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Restaurant Business Loans: Best 7 Funding Options
With some of the lowest profit margins of any industry, running a restaurant is expensive. Restaurant owners often need financial support to hire staff, buy inventory, and invest in marketing. A restaurant business loan can provide that support.
Written by:Susan Guillory
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
Fact Checked by: Dr. JeFreda R. Brown, Financial Expert
Low profit margins, ever-increasing costs of food, and payroll expenses make it 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, or to expand their business by opening a second location.
In either instance, restaurant business loans can be the ticket. Our team of financial experts reviewed and ranked the best small business loans on the market to help you get funded. Read on to discover our choices.
Top Picks for Best Restaurant Business Loans
- Lendzi - Best for Restaurants With High Revenue
- National Funding - Best For Restaurant Equipment Financing
- SMB Compass - Best for Fast Funding Times
- Backd - Best Large Restaurant Loans
- Credibly - Best for SBA Loans
- Biz2Credit - Best For Commercial Mortgage Loan
- Bluevine - Best for Low Interest Rates
There are many options for restaurant financing, including short-term loans, business lines of credit, restaurant startup loans, equipment financing, and more.
In this review, our team of expert reviewers has thoroughly analyzed and evaluated the rates, fees, and terms of hundreds of small business loans. We will share our findings and provide a rating methodology you can use to select the best option for your needs.
Best Restaurant Business Loans for 2023 - Full Overview
Considering the factors above, here are some of the lenders who provide the best restaurant business loans.
Best Overall
Lendzi - Best for Restaurants With High Revenue
Factor Rate
Starting at 1.10
Loan Amounts
Up to $4 million
Min. Annual Revenue
$180,000
Key Features
- Borrow up to $4 million in working capital
- Min. credit score: at least 500
- Min. time in business: 6 months
- Equipment financing up to $2 million
- Business line of credit up to $250,000
- See your options without hurting your credit
- Flexible terms: 3 to 15 months
- Excellent customer reviews on independent review sites
- Get funding in as little as 24 hours
Pros & Cons
- Simple online application
- Fast funding times
- Excellent customer service
- Bad credit is accepted
- Applying has no impact on credit score
- Annual revenue requirement may be high
- Startups will not qualify
Overview
Lendzi was founded in 2020 and caters specifically to business owners with high revenue. Not only that, but they also offer competitive rates and fees, excellent customer satisfaction ratings, fast funding times, and many loan products to choose from. Even if you don’t have poor credit, Lendzi is a lender worth looking into.
Main Features
Whether you need to purchase new equipment, pay for operating expenses, or you’re hoping to open a second location, a business loan from Lendzi can help get you the funds you need, regardless of credit. Lendzi offers three loans specifically for those with poor credit - merchant cash advances up to $400,000, working capital loans up to $400,000, and equipment financing up to $2 million. When you apply, a representative will reach out to you and discuss your business and your loan options. Together, you can make a decision as to which option would be best for you and your business. To qualify for a working capital loan, you need to have a credit score of 500, six months of business history, and an annual income of $180,000. For equipment financing, your credit score needs to be 550 or higher. Merchant cash advances require a score of 525.
Regardless of your credit score, Lendzi is an excellent option for high revenue restaurant owners in need of financing. The lender has more than 2,000 5-star reviews across trusted review sites, they offer many different types of small business loans, and they cater to those that may be struggling. Applying takes just a few minutes and will not impact your credit score.
National Funding - Best For Equipment Financing
Factor Rate
Starting at 1.10
Loan Amounts
Up to $500K
Min. Annual Revenue
$250,000
Key Features
- Min. Time in Business: 6 months
- Min. Credit Score 600
- Borrow up to $500,000 in working capital
- Equipment financing up to $150,000
- Factor rate From 1.10
- Fast funding
- Early payment discounts
- Equipment financing repayment 2-5 years
- Working capital repayment 4 months - 2 years
Pros & Cons
- Bad credit not an issue
- High approval rates
- No collateral required
- Fees can be high
- Payments are daily or weekly
Overview
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.
Main Features
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 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.
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.
