bakery loan

Best Bakery Loans: Turn Your Dream Into Reality

According to industry research, retail bakeries generate $3 billion annual revenue. While you might have saved some money for your dream bakery or received investment from friends or family, you may still be short. In this article, our experts will go over the top bakery loans.

Financially reviewed by Gordon Scott

At a Glance A bakery can be a place where people get their daily dose of sugar and happiness. Or a shop where people buy their loaf of artisan bread to brighten their day. Although this sounds inspirational, you need a solid business plan to make this dream a profitable reality. Our experts dive into the best small business loans so that you can get your bakery business up and running.

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A Brief Overview of The Best Bakery Loans for 2022

Here is a summary table of the best bakery loans in brief. 

Recommended Lender

Financing Need

Best Loan Type

Loan Features


Inventory, equipment, and ongoing expenses

Merchant cash advance

  • Term length: 3 - 18 months
  • APR range: Factor rates from 1.15
  • Min - Max amount: Up to $400,000
  • Repayment period: Daily

Fora Financial

Hire skilled workers, invest in marketing, upgrade outdated equipment, keep cash flow healthy

Short Term Loans

  • Amount: Up to $500,000
  • Term: Up to 15 months
  • Interest: One-time factor rate
  • Time to get the loan: Only 72 hours after approval


Covers all expense categories

SBA loans

  • Amount: Up to $5 million
  • Term: 7-25 years
  • Interest: 6-8%
  • Time to get the loan: 10 days-6 months


Covers many expense categories

Alternative loans

  • Amount: Up to $100,000
  • Term: 24-52 weeks 
  • Interest: 8-20%
  • Time to get the loan: Depending on the loan type

National Funding

Lease equipment and machinery

Equipment leasing

  • Term length: 2 to 5 years
  • Repayment period: Monthly
  • APR range: Not disclosed 
  • Min - Max amount: Up to $150,000

Best Bakery Loans Explained In Detail

In this section we will describe the small business funding opportunities from the table above, going through the terms and financing needs they cover.

1. Credibly - Best for Merchant Cash Advance

A merchant cash advance is a suitable option for those bakeries that don’t qualify for a bank loan and don't have the credit score to apply for SBA. Taking a cash advance can help the business gain short-term operating cash against their future sales.

This is a lump sum of money that can have interest rates as high as 100%, a process for as short as a week, and have a three to eighteen-month payback period.

If your bakery business has been operational for over six months and makes $15,000 in monthly revenue, we recommend Credibly as a merchant cash advance loan provider. Credibly can approve and provide a cash advance in just 48 hours. You can get an advance of between $5,000 - $400,000. 

2. Fora Financial - Best for Short-Term Loans

To get that renovation done you need some cash and that is where a short-term loan will help you in your bakery. A short-term loan is also a great way to help with the payroll and get your inventory up to date, as well as for cash flow.

For quick and easy access to finances to do all the necessary things for your business, Fora Financial is a highly recommended financial service. You can get any amount from $5,000 and up to $500,000 and get approved in as little as 24 hours.

You do not need any collateral to get approved for a short-term loan and will get discounts for early paying off of the loan. The loan can be repaid with flexible payments and can be used for a variety of options.

3. Fundera - Best for SBA Loans

This loan type is a favorite among bakery owners because it offers low rates and relatively high approved amounts. Although you don't need $5 million to open a small bakery, a kick start from a governmental loan could help you expand and acquire some equipment.

While this loan expects you to have credit scores of 650 and higher, it also lets you take the time to pay it back (some loan types can last up to 25 years).

An SBA loan allows you to cover your bakery startup and operating costs, buy real estate, and renovate the premises, should you need to.

Our recommended lender for this category is Fundera. Along with the various SBA loan types, the company offers other options and is willing to work with startups. You can also apply to this credit organization with bad credit.

