Looking for restaurant loans? Discover the best restaurant business loans available with competitive rates and flexible terms to help your restaurant grow.
Financing is a core tool for getting a restaurant running or expanding an operation. There are different ways to finance a restaurant, but the best option for you will depend on the features of your business, your funding goals, and your business’s or management’s financial standing.
Knowing the different small business loans for restaurants at your disposal will better allow you to make the best decision and find the loan option with the best payback terms and timelines.
Review my list of the best restaurant loans and their terms in 2025.
Looking to find the best financing option for your restaurant? The team at Guidant Financial can help assess your financial needs and guide you to the best choice. Their team can help you find the best rates with the best lenders. Reach out to them today to determine the best restaurant loan option that fits your goals!
| Est. starting rates | Max. loan term | Min. credit score | Best restaurant loan for | ||
| SBA 7(a) business loans | Variable: 6%-10% Fixed: 12.5%-15.5% | Working capital: 10 years Real estate: 25 years | 650-690+ | Established full-service restaurants, multi-location operators, franchisees, and restaurants in need of real estate | |
| Business line of credit | 8%-12% (Bank LOC) or 15%-40% (Online lenders) | Revolving credit, 12-24 month draw periods | 600-680+ | Seasonal restaurants, restaurants with changing expenses, small full-service or fast-casual restaurants, and new concepts | |
| Equipment financing loan | 6%-20% | 3-7 years | 600-650+ | Pizzerias, bakeries, cafes, expanding restaurants, specialty kitchens | |
| Short- and long-term loans | 8%-30% or 6%-15% | 3-18 months or 3-10 years | 600-650+ | Emergency cash flow needs, expansion, remodeling, or debt refinancing | |
| Merchant cash advances | Factor rates: 1.1-1.5(equivalent to 40%-100%) | 3-18 months | 500-550 | Quick-service or fast casual, owners who can’t qualify for traditional loans; extremely urgent cash needs | |
| Collateral loan | 6%-12% | 3-7 years (equipment) or 25 years (real estate) | 620+ | Restaurants that own their property, established restaurants, and family-owned or multi-unit restaurants | |
| Unsecured loan | 9%-35% | 1- 5 years | 650+ | Established restaurants with strong revenue, expanding businesses, and risk-averse operators | |
SBA loans are excellent small business loans for restaurants for those with an already established brand. The amounts you can borrow for your business are quite high, with $5 million being the cap. Interest rates on these loans vary, but they are often much lower than those of a commercial loan. Longer repayment terms allow for lower monthly payments, and loans for equipment or working capital are highly flexible in how they are used.
However, I would not suggest this loan type for newer restaurants or start-ups. Most SBA approvals require proof of business success or the means to be successful. Thus, getting a loan for a new restaurant within this financing type is extremely difficult. I would recommend this loan for established restaurants looking to expand, renovate, or build onto their existing restaurant. Finally, this type of loan is also very favorable to franchises.
| Best for | Established full-service restaurants, multi-location operators, franchisees, and restaurants in need of real estate |
| Estimated starting rates | 6-10% or 12.5-15.5% (as low as 3% in some cases) |
| Max loan amount | $5 million |
| Max loan term | 10 years (equipment, working capital) or 25 years (real estate) |
| Estimated time to fund | 4-8 weeks |
| Required time in business | 2 years in business is the gold standard |
| Required credit score | 650-690+ |
| Annual revenue | No fixed amount, dependent on each borrower or business |
A business line of credit is an option for restaurants that need a quick supplement of cash, but it’s not technically a restaurant loan. This borrowing type allows you to only pay for what you use, and is very flexible. I would try to secure credit through a bank or credit union, as they will have much lower rates than online lenders. The approval process for this kind of loan is quick, which is another upside.
The biggest drawback of a business line of credit is the higher interest rates and the shorter repayment period. It’s very similar to a credit card, and therefore, the repayment to the lender is often much tighter when compared to an SBA loan.
I recommend this loan for seasonal restaurants or those that require quick cash for repairs or renovations. Small fast-casual restaurants, or restaurants in their one- to three-year window of operations, can also benefit. Startups need not apply, as some revenue and credit must be established to secure this funding.
| Best for | Seasonal restaurants, restaurants with changing expenses, small full-service/fast-casual restaurants, and new concepts |
| Estimated starting rates | 8%-12% (bank LOC) or 15%-40% (online lenders) |
| Max loan amount | Varies by lender, with banks offering lower limit amounts |
| Max loan term | Draw period of 12-24 months |
| Estimated time to fund | 1-3 business days (online lender) or 1-2 weeks (bank or credit union) |
| Required time in business | 1 year minimum |
| Required credit score | 600-680+ |
| Annual revenue | $100,000-$250,000 |
As the name suggests, this financing method is one of the most popular borrowing types that many restaurants use to purchase new equipment. It could be a proof box for a bakery, a new oven for a pizzeria, or new barista equipment for a cafe.
It offers much more generous repayment terms over a line of credit, with relatively lower credit score requirements. I would recommend this loan if you want to purchase a new piece of equipment that will enhance your offerings.