SMB Compass - Best for Fast Funding Times
Interest Rates
Starting at 7.99%
Loan Amounts
$10K - $10 million
Min. Monthly Revenue
$20,000
Key Features
- Loans up to $10 million
- Min. credit score: can go as low as 550 for certain loans
- Min. time in business: 1+ years in business, no startups
- Funding times: 5 to 7 days for term loans and 24 - 48 hours for line of credit
- Flexible terms: 2 – 10 years for term loans
- Interest Rates: starting at 8.99% for term loans
- Applying does not impact credit score
- Nine loan products to choose from
Pros & Cons
- Low, competitive rates
- Large loan amounts
- Loan terms up to 25 years
- Excellent customer service
- Poor credit not accepted
- Not available in all states
- Must be in business at least one year
- High revenue requirements
Overview
Whether you need a small business loan for your restaurant to cover expenses during a slow season or to renovate your existing space, SMB Compass can help. The lender offers nine different loan products, including business lines of credit, business term loans, equipment financing, SBA loans, and more, and most come with fast funding times. If you’re in a pinch and need your funds as soon as possible, SMB Compass is worth looking into. The application takes just a few minutes and a representative is available to help you M-F. To qualify, you’ll ideally have a 650 credit score or higher, be in business at least one year, and have $20,000 per month in revenue.
Main Features
SMB Compass offers nine different types of small business loans to borrowers in the restaurant industry. Their mission is to make loans more accessible to small business borrowers by providing cost-effective and flexible lending solutions. SMB Compass business loans range from $10,000 to $10 million with terms up to 25 years. Rates start at 7.99% for qualified borrowers. The lender has currently provided more than 1,200 U.S. businesses with more than $250 million in financing. To apply, simply fill out their easy online application. It takes just a few minutes and will not impact your credit score. If approved, funding can be dispersed within 24 hours.
SMB Compass understands the challenges that come with running a restaurant. Turnover can be high, inventory is constant, and rent can be through the roof. If you need a loan in a short amount of time and meet the strict requirements, SMB Compass may be able to help you. Loan limits are high, terms are flexible, and customer service is excellent. Contact SMB Compass to get started today!
Backd - Best Large Restaurant Loans
Factor Rate
Starting at 1.10
Loan Amounts
Up to $2 million
Min. Annual Revenue
$200,000
Key Features
- Borrow up to $2 million
- Min. Credit Score: 640
- Min. Time in Business: 2 years
- Industry best factor rate for MCA - as low as 1.10
- APR for the Line of credit product starts at 35%
- Flexible repayment terms up to 16 months
- Get funding in as little as 24 hours
- Check your rate with a soft credit pull
Pros & Cons
- Fast funding times
- Instant lending decisions
- No collateral required
- Large loan amounts
- Flexible payment options
- Startups will not qualify
- Must have $100,000 in annual revenue
- Rates not disclosed up front
Overview
Backd understands that restaurants are a unique type of business, and their loans are tailored to fit those needs. Founded in 2018, Backd has helped more than 10,000 small businesses access the funding they need. Whether you’re looking to renovate your restaurant, update your equipment, or purchase a second location, Backd is there for you every step of the way.
Main Features
Backd offers two loan products to restaurants: Working capital loans up to $2 million and business lines of credit up to $750,000. Working capital loans have terms up to 16 months and flexible payment options, including daily, weekly, and semi-monthly. Business lines of credit have unlimited terms and allow you to continually draw on the funds. Neither option requires collateral; and funding can be in your account within one business day of loan approval. To qualify, you must be in business for two years, must have $200,000 or more in annual revenue, and 640 or higher FICO score. You also must be based in the U.S. and have a business bank account.
Backd wants to see your restaurant business succeed; and they want to provide you with the funding to do so. It takes just a few minutes to apply, and you’ll receive a lending decision instantly. Applying doesn’t affect your credit score, either, so it’s worth it to apply and see what Backd can do for you.
Credibly - Best for SBA Loans
Interest Rate
8-25%
Loan Amounts
Up $250K
Min. Annual Revenue
$180,000
Key Features
- Min. Credit Score: 550+
- Min. Time in Business: 6 months
- Borrow up to Up to $250,000 in term loans
- Borrow up to $400,000 in working capital
- Term loan rates range between 8-25%
- Working capital factor rate starts at 1.09
- Simple application process
- As soon as same day funding
- Open to high-risk industries
Pros & Cons
- Easy to qualify
- Fast loan funding
- Many types of loans available
- Fees vary, depending on lender
- May include origination fees
- Daily or weekly payments
Overview
If you have great credit and 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.
Main Features
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. SBA loans for restaurants can be used as working capital, to consolidate debt, to purchase equipment, to buy real estate, and more. To qualify for an SBA restaurant 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 and a personal credit score of at least 620.
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, and will match you with the one that best fits your needs.
