA loans
SBA loans offer restaurants government-backed funding as high as $5 million or more for almost any use. With rates and fees capped by the government, SBA loans might be the least expensive restaurant financing option for many businesses. While there are programs for startups and bad credit, it’s best for restaurants that have been around for at least three years and owners who have credit scores above 620, which most SBA lenders require.
Business lines of credit
A business line of credit offers your restaurant access to cash as needed to buy inventory, hire new staff, handle seasonal expenses or use as general working capital. These can be helpful to have on hand for emergencies since it typically takes less time to draw from a credit line than get approved for a loan.
Business term loans
Business term loans can help your restaurant cover a large, one-time expense, like renovating your dining room or updating the bathrooms. They’re the most common type of financing out there and are available for startups and established businesses, as well as for good or bad credit.
Equipment financing
Restaurant equipment financing is a term loan to buy equipment, including a new oven, mixer or salamander. Usually, lenders will finance between 80% to 100% of the cost and use your equipment as collateral. The loan term is based on how long the lender expects your equipment to be functional. And this type of financing is one of the easiest to qualify for.
Restaurant acquisition loans
A restaurant acquisition loan is a term loan used to buy an existing restaurant. The SBA 7(a) program can be a good option for restaurants that want to expand by buying out a competitor, since they come with low rates and offer high loan amounts up to $5 million.
Inventory financing
Since food and alcohol are perishable goods, traditional inventory financing is off the table for most restaurants. But there are other inventory financing options. Consider an unsecured term loan or line of credit to buy inventory, or use other business assets to back the loan.
Working capital loans
Working capital loans are usually short-term business loans, typically used to cover unexpected expenses or cash flow shortages. These can often fund your business within one day and are available to business owners with poor credit. But they often come with daily or weekly repayments and can cost more than your typical term loan or line of credit.
Merchant cash advances
Merchant cash advances are an advance on your restaurant’s future credit and debit card sales. They can help cover cash-flow gaps during the high season. But they’re one of the most expensive types of restaurant financing out there and should be saved as a last resort, like during an off-season or when sales are difficult to predict in advance.
When to get a restaurant loan
A restaurant business loan can be useful when you need funds to invest in a new project or to cover working capital expenses. Use a restaurant loan to:
Hire new staff and stay competitive in a tight labor market by funding sign-on bonuses, upgraded health insurance and attractive pay.
Buy inventory to meet seasonal demands as you prepare to get busy.
Bring on a new vendor to revamp your menu. Pair with a farm or craft brewery to spice things up for your regulars.
Upgrade equipment that’s on its last legs. Commercial kitchen equipment typically lasts around 10 years.
Launch a marketing campaign to bring back old customers and attract a new crowd. Let the world know your restaurant is still around and better than ever.
Open a new location or renovate where you are and fully cover moving and refurb costs to keep your cash flow freed up.
Buy another restaurant if you’re a seasoned entrepreneur and spot potential in an already-existing restaurant.
How to compare restaurant business loans
Once you know the kind of loan you’re looking for and have identified some top lenders, compare these key factors before applying.
Interest rates. Rates vary significantly by lender, so be sure to compare multiple lenders and loan types to find the best deal for your situation.
Fees. Like interest, fees add to the loan’s cost. Look for lenders that charge minimal fees.
Turnaround times. Consider how soon you need the capital when weighing your options. For example, alternative business lenders tend to offer fast funding, whereas SBA loans can take months.
Repayment terms. Shorter terms can save on interest charges, but payments can be high. Longer terms offer lower payments but may be more expensive in the long run. Try to shoot for the shortest loan term with payments that fit into your budget.
Lender requirements. Each lender has different requirements to qualify. Make sure you meet the minimum criteria before you apply.
How to qualify for a restaurant loan
Exact requirements to qualify for a restaurant loan vary depending on the lender or loan type, but most consider your credit score, time in business and monthly or annual revenue.
Credit score. A good credit score of 670 or more will open you up to the most opportunities, but there are providers, particularly online lenders, that accept lower scores.
Revenue. How much you take in is a key factor in determining how much you can borrow, and most restaurants will need around $8,000 to $10,000 in monthly revenue to qualify.
Time in business. Some lenders offer financing to restaurants that have been in business for a year or less, but you’ll have more funding options if your restaurant is at least two or three years old.
Some restaurant loans may also require collateral or a down payment, and most require a personal guarantee.
How to apply for a restaurant business loan
While steps may vary depending on the loan type or lender, restaurants can generally follow these steps.
Compare business loans. Decide on the type of restaurant financing your business can benefit from the most, taking into account repayment terms, collateral requirements and cost.
Compare lenders. Get quotes from your top choices. Most lenders now have online preapplication forms, though banks and Community Development Financial Institutions (CDFIs) might require you to meet in person.
Gather the documents you need to apply. You’ll typically need documents like tax returns, bank statements, financial statements, your restaurant’s business plan and profit and loss statements.
Complete the loan application. Some lenders might ask for additional documentation at this point.
Review and sign the closing documents. Be sure to carefully read your contract so you know exactly what to expect.
Need help?
Set up an appointment with an SBA resource partner in your area, like a small business development center. They can outline all your financing options and help you decide on the right path forward for your business.
What kind of credit score do I need to get a business loan?
Generally, you need to have good to excellent credit to get a business loan — that’s a credit score of at least 670. Business lenders are usually more forgiving of personal credit scores than personal loan providers.
But when it comes to the restaurant industry, your credit score could matter more, especially if you’re within the first five years. It can help offset the risk of lending to a relatively high-risk business.
Frequently asked questions
Yes. It's still possible to get a restaurant loan even if your credit is poor. Microloans or merchant cash advances are two options to consider. You might also want to look into restaurant grants or consider setting up a crowdfunding campaign.
That depends on your goals for your restaurant. Need a bigger space? Then, a commercial real estate loan is your best bet. Aging equipment in the kitchen? Look into equipment financing.
While you could look into big banks like Chase, Wells Fargo or Bank of America, they tend to have fairly strict requirements to qualify. But lots of business owners recommend local banks that have a stake in your community, where you can build a relationship.
Anna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY.
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