How to Get a Loan for a Restaurant in 5 Steps

Opening and running a restaurant requires a significant financial investment. From kitchen equipment and staff wages to inventory and lease payments, the costs can add up quickly. If you’re launching a new location, upgrading your space, or managing day-to-day operations, having access to the right financing can help you stay on track and support long-term growth.

There are several types of small business loans designed specifically for restaurants. These funding solutions can provide the working capital you need without disrupting your cash flow.

In this article, we’ll walk through five key steps to help you secure a restaurant loan. You’ll learn how to identify your financing needs, compare loan options, understand eligibility requirements, and choose a lender that aligns with your goals.

1. Determine Your Financing Needs

Before applying for a restaurant loan, it’s important to identify exactly how much funding you need and what you’ll use it for. Whether you’re outfitting a new kitchen, hiring staff, or covering day-to-day expenses during slower months, having a clear plan will help you choose the right type of loan and improve your chances of approval.

Common Reasons for Restaurant Loans

Restaurant owners seek financing for a variety of reasons. Your specific needs will depend on your business model, stage of growth, and operational challenges.

• Startup Costs: Launching a new restaurant involves upfront expenses like lease deposits, build-outs, licenses, permits, and initial inventory. A loan can help cover these costs so you can open your doors with confidence.
• Equipment and Renovations: From ovens and refrigeration units to furniture and POS systems, restaurants rely on specialized equipment. Loans can help you purchase or upgrade these essentials—or renovate your space to improve the dining experience.
• Working Capital: Cash flow can fluctuate due to seasonality, unexpected repairs, or slower periods. A working capital loan can help you cover payroll, rent, and utilities while keeping operations running smoothly.
• Expansion: If you’re opening a second location or expanding your current space, a loan can help cover construction, marketing, and hiring costs without draining your reserves.

2. Types of Restaurant Loans

Restaurants have access to several financing options tailored to the unique challenges of the foodservice industry. Whether you need capital for daily operations, equipment upgrades, or long-term growth, understanding your loan options is key to choosing the right solution.

SBA 7(a) Loans

The SBA 7(a) loan is a government-backed program that supports small businesses, including restaurants. These loans offer competitive terms but can take longer to process.

• Loan Amounts: Up to $5 million
• Uses: Kitchen setup, working capital, equipment, or purchasing a location
• Terms: Up to 10 years for working capital or equipment; up to 25 years for real estate

Term Loans

A term loan gives you a lump sum of funding that’s repaid over a fixed period. It’s a versatile option for restaurants looking to make larger investments in their business.

• Loan Amounts: Varies based on lender and financial profile
• Uses: Renovations, marketing campaigns, technology upgrades, or debt consolidation
• Terms: Typically 1 to 10 years, with fixed or variable interest rates

Equipment Financing

Restaurants rely on commercial-grade equipment that can be costly to purchase upfront. Equipment financing allows you to break the cost into manageable payments.

• Loan Amounts: Up to 100% of the equipment’s value
• Uses: Ovens, refrigeration units, dishwashers, POS systems, or furniture
• Terms: Usually 3 to 7 years, aligned with the equipment’s lifespan

Business Line of Credit

A business line of credit gives restaurants flexible access to working capital. You can draw funds as needed and only pay interest on what you use.

• Credit Limits: Based on revenue and credit profile
• Uses: Payroll, utilities, bulk food orders, or covering short-term cash flow gaps
• Terms: Revolving credit with interest charged only on the withdrawn amount

3. Assess Your Eligibility

Understanding the factors lenders use to evaluate loan applications can help you better prepare and improve your chances of getting approved. While requirements vary by lender and loan type, most will look at the following key areas when assessing a restaurant loan application:

Credit Score

Lenders typically use your personal and business credit scores to assess risk. A higher score generally leads to better interest rates and terms. While banks may prefer scores of 680 or higher, some alternative lenders are more flexible.

Time in Business

Most lenders want to see at least one to two years of operational history. If you’re opening a new restaurant, you may still qualify for certain loans, but you’ll likely need a strong business plan and solid personal finances.

Annual Revenue

Lenders evaluate your business’s revenue to determine your ability to repay the loan. Many loan programs have minimum annual revenue thresholds—often between $100,000 and $250,000.

Cash Flow and Profitability

Even with strong sales, lenders want to ensure your restaurant has positive cash flow and a reliable profit margin. They’ll assess whether your earnings can support consistent loan payments.

Collateral (When Required)

Some loans may require collateral such as equipment, inventory, or a personal guarantee. This can help lower the lender’s risk and may improve your loan terms.

4. Choose the Right Lender

Once you know what kind of loan you need and understand the eligibility requirements, the next step is finding a lender that fits your business. Restaurants often benefit from working with lenders who understand the industry and can offer flexible financing options.

Traditional Banks

Banks typically offer competitive interest rates and long repayment terms. However, they often require strong credit, established business history, and a lengthy approval process. This can be a good fit for well-established restaurants with strong financials.

Online and Alternative Lenders

Alternative lenders tend to offer faster application and approval processes, along with more flexible qualifications. They’re a solid option for newer restaurants, businesses with lower credit scores, or those seeking short-term funding.

Industry-Specific Lenders

Some lenders, such as SBG Funding, specialize in working with restaurant businesses and offer financing tailored to industry needs, such as funding for equipment, remodeling, or seasonal cash flow support.

5. Gather Your Documents and Apply

Once you’ve selected a lender and loan type, the final step is to prepare your application. Having your documentation ready can streamline the process and increase your chances of approval.

Common Documents You’ll Need

While specific requirements vary by lender, most restaurant owners should be prepared to provide:

• Business Bank Statements: Usually the most recent 3 to 6 months of statements
• Tax Returns: Personal and business tax returns from the past 1 to 2 years
• Profit and Loss Statement: A recent P&L showing revenue, expenses, and net income
• Balance Sheet: A snapshot of your restaurant’s assets and liabilities
• Business Plan or Loan Purpose Statement: Especially important for startups or expansion projects
• Business License or Permits: Proof that your restaurant is legally registered and operating
• Personal Identification: Typically a driver’s license or government-issued ID

Some lenders may also request food service permits, lease agreements, or equipment quotes—particularly if the loan is for opening a new location or purchasing equipment.

After submitting your application, funding timelines vary. Online lenders may provide same-day decisions and funding, while traditional lenders could take several weeks. Respond promptly to any additional requests, and make sure to review all loan terms before signing.

Flexible Term Loans for Restaurants from SBG Funding

Whether you’re launching a new restaurant or expanding your current location, SBG Funding offers customized loan solutions to help you grow. Our fast and flexible financing is designed to support the everyday challenges and long-term goals of food service businesses.

Why Choose SBG Funding?

• Quick Approvals: Get a decision in as little as 24 hours.
• Tailored Loan Options: Use funds for equipment, staffing, renovations, or working capital.
• Transparent Terms: No hidden fees and competitive rates.

How to Apply

1. Apply Online: Complete our short application in minutes.
2. Get a Fast Decision: We’ll review your request and respond within 24 hours.
3. Receive Funding: Approved funds can be in your account as soon as the same day.

Applying won’t affect your credit score. Get the funding your restaurant needs—without the wait.