The most significant risk associated with this loan type is that your equipment can depreciate or fail, and you would still be required to pay back the loans. This is not ideal for startups, as you will often need to show proof of revenue.
The down payment on this loan type can range from 10% to 20%, which can be burdensome if you are strapped for cash. Still, this financing is a great option if you need the funds to enhance your business.
| Best for | Pizzerias, bakeries, cafes, expanding restaurants, specialty kitchens |
| Estimated starting rates | 6%-20% |
| Max loan amount | $10,000-$250,000 |
| Max loan term | 3-7 years |
| Estimated time to fund | 1-5 business days |
| Required time in business | 1-2 years minimum |
| Required credit score | 600-650+ |
| Annual revenue | $100,000-$250,000 |
With over 75 loan servicers in its network, Lendio can help you get funding in minutes. Share your vision and loan needs with the Lendio team, compare your options, and get funding. Lendio makes it that easy.
Short-term loans are best suited for small restaurants that need emergency cash. However, it’s always the best option since the interest rates and repayment plans on these are not as favorable because of their short funding window. The key advantage of short-term loans is that they are easily available for emergency situations.
Long-term loans, on the other hand, often require a more rigorous approval process. For instance, they often require higher credit and extensive business documentation. That being said, these loans have generous repayment windows and also have lower interest rates. I recommend these loans for refinancing debt, restaurant expansions, and other large projects that help bolster your restaurant.
| Best for | Restaurants in need of emergency cash flow, funds for expansion, remodeling, and debt |
| Estimated starting rates | 8%-30% (short-term) or 6%-15% (long-term) |
| Max loan amount | $250,000-$500,000 (short-term) or $25,000-$1 million |
| Max loan term | 3-18 months (short-term) or 3-10 years (long-term) |
| Estimated time to fund | 1-5 business days (short-term) or 1-4 weeks (long-term) |
| Required time in business | 6 months-1 year (short-term) or 2 years (long-term) |
| Required credit score | 600+ or 650+ |
| Annual revenue | $100,000-$250,000 (short-term) or $250,000-$500,000+ (long-term) |
You should only use a merchant cash advance when all other options are off the table. This form of funding has an interest rate system that uses a factored percentage for repayment. If you were to equate this factor to an interest rate, these range from around 40% to 100% in interest on the amount you borrowed. Additionally, this type of funding often involves frequent withdrawals, and there is a risk of needing a second cash advance just to cover the first.
However, this financing is beneficial if you need easily accessible funds, but have a low credit score and lending power. That being said, the risk of adverse outcomes to this type of loan is almost always not worth it. If you have other options, I’d recommend avoiding merchant cash advance loans.
| Best for | Quick-service or fast casual, owners who can’t qualify for traditional loans, and extremely urgent cash needs |
| Estimated starting rates | Factor rates: 1.1-1.5(equivalent to 40%-100%) |
| Max loan amount | Generally $250,000 |
| Max loan term | 3-18 months |
| Estimated time to fund | 1-3 business days |
| Required time in business | 3-6 months |
| Required credit score | 500-550 |
| Annual revenue | $100,000 |
Collateral loans are often based on both your credit score and the total assets that you own. Personal or business assets, such as real estate or equipment, back them. Collateral often lowers the perceived risk to the lender while offering more opportunities for borrowers.
You may go with this option if your restaurant owns real estate or other business assets. It’s also ideal for those who want to start a restaurant with no money but have substantial assets to justify the loan.
One downside is that your assets could be seized if you default on your collateral loan, and key parts of your business could be impacted. Additionally, collateral loans are slower to fund and require heavy documentation.
I would not recommend this option for owners who are just starting. However, it’s ideal for established businesses with a reliable cash flow and the ability to repay the loan terms with complete confidence.
| Best for | Restaurants that own their property, established restaurants, family-owned, and multi-unit restaurants |
| Estimated starting rates | 6-10% or 12.5-15.5% (as low as 3% in some cases) |
| Max loan amount | $5 million |
| Max loan term | 10 years (equipment, working capital) or 25 years (real estate) |
| Estimated time to fund | 2-6 weeks |
| Required time in business | Ownership of assets is required |
| Required credit score | 620+ |
| Annual revenue | $250,000-$500,000 |
An unsecured loan is a loan not secured by collateral, but rather the credit, financial standing, and overall revenue of a restaurant. This is often granted based on a percentage of your total revenue, typically ranging from 10% to 20%, with a cap of $500,000.
This loan type is a good choice for restaurant businesses with a strong credit standing, solid and consistent revenue, and a favorable financial outlook. This is also a favorable option for restaurants looking to buy another restaurant property as well, as long as the revenue backs up your loan-fueled purchase.
