This article was reviewed by Doug Noll, a member of the Finder Editorial Review Board and award-winning lawyer, mediator and author with over 40 years of experience in the legal field.
Traditional business loans can be hard for restaurants to qualify for because lenders consider the restaurant industry to be risky. That’s why restaurant business loans are most often available through Small Business Administration (SBA) lenders, nonprofits or alternative business loan providers.
These financing options are easier to qualify for than a bank loan, making it possible to obtain a loan to buy a restaurant, upgrade a kitchen or cover working capital expenses. But many charge higher interest rates and fees than you’d find at a bank. And some require weekly or even daily repayments, which can be inflexible.
Our team reviewed over 220 business lenders before selecting the best lenders for restaurants, focusing on providers with flexible requirements or relatively low rates and fees. And we revise our list regularly. In July 2021, we replaced Fora Financial with Credibly as our pick for bad credit, due to Credibly's faster turnaround and transparency about costs.
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 a credit score as low as 575 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.
Lending program for restaurant equipment
Accepts fair credit
Only requires six months in business
Not always a direct lender
Not transparent about costs online
Short loan terms
$5,000 – $500,000
4% to 8%
Min. Credit Score
Up to 12 months
Be in business at least one year and make at least $150,000 in annual sales. Other loan types have additional requirements.
BlueVine offers easy-to-use lines of credit that can get you funding within hours of requesting a draw. It doesn’t require you to use your inventory as collateral — which generally isn’t an option when your inventory is perishable. And it accepts fair credit. But it’s not for startups. Your restaurant must be around for at least three years, generate $10,000 in monthly revenue and 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.
Draw requests available within hours
Fair credit OK
Rates start at a low 4.8%
Partnerships and sole proprietors are ineligible
Not available in NV, ND, SD or VT
Potential weekly payments
$5,000 – $250,000
Starting at 4.8%
Min. Credit Score
6 to 12 months
6+ months in business, $10,000+ in monthly revenue, 600+ credit score
SmartBiz is an online platform that can connect you with a bank offering Small Business Administration (SBA) loans and help you fill out the application. The packaging services make it a lot easier for restauranteurs to navigate this paperwork-heavy loan program. This can be particularly useful for restaurants that want to take advantage of the reduced fees and higher guarantee that the SBA is offering during the coronavirus outbreak.
Connects you with SBA lenders
Also offers non-SBA bank loans
Turnaround as long as 30 days
Charges packaging and referral fees
$30,000 – $5,000,000
4.75% to 7%
Min. Credit Score
10 to 25 years
640+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years
Accion Opportunity Fund is a nonprofit community development financial institution (CDFI) lender. It specializes in funding new businesses, and provides coaching and mentoring to help your business survive those volatile first few years. In 2021, it launched the Main Street Strong Accelerator program in partnership with DoorDash to help revitalize restaurants affected by COVID-19 — which includes training and a $20,000 grant. Its $50,000 revenue requirement is lower than you might find with most lenders. And it has no stated credit score minimum.
No stated minimum credit score
Restaurant training and grant program
Rates start at low 5.99%
Relatively new lender
No longer offers microloans
Doesn’t disclose fees online
$5,000 – $100,000
5.99% to 25.99%
12 to 60 months
12+ months in business, $50,000+ in annual sales, 20%+ ownership of business, 18+ years old
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. And its 90-day COVID-19 Guarantee means you can request 90 days of interest-only payment if government mandates make it impossible for you to operate at full capacity. But while other industries might qualify for more, restaurant loans stop at $450,000.
Loan program made with restaurants in mind
90-Day COVID-19 Guarantee
No collateral required
Doesn’t disclose rates online
Other lenders might have more flexible hardship policies
This peer-to-peer platform can connect your restaurant with investor-funded loans. It can be a great option if your credit score is less than perfect, with relatively low rates starting at 8.75% APR. It was also one of the first online lenders to offer PPP loans. But your restaurant must be at least two years old to qualify.
Accepts 620 credit scores
No minimum revenue requirements
No prepayment penalty
Can take at least five business days to fund
At least two years in business required
$5,000 – $500,000
4.99% to 38.43%
Min. Credit Score
3 to 120 months
660+ personal credit score, 2+ years in business, for-profit business in an approved industry, not located in Nevada
Credibly is an online lender that offers short-term loans and merchant cash advances for all credit types. Its merchant cash advances and short-term loans come with relatively low fees, compared to other products available to bad credit borrowers, starting at 15 cents on the dollar. And in addition to accepting credit scores as low as 500, you only need six months in business. But its monthly revenue requirement of $15,000 is a little higher than other bad-credit lenders. And like other short-term loans and merchant cash advances, Credibly charges daily or weekly repayments.
Funding available within 24 hours
Low starting factor rate of 1.15
Transparent about costs
Weekly or daily repayments
High $15,000 monthly revenue requirement
Maximum loan of $400,000
$5,000 – $400,000
Min. Credit Score
3 to 18 months
6+ months in business, $15K+ in monthly deposits, 500+ credit score
ApplePie Capital is one of the only lenders out there that specializes in franchise financing. Its term loans start at a high $100,0000 — but its rates are low, running from 6.5% to 9% APR. And it accepts startups. But you must have a personal net worth that is at least equal to the amount you're borrowing. And established businesses must be profitable for the past six months — under normal circumstances.
