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Compare restaurant loans

You’ve got a passion for cooking and the desire to make something bigger than yourself. Here's how to fund that dream.

Updated

There’s a lot of stress in the kitchen: heat, a large crowd, special or time sensitive orders — and all of it can be demanding. Luckily, that demand can help you prepare for owning your own business. Running a restaurant can take big investments of time and money, and a great deal of dedication on top of that.

Because the right financing can potentially make or break your new venture, you’ll want to carefully consider your needs and the financing options available to you. Our guide takes you through your options and how to compare them, plus learn tips from professionals in your field.

SharpShooter Funding Business Loan

  • Min. Loan Amount: $500
  • Max. Loan Amount: $500,000
  • Interest Rate: Fee based, Prime pricing starting at 9.00%
  • Requirements: Annual business revenue of $120,000
  • Free online loan quote
  • Borrow $500,000+
  • Quick application process

SharpShooter Funding Business Loan

SharpShooter Funding offers loans up to $500,000 for small business owners who have been business for at least 2 years and can show a minimum of $10,000 in monthly deposits.

  • Min. Loan Amount: $500
  • Max. Loan Amount: $500,000
  • Interest Rate: Fee based, Prime pricing starting at 9.00%
  • Requirements: Annual business revenue of $120,000
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What loan options are available for restaurants?

Here’s a breakdown of the main financing options you can choose from:

  • Business term loans. General business loans provided by banks, other financial institutions and online lenders can help you with large one-time expenses like kitchen and front of house equipment. While you’ll need to meet the eligibility requirements, if approved, you might be able to borrow up to $1.25 million.
  • Canada Small Business Financing Program (CSBFP) Loan. Find competitive rates with a Government-backed loan designed to help startups and small businesses that might struggle to qualify for other financing. These loans are at least 75% backed by the Government and are provided by banks and other financial institutions. Your business will need to bring in an annual revenue of less than $10 million to qualify and you’ll have to use the financing for specific purposes like purchasing equipment, land or buildings, or doing renovations on your property.
  • Equipment financing. New and used equipment can sometimes be financed directly in-house with the provider you’re buying it from. If not, you can look into a business loan specifically designed for purchasing equipment.
  • Inventory financing. Designed specifically for obtaining supplies and inventory, the types of financing offered range from short term loans to lines of credit.
  • Invoice factoring. If inventory isn’t a problem but you need working capital, consider invoice factoring. This is where you sell account receivables to a third-party at a discount.

Business loan options to consider for your restaurant

Name Product Interest Rate Min. Loan Amount Max. Loan Amount Loan Term Minimum Revenue Min. Credit Score Filter Values
SharpShooter Funding Business Loan
Fee based, Prime pricing starting at 9.00%
$500
$500,000
6 months - 5 years
$10,000 /month
670
SharpShooter Funding offers loans up to $500,000 for small business owners who have been business for at least 2 years and can show a minimum of $10,000 in monthly deposits.
Loans Canada Business Loan
Prime Pricing from 9.00%, Long term financing from Prime + 2.00%
$2,000
$350,000
3 months - 5 years
$4,166 /month
410
Loans Canada connects Canadian small business owners to lenders offering up to $350,000. Borrowers must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).
OnDeck Business Loan
8.00% – 29.00%
$5,000
$300,000
6 - 18 months
$10,000 /month
600
OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000.
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Representative example: Nolan takes over the family restaurant

Nolan, who lives in Ontario, is the manager of a local family restaurant that his parents have owned for nearly 30 years. Now that they’re are ready to retire, Nolan wants to buy the restaurant and become the new owner. His parents were originally planning to sell the entire business – including property, inventory and all other assets – for $150,000.00. Nolan applies for a business loan from an online lender for this amount. Thanks to his solid credit history, he is approved.

Nolan and his parents forfeit the collection and remittance of sales tax on the transaction by signing Form GST44, which can be done because both parties are GST/HST registrants. Had they not signed this form, Nolan would’ve had to pay 13% HST ($19,500.00) on the sale price. In that case, he could’ve treated the HST as tax deductible on his next business tax return.

Cost of purchasing a restaurant$150,000.00
Loan typeBusiness loan (term loan)
Loan amount$150,000.00
Interest rate (APR)8.90%
Loan term7 years
Additional feesOrigination fee of 3.00% ($4,500.00)
Monthly payment$2,405.76
Total loan cost$202,083.84

*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

How do I compare my financing options?

With so many types of financing, it can be overwhelming to compare your options. Here are a few elements you can focus on when making a decision on which type of financing to apply for:

  • Eligibility criteria. The age of your restaurant, annual revenue and your personal credit score, among other factors, can all affect your eligibility.
  • Loan type. When you’re looking at financing, you may want to consider how the different merits of each type could fit your needs. A traditional loan will likely have stricter qualifications than a short term loan will, but the rates will be much higher with the latter. Other types of financing for specific needs, like equipment or inventory, may not provide you with enough working capital.
  • Loan amount. Be sure the lender’s maximum amount offered covers what you require. But avoid applying for too much — taking on more than you need can lead to paying unnecessary interest charges and ultimately throw you into a cycle of debt you can’t get out of.
  • Loan term. With a longer loan term comes lower monthly payments, but a higher overall cost due to more payments towards interest.
  • Costs. The interest rate and any fees charged can help you determine how much your business loan will cost. If the lender provides an annual percentage rate (APR), this can give you a strong idea of how much you’ll pay on top of the loan principal. Keep in mind that the APR doesn’t include penalty fees for things like late or missed payments, but it does include other fees like administration fees, as well as the interest rate.

What do I need to apply?

Generally, you’ll need to provide the following:

  • A detailed business plan.
  • A statement of your financial needs.
  • Your business and/or personal bank account statements.
  • Profit and loss statements.
  • Your business ownership documents.

6 tips on running a successful restaurant from Michelin-starred chefs (source: The Legacy Project)

  • compare restaurant loansMake it nice. A nice welcome can set the tone for a restaurant or cafe. A nice plate requires fresh ingredients and a sophisticated presentation. A nice table requires lovely linens, a pressed tablecloth and a high level of cleanliness. It all comes down to the details.
  • Hire people who have passion. Bring on people who love food and service as much as you do. Find members for your team who will dedicate themselves by giving their all.
  • Lead by example. If you expect your team to do well, show them what that looks like. Work just as hard as you want them to.
  • Shove good aside — and be great. Great requires sacrifice, time and patience. Kick things up a notch with a willingness to listen to criticism – and evolve from it.
  • Balance is everything. If you work until you break, you won’t be of use to anyone or anything — your restaurant included. Take time for yourself to do more than just own a restaurant.
  • Don’t give in. You’ll have days when you want to quit for something less intense. Think over your options, and don’t make any snap decisions. How can you view tough days as learning experiences or delegate tasks to lighten your workload?

Bottom line

A great restaurant is about making an unforgettable dining experience. Keep your goal in mind to give yourself some perspective. Just as each guest’s time at your restaurant is unique, so are your restaurant’s needs. If you’re looking for financing, take your time to find the right type of loan for your needs.

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