8 best restaurant business loans (updated for COVID-19) | finder.com

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Best restaurant business loans

These online lenders offer simple financing — with options for bad credit, startups and restaurants struggling during COVID-19.

Updated . What changed?

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Editor's choice: First Down Funding business loans

  • Works with bad credit and most industries
  • Only 100 days in business required
  • No credit check
Check eligibility

Getting a restaurant business loan can be difficult under normal circumstances — especially if you’re within those first five years. With such tight profit margins and a high rate of failure, lenders tend to see this industry as risky.

Unfortunately, COVID-19 has made it even more difficult for some restaurants to qualify for financing, especially in areas with government shutdowns. Government assistance like Paycheck Protection Program (PPP) loans were created with this industry in mind. But grants are often a better choice for struggling businesses in the food service industry.

8 best restaurant business loans

Our team of business loan experts reviewed over 220 business lenders before selecting these providers. We focused on lenders that offer the types of financing restaurants can benefit from the most — like equipment financing and inventory lines of credit. And and we put an emphasis on lenders with flexible requirements.

LenderPPP loans available?Best forLoan amountsAPR

Fundbox

Yes

Inventory financing

$1,000 to $150,000

Starting at 4.99%

National Funding

No

Equipment financing

$5,000 to $500,000

4% to 8%

SmartBiz

Yes

SBA loans

$30,000 to $5,000,000

4.75% to 7.00%

Funding Circle

Yes

Fair credit — 580 and up

Starting at $25,000

Starting at 4.99%

Rapid Finance

No

Bad credit — 579 and below

Starting at $5,000

Factor rate of 1.09 to 1.3

Kabbage

Yes

PPP loans

Up to $10 million

1%

Kiva

No

Opening a restaurant

$25 to $15,000

0%

ApplePie Capital

Yes

Franchise financing

Starting at $100,000

6.5% to 9%

Best restaurant business loan details

Best for PPP loans: Kabbage small business loans

600
Min. Credit Score

Starting APR
$250,000
Loan Amount

Kabbage has suspended its regular lending program to solely focus on getting PPP loans into the hands of small business owners through its platform, K Servicing. This online lender specializes in financing businesses with lower payroll expenses — the average PPP loan was just below $13,000 during the first round of funding. Restaurants that already received a PPP loan can apply for a Second Draw loan through Kabbage’s K Servicing as long as they saw a 25% drop in revenue or more since March 2020.

  • Focused on PPP loans
  • Uses algorithm to quickly process application
  • Average PPP loan under $13,000
  • Not offering regular business loans
Min. Loan Amount $500
Max. Loan Amount $250,000
APR Varies
Interest Rate Type Variable
Min. Credit Score 600
Minimum Loan Term 6 months
Maximum Loan Term 12 months
Fundbox business loans logo
Finder Rating: 4.76 / 5

★★★★★

Check eligibility

on Fundbox business loans’s secure site

Best for inventory financing: Fundbox business loans

600
Min. Credit Score
4.99%
Starting APR
$150,000
Loan Amount

Fundbox’s simple lines of credit make it easy to keep your walk-in stocked — and avoid 86-ing your best sellers on a busy night. It connects to your restaurant’s accounting software instead of asking for paperwork, and there are no fees to make a withdrawal. It also works with fair-credit owners and restaurants that have only been around for six months. But the weekly repayments can be unforgiving if you have a few slow days.

  • No draw fees
  • Accepts credit scores low as 600
  • Only requires six months in business
  • Short terms of 12 or 24 weeks per draw
  • Weekly repayments
Min. Loan Amount $1,000
Max. Loan Amount $150,000
APR 4.99%
Interest Rate Type Fixed
Min. Credit Score 600
Turnaround Time As soon as 1 business day
National Funding business loans logo
Finder Rating: 4.75 / 5

★★★★★

Check eligibility

on National Funding business loans’s secure site

Best for equipment financing: National Funding business loans

None
Min. Credit Score
4%
Starting APR
$500,000
Loan Amount

National Funding is a direct lender and connection service that specializes in equipment financing. You can qualify for an equipment loan with a credit score as low as 620 and just six months in business. 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
Min. Loan Amount $5,000
Max. Loan Amount $500,000
Fee 1% to 3%
Interest Rate Type Fixed
Maximum Loan Term 12 months
Funding Circle business loans logo
Finder Rating: 4.4 / 5

★★★★★

Check eligibility

on Funding Circle business loans’s secure site

Best for fair credit: Funding Circle business loans

620
Min. Credit Score
4.99%
Starting APR
$500,000
Loan Amount

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 4.99% APR. It was also one of the first online lenders to offer PPP loans, and is currently accepting First and Second Draw applications. 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
  • At least two years in business required
Min. Loan Amount $25,000
Max. Loan Amount $500,000
APR Starting at 4.99%
Fee 3.49% to 6.99%
Interest Rate Type Fixed
Min. Credit Score 620
Minimum Loan Term 6 months
Maximum Loan Term 60 months
SmartBiz business loans logo
Finder Rating: 4.3 / 5

★★★★★

Check eligibility

on SmartBiz business loans’s secure site

Best for SBA loans: SmartBiz business loans

650
Min. Credit Score
6.25%
Starting APR
$5,000,000
Loan Amount

SmartBiz is an online platform that can connect you with a bank offering Small Business Administration (SBA) loans and you fill out the application. The packaging services make it a lot easier for business restauranteurs to navigate this paper-work 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.

