Restaurant Business Loans For Good & Bad Credit

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Loan Amounts from $5K-$500K

*varies by loan type

Repayment terms up to 25 years

*varies by loan type

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Small Business Loans For Restaurants
New/Startups & Old

Running a restaurant can be both a work of passion and a high-intensity ownership experience. Whether you’re looking for funding to pay for kitchen renovations, or need quick cash to pay for repairs on a broken industrial refrigerator, you’re likely going to require some form of lending at various points during your restaurant’s operation.

What is a restaurant business loan?

A restaurant business loan is a regular business loan designed for and used by restaurants. They can be used for a variety of expenses or investments including financing new equipment, expansions, inventory, emergencies, and more. In most cases, loans will need to be repaid with interest. Terms can vary so make sure you pay attention.

How do restaurant business loans work?

There are several types of loans available so the specifics can vary, but there are a few steps that should work the same. These include:

  • Apply
  • Get prequalified 
  • Obtain approval
  • Funding

Most loans will require you to start with an application. Once the application is submitted, you can prequalify. At this time the lender can share what they can offer based on the information you submitted. They may also ask you to submit some supporting documentation. If you are unable to provide the supporting documentation or there are any discrepancies, the lender can change or revoke the prequalification offer. Most pre-qualifications are good for a certain amount of time. If they expire you may need to start the process over.

After any contingencies are satisfied, you can earn pre-approved status. Once you are pre-approved, you typically just need to sign documents and wait for funds. Lenders may be able to direct deposit funds into the business account of your choice or cut you a check. If you use a business line of credit, funding will work differently.

Common reasons restaurant owners apply for restaurant financing

There are many reasons why a restaurant owner may apply for restaurant business loans. Here are some of the most common.

New business: Business loans for new restaurants may be required to cover equipment costs, renovations, hiring staff, uniform purchases, and more. New businesses may have trouble qualifying for a business loan. Business owners may need to take out a personal loan to get their business going. 

Acquisition of an established restaurant: If you are taking over an established restaurant, you may need funds to pay off the owner and to cover remodeling costs. Whether you are starting a new restaurant or purchasing an existing one, you can use financing. 

Renovation needs: Renovation can occur when the business is being opened or it can come down the line if the owner wants to expand or change the facility’s aesthetic. Creating functional, clean, and brand-friendly locations will help your business. 

New location expansion: The building purchased or rented for the restaurant may not be large enough. Business loans for new restaurants may be required to cover expansion expenses.

Operations: Funding may be needed for everyday operations such as purchasing food items, paying staff, utilities, and more. If you need to improve cash flow, you should consider a business line of credit.

Marketing: Every good business needs a strong marketing plan. Funding may be needed to cover marketing materials, marketing software, and payroll for a marketing team.

Equipment Investing: A restaurant requires plenty of equipment including ovens, fans, refrigerators, freezers, and more. The owner may need a loan to purchase these products.

Payroll: Paying a staff may be a business’s largest expense. A loan may be needed to cover payroll costs from time to time.

Types of restaurant business loans

There are several types of business restaurant loans. Here are a few you can choose from.

Traditional business loans: Traditional business loans are typically installment loans or term loans that are funded as a lump sum and repaid in monthly installments. Most lenders offer business loans that do not require collateral. 

» MORE: Business Loan Options

Business line of credit: A business line of credit is similar to a credit card but typically with much lower interest rates. Business lines of credit are ideal for businesses that need access to cash on a regular basis.

» MORE: Business line of credit

SBA loans: The Small Business Administration (SBA) offers small business loans for restaurants. They are similar to banks in terms they offer, interest rates and requirements. However, they tend to be more forgiving of business owners that default on loans. The SBA is an independent agency of the federal government dedicated to helping small businesses.

» MORE: Compare SBA Loans

Equipment financing: Equipment financing is a loan that is given specifically to cover equipment expenses. It’s a good option for businesses that can’t qualify for other types of loans as it uses the equipment as collateral. However, if the company is unable to repay the loan, they could lose their equipment.

» MORE: Equipment Financing Options

Alternative loans: Alternative loans are an option for businesses that can’t show a good credit score or solid business history. They have fewer requirements and can be funded quickly but they are shorter term and offer higher interest rates. An example of an alternative loan could be a personal loan.

Cash advance: A cash advance is like a credit card you can use for your business. You make payments either by withholding a percentage of your credit and debit card sales or by fixed weekly or daily withdrawals from a bank account. The loans fund quickly and have few qualifications, but they come with expensive fees.