4. Fundbox - Best for Line of Credit

As we're talking about lower credit scores, it's logical to mention the less stringent requirements from alternative loan lenders. If you don’t qualify for an SBA or bank loan, taking this route can prove to be a great option for your bakery business. Although the interest rates are higher, most lenders require no minimum payments and no collateral.

You can use these loans for any need that might arise. Depending on the loan type, the amount lent, and the payout period length, these can either be short-, mid-, or long-term.

With its low minimum credit score requirement and rapid fund distribution, Fundbox is our recommended option for long- and short-term business loans. A company should have a minimum revenue of $100K, minimum business time of 6 months to qualify for a loan with Fundbox. 

5. National Funding - Best for Equipment Leasing

All bakers require professional equipment. Leasing is when the credit can fund the equipment directly from a vendor, and you repay the lender in increments. Once you close the debt, you can keep the item or lease another, newer model.

Leasing is a convenient option for bakeries, as the kitchen ovens and professional equipment can cost a lot. On the other hand, by the time you've paid off the lease, the equipment can become outdated.

Our recommended equipment leasing loan lender is National Funding. They provide funding up to $150,000 so that you can finance your new or used equipment for your business. You won’t need to put a down payment, and they have the lowest payment guarantee. National Funding also provides you with a dedicated loan specialist who will work with you to get fast approval on any sort of equipment. 

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How Much Does it Cost To Open a Bakery?

As a rough estimate, opening a bakery should cost you in the range of $10,000 and $50,000, plus a nest egg of $2,000 to keep the doors open before you start registering profits. Below are the categories you need to cover for startup and working costs:

  • Rent or lease: Choosing a good location for a new shop or, in our case, a bakery, is a science. Identify your target market and look for ways to attract them. Commercial locations can cost thousands, but a well-selected space can make or break a business. While buying the location or building it from the ground up is possible, renting or leasing the space is the most popular option. Look for a building that gets a lot of foot traffic.
  • Kitchen equipment and tools: If you're serious about the quality and volumes of the bread and dough products you make, paying particular attention to the equipment is a top priority. Sure, you can make a regular kitchen oven and mixer work initially, but, eventually, buying pro equipment will make your life that much easier.
  • Staff and contractors: Baking might be your passion, but you shouldn’t only rely on your skills. Hire excellent bakers and assistants, pay an accountant to keep the books in order, and have a contractor lawyer look through all permits and zoning issues you might have. Do what you know best, and leave the specialized areas to professionals.
  • Ingredients: A quarter of your monthly sales may go to buying ingredients. Negotiate deals with vendors that will provide you with fresh and quality components and bulk delivery at lower prices. This will help you to keep your product consistent and spendings at bay.
  • Marketing and branding: Depending on the target market and location, this can either be a large or small part of your budget. Experts recommend starting slow on this front, building up your audience as you go. Still, a digital presence is crucial to finding your niche. You can play with photo and video content to ensure visibility and keep an authentic feel.

The usual percentage breakdown in a typical independent retail bakery is as follows:

  • Ingredients - 25%
  • Labor - 35%
  • Overhead (rent, bills, etc.) - 30%
  • Profit - 10%

As you can see, the business requires massive startup capital, but it also needs a lot of investment during operation.

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How to Choose the Best Bakery Financing

Make sure that you take a loan that's the best fit for your goals. Suppose you're taking an equipment financing loan for five years to buy an oven paying upfront. Is the oven going to be useful long after you've paid for it?

For current spendings, you need to make sure to look for loans that can boost your business and provide a payment schedule that can alleviate your financial burden. Account for your profits and future growth before signing the agreement.

See Our Additional Guides on Industry-Specific Loans

The Bottom Line

If you are an owner of a bakery seeking equipment or working capital you may need financing. Likewise, if you are looking to open a cafe or bakery you may need a loan to get your business started. Now is a great time to get going as the bakery industry is predicted to continue growing. On this page, our experts have outlined the top bakery loan types and have provided you with recommended lenders for each type of loan. Now you just need to select the lender and loan type that is right for your style of bakery business.