  • Connects you with SBA lenders
  • Packaging services
  • Also offers non-SBA bank loans
  • Turnaround as long as 30 days
  • Charges packaging and referral fees
Min. Loan Amount $30,000
Max. Loan Amount $5,000,000
APR 4.75% to 7.00%
Interest Rate Type Variable
Min. Credit Score 650
Minimum Loan Term 120 months
Maximum Loan Term 300 months
Rapid Finance small business loans logo
Finder Rating: 3.74 / 5

★★★★★

Check eligibility

on Rapid Finance small business loans’s secure site

Best for bad credit: Rapid Finance small business loans

500
Min. Credit Score
N/A
Starting APR
$1,000,000
Loan Amount

Rapid Finance is a merchant cash provider, which gives you an advance on your future sales based on credit and debit card receipts. It’s a high-cost type of financing that’s best saved for emergencies. But Rapid Finance offers some of the lowest rates available when compared to similar products. It can also fund your advance as soon as the same business day.

  • Same-day turnaround
  • No credit requirements
  • Low factor rate of 1.09 to 1.3
  • Charges 2.5% origination fee
  • Daily repayments
  • Requires at least two years in business
Min. Loan Amount $5,000
Max. Loan Amount $1,000,000
APR Fee based
Fee 9% to 30%
Interest Rate Type Fixed
Min. Credit Score 500
Minimum Loan Term 3 months
Maximum Loan Term 60 months
Turnaround Time As soon as the same day

Best for franchises: ApplePie Core business loans

660
Min. Credit Score

Starting APR
$10,000,000
Loan Amount

ApplePie Capital is one of the only lenders out there that specializes in franchise financing. Its term loans 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
Min. Loan Amount $100,000
Max. Loan Amount $10,000,000
Fee 3.5% to 5%
Interest Rate Type Fixed
Min. Credit Score 660
Minimum Loan Term 60 months
Maximum Loan Term 120 months

Types of restaurant business loans

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

  • Bank loans. A good relationship with your lender can ease the funding process, so why not start with a financial institution you already have rapport with? Your local bank or credit union could provide the financing you need.
  • Online loans. Online lenders tend to be more friendly to startups than big banks and take less time to process applications. They’re also less risk-averse than banks and their applications require less time to complete, making them a good choice when you have a relatively low profit margin and little free time.
  • Equipment financing. New and used equipment can sometimes be financed in-house by the place you’re renting or buying from. If not, you can look into a business loan to purchase 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, in which you sell account receivables to a third-party at a discount.
  • Merchant cash advances. Technically not a loan, these offer an advance on your credit and debit card sales, usually based on your sales over the past few months. While these generally don’t have credit requirements, they are expensive — APRs topping 300% are common.

How to get a business loan for a restaurant

Follow these steps to find the right type of financing for your restaurant.

  1. Know what you need. Get an exact number on how much you need to borrow — or the manufacturer price for equipment or inventory — and an estimate of how much you can pay each month before you start researching lenders.
  2. Compare lenders. Since restaurants can be tricky to finance, compare a range of banks, online lenders and other types of financing, focusing factors like on requirements, monthly cost and fees.
  3. Prequalify. Many lenders allow you to get a quote from the provider without affecting your personal credit score by filling out a quick form. This can be a great way to compare your top choices.
  4. Get help. Feel lost? Your local small business development center (SBDC) offers free personalized advice on steps you can take to finance your business — which can be especially helpful during the coronavirus outbreak. You can find an SBDC on the SBA website.

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.

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.

Frequently asked questions

Common questions about restaurant business loans.

Can I get a loan to start a restaurant?

It’s possible to get a loan to start a restaurant, but your options are limited. To avoid a high-cost loan, consider borrowing from a microlender like Kiva. Or, read about our roundup of the best startup financing loans. Finding a partner or an investor or running a crowdfunding campaign could potentially get you funding as well.

Can I get special financing if I’m a veteran?

There are no business loans programs exclusively available to veterans — the SBA’s VA business loan program is no longer running. But some lenders offer services and advice tailored to veteran-owned businesses.

Can I get a loan to buy a restaurant?

You can use a business acquisition loan to buy a restaurant. But whether you get approved depends on factors like the business’s finances, your personal assets and your experience in the industry. Since business acquisition loans can be hard to find online, talk to your bank about your options.

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