Biz2Credit Restaurant Loans - Best For Commercial Mortgage Loan
Interest rates
Starting at 7.99%
Loan Amounts
$25K to $500K
Min. Annual Revenue
$250,000
Key Features
- Working capital up to $2 million
- Term loans up to $500,000
- Term loan interest rate starts at 7.99%
- Loan Repayment 12-36 months terms
- Variable APR depending on the applicant
- Funding in 72 hours
- Soft credit pull
Pros & Cons
- Few restrictions on loan use
- Fast decision and funding
- Quick application
- Amounts under $25k not available
- Annual revenue requirement is high
- Loan rates may be high
Overview
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.
Main Features
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. Qualifications 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.
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.
Bluevine Restaurant Loans - Best for Low Interest Rates
Interest rates
Starting at 6.2%
Loan Amounts
Up to $250K
Min. Annual Revenue
$480,000
Key Features
- Funding up to $250,000
- Min. credit score: 625
- Min. time in business: 6 months
- Interest rates as low as 4.8%
- Loan Repayment 6-12 months terms
- Quick and simple application
Pros & Cons
- Low interest rates
- Fast application approval
- Funds available on demand
- Business checking account available
- Short repayment periods
- Not available in every state
- Credit score requirement may be high for some
Overview
Having all your business financing services with one company saves your restaurant time and money. Bluevine offers both lines of credit up to $250,000 and a business checking account with 1.2% interest rate. Use what you make in interest to repay your Bluevine line of credit or put it back into your restaurant.
Main Features
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 625.
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.
Main Features of the Best Restaurant Business Loans
Lendzi4.5
National Funding4.1
SMB Compass4.5
Backd4.5
Credibly4
Biz2Credit4
Bluevine4
- Min. Credit Score - 550
- Min. Time in Business - 6 months
- Min. Annual Revenue - $180,000
- Loan Amount - Up to $2 million
- Interest Rate - 3.49% and up
How to Choose the Best Restaurant Business Loan
- Loan features: Each lender offers different loan amounts, rates, and repayment terms to restaurant owners.
- Application process: Some loan applications require more information than others, and 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.
- 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 looked 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, such as reduced interest on secondary loans, payment flexibility, and mobile apps.
What Can Restaurants Use Business Loans For?
The cost of opening and operating a restaurant 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 financing for restaurants you’ll need. Listed below are current estimates for the essentials:
- Rent and building fees: The median monthly cost of rent is $5,000, and depending on the location and size of the building, it could cost much more.
- Food costs: The average amount of food costs run 28%-35% of sales, with steakhouses exceeding this at 40%.
- Operations: Expect to spend $10,000-$100,000 to cover the cost of equipment, depending on the restaurant size.
- Labor expenses: The number of employees, their salaries, and benefits typically range from 28%-35% of gross profits.
- Insurance fees: 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 point-of-sale terminals, handheld and at-table sale systems, self-order kiosks, digital displays, cash drawers, and printers.
- Marketing expenses: Low-budget marketing costs average about $1,000 a month. This may include branding, the website, and social media.
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 offers lower interest rates and longer repayment terms than other types of small business financing.
- Business line of credit – Allows you to draw on the funds, pay them back, then use them again. You 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.
- Invoice factoring – The lender provides 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 real estate loan – A commercial real estate loan is used if you need to renovate your existing space or purchase another building to expand your business.
- 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. A merchant cash advance is one of the most expensive forms of borrowing for restaurant owners.
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. Here is what you need to consider prior to applying for small business loans for restaurants:
- 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.
Financial documents include your business plan, financial statements, tax returns, collateral, and any legal business documents, among others.
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.
Conclusion
Having access to working capital can empower your restaurant to go further, whether that’s by hiring more staff, investing in restaurant equipment that makes it easier to serve customers, or expanding to another location. A restaurant business loan can help your business meet those needs, allowing you to focus on the day-to-day operations of running your restaurant.
*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
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Written by: Susan Guillory
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.
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Reviewed by: Sarah Brooks
Sarah Brooks is a personal finance writer and editor with more than 10 years of experience. She specializes in personal and business loans, mortgages, auto loans, and credit cards.
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Fact checked by: Dr. JeFreda R. Brown
Dr. JeFreda R. Brown is more than a financial consultant: she’s an avid teacher and subject matter expert who helps people—individuals and groups in a business setting—master the skills they need to achieve lasting financial wellbeing. As Founder and CEO of Xaris Financial Enterprises, it is her passion and life goal...
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