Restaurant loans

Best Restaurant Business Loans for 2021

The restaurant business industry is demanding, with 20% of restaurants failing within one year of opening. Expenses can readily amass. Restaurant business loans are a solution for any restaurant that needs to get started or refresh their cash flow.

Financially reviewed by: Gordon Scott

At A Glance - Are you contemplating opening a new restaurant but are short on experience? Eight in 10 restaurant owners begin their careers at entry-level. Getting a business loan to open a restaurant can be tricky. Whether conventional or alternative financing is right for you, small business lenders can provide access to the capital for your short and long-term goals. We’ll help you find the right financing solution for your restaurant and walk you through the top lending options.


According to the Bureau of Labor Statistics, the average American household spends around $3,000 eating out annually. In 2020, the restaurant industry had $659 billion in sales and over 12.5 million employees, with sales set to grow 10.2% in 2021. According to the National Restaurant Association's State of the Industry Report, there’s room in the market for new restaurants. 

In this article, our experts outline the top small business loan types for restaurants on the market in 2021. We will help you find the right loan and financing lender for your restaurant business needs. In short, we will shed light on what can be a confusing area to navigate - the world of loans for restaurants.  

A Quick Overview of the Best Restaurant Business Loans for 2021

Here is a table summary of the different types of restaurant business loans currently on the market. 

Financing Needs

Loan Type

Loan Features 

Recommended Lender

Renovation costs, upgrade equipment, purchase inventory, working capital

Short-term loans

  • Amount: Between $5,000 and 500,000
  • Term: Up to 15 months
  • Interest: No interest rate, instead offers one-time factor rate 
  • Time to get the loan: Up to 24 hours

Fora Financial

Startup costs, expansion, equipment, inventory, working capital, or real estate purchases


  • Loans from $5,000 to $5.5 million
  • Interest rates vary depending on the type of SBA loan
  • Repayment period of 6 to 25 years
  • Turnaround time is 60 to 90 days


Fast cash with no collateral

Merchant cash advance

  • Loan amounts from $2,00 up to $500,000
  • Interest rates are 10%-350% APR
  • Repaid in 3 to 36 months
  • Turn around time is 1 to 7 days

Rapid Finance

Cash flow, recurring expenses, seasonal business

A business line of credit

  • Loan amounts vary from $50,000 to $500,000
  • Interest rates run 7% to 25%
  • Repayment terms are 3 to 18 months
  • Processing time can be a low as 24 hours

Wells Fargo

Minor funding for an idea or product


  • Kickstarter - With 300,000+ completed projects
  • Fundrazr - With the highest success rate at 41%
  • Indiegogo - Projects have raised $41,634 each 


Freeing up cash flow

Invoice factoring or invoice financing

  • Loan amounts up to 100% of the invoice value
  • 3% processing fee and 1% factor fee weekly until full invoice payment
  • Repayment complete when the customer pays the invoice
  • Turn around times as quick as one day


Best Restaurant Business Loans Explained

Of the seven restaurant business loan types outlined above, you’ll need to decide which loan is right for you. Here we’ll explain the features of each of these loans in detail to make your choice easier.  

1. Fora Financial - Best for Short-Term Loans

Fora Financial offers flexible short-term loans between $5,000 and $500,000 with low rates that are easy to apply for. Until now, Fora Financial has supplied more than $2 billion in working capital solutions to their customers. Over 25,000 unique customers have leaned on Fora to achieve their goals and build their businesses.

As one of the most reliable small business lenders, Fora Financial comes highly recommended by us. They specialize in helping small businesses and loan applications are handled swiftly.

The company aims to continue being a competitive lender with extensive and flexible offerings. They are dedicated to developing fresh ways to serve small businesses for as long as possible in a financial market that’s always changing. Read more in the full Fora Financial review.

2 . Live Oak Bank - Best for SBA Loans

Created in 1953, the Small Business Administration helps entrepreneurs secure funding and supports the interest of small businesses. SBA restaurant business loans cover expenses like start-up costs, expansion, equipment, working capital, inventory, and real estate. Unfortunately, limited loan amounts, a lengthy approval process, and bad credit can deter borrowers.

Ranked the #1 SBA lender, we recommend Live Oak Bank, which specializes in small business loans. Their online application process eases uploading documentation and monitoring loan progress.