Low rates of 6.5% to 9% APR
Works with entrepreneurs
Specializes in franchise financing
May charge broker fee
No loans under $100,000
Must have net worth equal to loan
$100,000 – $10,000,000
6.5% to 9%
Min. Credit Score
60 to 120 months
Operate an eligible franchise, 660+ credit score, personal assets to fully secure the loan, additional based on financing type
With over 75 partner lenders, Lendio is one of the largest online business marketplaces out there. It can be a good choice when you need funding fast — or just don’t have time to spend shopping around. Its partners offer everything from working capital to SBA loans. And bad credit options are available. But customers give the site mixed reviews. Some say it was a great choice, while others complain it didn’t give enough information about offers or that Lendio customer service was slow to respond to emails.
Network of over 75 lenders
Fast funding available within 24 hours
Works with bad credit
Customers report spotty response times from Lendio staff
Not a direct lender
Restaurants might not qualify for lowest rates
$500 – $5,000,000
Starting at 6%
Min. Credit Score
1 to 25 years
Operate business in US or Canada, have a business bank account, 560+ personal credit score
COVID-19 relief programs for the restaurant industry
Several federal COVID-19 relief programs were available to restaurants, but many have run out of funds. But you should still consider these low-cost and free options before you apply for restaurant financing.
Here’s the status of the main SBA programs as of July 20, 2021.
Eligible restaurants located in low-income areas will be invited to apply for a Targeted EIDL Advance of up to $15,000 after applying for an EIDL.
Restaurants that have already received a Targeted EIDL Advance can still apply for a Supplemental Targeted Advance of up to $5,000 — also if they're invited by the SBA to apply.
The restaurant industry is also eligible for up to eight months of SBA loan debt reliefto all borrowers — including six months for new SBA loans disbursed between February 1, 2021 and September 30, 2021. The SBA will cover interest, fees and principal payments on the most popular SBA loan programs during the covered period.
Types of restaurant business loans
These restaurant financing options might benefit businesses in the food service industry the most.
SBA loans offer restaurants government-backed funding as high as $5 million 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 good to have on hand for emergencies, since it typically takes less time for you to draw from a credit line than get approved for a loan.
Business term loans
Business term loans can help your restaurant cover a one-time expense — like renovating your dining room to meet social distancing policies. They’re the most common type of financing out there and are available for startups and established businesses, as well as good and bad credit.
Restaurant equipment financing is a term loan to buy equipment — including a new oven, mixer or salamander. Usually you can fund 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.
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. These can often fund your business within one day and are available to business owners with poor credit. But they can 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 cashflow gaps during the high season. They’re one of the most expensive types of restaurant financing out there and should be saved as a last resort. Especially during an off season or when sales are difficult to predict ahead of time.
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 summer demand as Americans come back to restaurants in droves.
Bring on a new vendor to revamp your new 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 back in business 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.
While steps may vary depending on the loan type, amount or lender, restaurants can generally follow these steps.
Compare business loans and decide on the type of restaurant financing your business can benefit from the most.
Compare lenders and get quotes from your top choices. Most lenders now have online preapplication forms, though banks and CDFIs might require you to meet in person.
Gather the documents you need to apply, such as previous years' taxes, bank statements, financial statements, your restaurant’s business plan and profit and loss statements.
Complete the application and get your collateral appraised, if required. Some lenders might ask for additional documentation at this point.
Review and sign the closing documents and save a copy that you can reference in the future.
Need help? Set up an appointment with an SBA resource partner in your area, like a small business development center. They can outline all of your financing options — including COVID-19 funding and grants — and 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.
Can I get a restaurant loan with bad credit?
If you have bad personal credit — or no credit at all — it’s still possible to get a restaurant loan. Microlenders and merchant cash advance companies are often your best bet.
But these often come with high rates or take a while to qualify. You might want to consider other options instead. Look into restaurant grants and consider setting up a crowdfunding campaign.
More COVID-19 assistance for restaurants and employees
Business loans can dig your restaurant into an even worse financial situation if you’re struggling during the coronavirus outbreak. Instead, try to get help you don’t have to make repayments on. Some of these options are available to restaurant workers, while others are for small businesses.
Southern Smoke Foundation Emergency Relief Fund. Food and beverage industry employees can apply for this relief grant during any crisis — including COVID-19. To qualify you must have worked at least six months in the industry for a minimum of 30 hours per week. It also offers free mental health services to Texas residents in the industry.
Raising the NYS Bar Restaurant Recovery Fund. Full-service restaurants in New York State that didn’t offer take out or delivery can apply for grants of up to $5,000.
Restaurant Employee Relief Fund (RERF). This program gave restaurant workers $500 grants to help make up for lost work. While the National Restaurant Association is no longer accepting RERF applications as of February 2, 2021 it’s possible there will be another round.
Many local governments also offer grants to small businesses struggling during the COVID-19 outbreak. Talk to your local SBDC to learn about more options.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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