However, these loans tend to have higher rates, which offsets the risk to your assets and overall business. Repayment terms are also shorter, and the interest can add up, so it’s critical to ensure you have the proper revenue to back the loan. This option is ideal if you need faster cash but do not want to put collateral against a loan.
| Best for | Established restaurants with strong revenue, expanding businesses, and risk-averse operators |
| Estimated starting rates | 9%-35% |
| Max loan amount | $250,000-$500,000 |
| Max loan term | 1-5 years |
| Estimated time to fund | 1-3 weeks |
| Required time in business | 1-2 years |
| Required credit score | 650+ |
| Annual revenue | Loans are often offered based on 10%-20% of annual revenue |
Restaurants are very fluid businesses, and the financial situation of a food business can turn on a dime. There are several reasons why a restaurant may consider a business loan, as capital to grow a restaurant is often the most common way it’s achieved. Below are some of the main reasons why restaurant financing options may be considered for a business.
Equipment in restaurants can break down, become outdated, and impact the efficiency of your kitchen. Small business loans for restaurant equipment are crucial to many operators as these allow them to purchase a new oven, grill, or point-of-sale (POS) system.
New software and restaurant technology are very popular purchases in this regard, as new systems often help restaurants tremendously. The ROI of these loans involves improved business efficiencies and enhanced customer experiences with the purchased equipment.
Restaurants need to renovate both kitchens and dining rooms to stay modern and properly serve their customers. Owners often take out loans to rebuild a kitchen, renovate a dining room, or expand an existing restaurant to accommodate more customers. These loans help boost customer capacity and generate more revenue.
Loans for inventory and bulk ingredient purchases help restaurants make larger purchases of key ingredients to save money. Concepts such as seasonal restaurants rely heavily on these big purchases as they curb vendor prices. This also helps build relationships with vendors, who often prefer larger orders.
The cost to onboard chefs, cooks, and waitstaff is high. Some restaurants will take out a loan to cover these costs if the hiring need is that large. This initial loan can help cover the costs of training, uniforms, and other expenses associated with hiring a larger group of people.
Effective marketing and advertising can have a significant impact on the sales of your business. Some restaurant operators will take out loans to run campaigns and further reach their target audience. By taking out this loan, operators have adequate capital to launch a new product or marketing campaign better.
Owners often take out loans to expand a restaurant. They can use this borrowed money to fund a second location, invest in a new market with a food truck, or expand existing restaurants to serve different customers or offer different menus. Expanding a restaurant is expensive, and different loans help carry the burden of this cost.
401(k) business financing allows you to use retirement funds for your business. You can do this with a process called Rollover as Business Startups (ROBS). Under this, funds are rolled into a 401(k), and the new plan buys stock in your business. This then provides cash, which you can use to help pay for key business expenses. This process is very complex legally, but you skip paying interest on the “loan”.
ProsNo debt interest paymentsNo credit score neededHelps with SBA 7(a) eligibilityConsComplex legal processRisks your retirement savingsAnnual maintenance and setup fees can be high
Given the many restaurant financing options above, it can be daunting to figure out which loan is best for you. Let’s take a look at the considerations when choosing the best loans for your restaurant:
Obtaining a restaurant loan can be complex, as it typically requires meticulous planning and extensive documentation. Still, it’s important to understand the process to secure funding. Here are the steps you’ll likely go through when applying for a restaurant loan.
The first step in any loan process is determining your restaurant’s funding needs and how you will utilize the funds. Clearly outlining the capital required for a renovation, expansion, or build-out will better serve the case as to why you qualify for a loan.
It’s important to understand your credit score and be able to articulate it. You will also need to prepare recent bank statements, P&Ls, tax returns, and other financial records for lenders. Make sure you know your monthly cash flow and debt obligations, as these are crucial to the review process.
Choosing the right loan makes all the difference in restaurant financing. For example, an SBA loan can be used for low-cost funding on a long-term project, while an unsecured loan is great for quicker capital without collateral, if you have the right financial profile.
Picking the right loan plays to your financial strengths, while ensuring the project goal of the loan is executed correctly. Comparing lenders of the loan type you decide on will help you find a reputable source of funding.
The application process for your loan will require you to gather the required documentation to show why you are a good candidate. You need to work with your lender on providing all of the requested documentation for a positive review. Once you apply, you will have to wait for the lender to approve your loan.
Many lenders may send you different loan offers based on your credit and your business’s financial health. Pick the loan that best serves your goals and ensure it’s one that you can pay back on time.
Once you secure funding, be sure to use it for your intended goal. This is usually legally required, so be smart and honest with the capital you have borrowed. Keep detailed records of how you use your funds, and pay on time to maintain a good standing with your lenders.
Choosing the right restaurant financing and business loan for your restaurant takes time, focus, and an understanding of the loans you can apply for. The loans in this article demonstrate the diversity of the financing process.
Whichever you choose, make sure that it helps you achieve your business goals, and it’s affordable and manageable for your business to pay back. Ultimately, the best restaurant financing option is the one that helps you grow without sinking your business into large amounts of debt.
Ray Delucci is a graduate of The Culinary Institute of America with a Bachelor’s in Food Business Management. He has experience managing restaurants in New York City, Houston, and Chicago. He is also the host of the Line Cook Thoughts Podcast, where he interviews and shares the stories of foodservice workers. Ray currently works in food manufacturing and food product development.
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