3. Rapid Finance - Best for Merchant Cash Advance

Merchant cash advances are lump sum payments available to borrowers using future credit/debit card sales as repayment. Fast cash with no collateral upfront doesn’t require good credit; however, high interest rates and daily minimum payments can disrupt cash flow. Requiring only three months in business and a minimum personal credit score of 550, Rapid Finance is our choice for merchant cash advances with funds of up to $500,000 available in 24 hours. Read more in the full Rapid Finance review.

4. Wells Fargo - Best for Business Line of Credit

Fifty percent of all business owners experience cash flow issues. A business line of credit can provide flexible access to capital for recurring expenses and seasonal business flow. Like a credit card, with a spending limit and monthly or yearly payments, this revolving line of credit allows you to borrow the minimum amount you need while only paying interest on that amount. A secured credit line requires collateral, but the payoffs may include a considerable loan amount and a lower interest rate. 

Unsecured credit lines may be more expensive due to more lender risk, but no collateral is required. Wells Fargo takes the top spot here as a national bank with extensive experience lending to startups and young businesses with some of the lowest interest rates on the market.

5. Kickstarter - Best for Crowdfunding

With over six million crowdfunding campaigns last year and $17.2 billion generated in North America alone, this industry is expected to grow by at least 14% next year. Creating and maintaining a social media presence helps reach a vast audience. Business owners present their ideas or products in exchange for benefits such as free meals, invitations to the opening, or monthly reservations. With no credit checks, collateral, or financials required, campaigns take 11 days to prepare and run for nine months. 

The crowdfunding experience can be time-consuming with no guarantees of reaching your funding goals. This growing market could reach $300 billion by 2030, so the time and effort may be worth it.

6. BlueVine - Best for Invoice Factoring

Referred to as accounts receivable financing, restaurant owners get a capital advance in exchange for unpaid invoices. Invoice factoring involves selling your outstanding invoices to an invoice factoring company at a discount, while invoice financing requires paying off the advanced capital on unpaid invoices with interest. Lenders finance 85% of the total invoice and the final 15% upon full payment. These loans are easier to get, and freeing up your cash flow is always a win-win situation. 

We recommend BlueVine, which will fund up to $1 million to borrowers with a 530 credit score, who have been in business for at least three months, and show an annual revenue of $120,000. Read more in the full BlueVine review.

How Much Does it Cost to Open a Restaurant?

Restaurant startup costs 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 funding you’ll need. Listed below are current estimates for the essentials:

  • Food costs: The average amount of food costs run 28%-35% of sales, with steakhouses exceeding this at 40%.
  • Operations: $10,000-$100,000 will cover equipment depending on the restaurant size.
  • Labor costs: The number of employees, their salaries, and benefits should range from 28%-35%
  • Rent and building fees: Owning your space averages $178 per square foot, while leasing averages $159 per square foot. 
  • Hidden costs: 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, but not limited to, point-of-sale terminals, handheld and at-table sale systems, self order kiosks, digital displays, cash drawers, and printers, could provide a significant return on your investment. 
  • Marketing costs: Low-budget marketing costs average about $1,000 a month. This may include branding, the website, and social media, to name a few.

How to Choose the Best Restaurant Loan Option

You’ve created a detailed business plan and read through the popular restaurant business loans presented by our experts on this page; now is the time to consider which loan is right for your restaurant business. Prospective business owners should examine the loan cost, terms of repayment, processing speed, and available lenders. You may also want to consider these additional details:

  • Lender reputation
  • Fixed vs. variable rates
  • Need for collateral
  • Payment schedules
  • Cash availability time after approval

While the financial details are most important, good lending relationships are also crucial. Your lender should be supportive and be there throughout the term of the loan. Owning a restaurant could be the most significant and rewarding investment of your life.

See Our Additional Guides on Industry-Specific Loans

The Bottom Line

After analyzing seven types of restaurant business loans, we’ve armed you with the tools and knowledge to make an excellent investment choice. The SBA offers guidance, coaching, help in completing business plans and loan applications, and special financing programs for women, veterans, minorities, and the disabled. There are even restaurant loans available for those with bad credit. So whether you seek conventional or alternative funding, there is a lender ready to service your needs. So what are you waiting for? Let’s get going!