» MORE: Merchant Cash Advance

Invoice financing: Invoice financing involves the lender buying your unpaid invoices. They will pay you the amount your customers owe minus a fee and collect the money directly from your customers. It’s a good way to get a quick infusion of cash and it does not require extensive qualifications.

How do you get a small business loan for a restaurant?

The first step in getting financing to open a restaurant is to find the type of loan or lender that’s right for you. The internet is a great place to narrow down your options. When you’re ready, you will want to apply for a loan or start checking offers. In some cases, this can be done online.

Time in business: While having two years in business will help you secure a much lower rate on a loan for your restaurant, many lenders require just one year.

Credit score: Having a credit score above 650 will give you access to the most affordable rates. However, some companies offer loans to restaurants whose owners have credit scores as low as 550, while others take a holistic approach to application evaluations and don’t stipulate any minimum requirement.

Available collateral/down payments: Not all lenders require collateral or down payments on loans. However, if you’re a new restaurant or do not have strong financial qualifications, it can be a good idea to be ready to put up collateral to secure a lower rate or higher amount.

Equipment vs Real Estate Purchases

If you’re looking to purchase new equipment or expand your properties, you can look into loans that are offered specifically for these purposes. The Small Business Administration (SBA) offers commercial real estate loans at extremely low rates to borrowers who fulfill SBA’s set of requirements. However, there are also many lenders who will work with owners who do not fulfill this list of qualifications or who are very new to the industry.

How much does it cost (on average) to start a small restaurant?

The cost of starting a restaurant can range from a few thousand dollars to hundreds of thousands. According to, the average cost of starting one is $275,000, or $3,046 per seat. When evaluating how much it will cost you to open your small restaurant, make sure to factor in the cost of the property, utilities, kitchen supplies and machinery, food, and labor.

Is it hard to get a loan for a restaurant?

Getting restaurant business loans can be difficult, especially if you can’t show a reliable business history and a good credit score. The worse your financial situation is, the harder it will be. While there are lenders that accept poor credit scores and little to no business history, they tend to charge higher interest rates.

How much does it cost to open a restaurant?

The amount of money it takes to open a restaurant will vary depending on the size of the facility and how upscale the eatery will be. In most cases, it can cost between $175,000 and $750,000.

What credit score do I need to obtain restaurant financing?

It’s best to have a credit score of 600 or above to obtain restaurant financing, but the better your score is, the lower your interest should be. Ideally, you should have a credit score of 700 or better. Let’s take a look at what you might qualify for based on your credit score.

700 or above: If your score is 700 or above, you should be able to qualify for most loans with low interest rates.

640 to 700: If you fall between 680 and 700 you should still be able to qualify for loans. If you are on the lower end of the spectrum, you will likely need good business credentials to back you up.

600 to 640: A score this low may limit you to alternative loans and equipment financing.

550 to 600: A score of 550 to 600 may limit you to invoice financing and cash advances.

500 or Below: If your score is below 500, you may want to look into other financing options.

How long does it take to get funded?

The amount of time it takes to get funded for restaurant business loans will vary depending on the type of loan you are getting. For example, a bank or SBA loan will require a lot of paperwork which will need to be manually approved. Although most organizations say approval takes a week or two, it can drag out to as long as a month or two.

Alternative lenders won’t require as much documentation and can provide approval in as little as 1-3 days.

What documentation is needed to apply for a restaurant loan?

If you’re applying for a standard loan for your restaurant, there will be a few documents that you’ll need to have available before starting the process:

  • Your personal financial information
  • Personal credit report
  • Business’ credit report
  • Business plan
  • Income tax returns
  • Personal bank statements
  • Business bank statements
  • Documentation of collateral (if required by the lender)
  • Personal contact information

Requirements & how to qualify for a restaurant loan

Because there is such a wide variety of options for restaurant owners to use to fund their businesses, most borrowers will be able to find some form of financing. However, having a credit score above 650 and more than two years in business will drastically improve any potential borrower’s chances of finding a low-cost loan.

Best Small Business Loan Options For Restaurant Owners

For New Restaurants & Smaller Purchases


Kiva is a nonprofit crowdfunding platform that connects borrowers to independent lenders and investors all over the world. This can be a very flexible form of funding because it allows borrowers to speak directly with interested lenders and establish terms on a case-by-case basis. Crowdfunding can be an ideal option for new restaurant owners who have trouble qualifying for traditional or low interest, online loans.


StreetShares offers loans and lines of credit of up to $250,000 and invoice financing for up to $2 million. Their rates range between 9% and 40%, depending on borrowers’ financial qualifications. Restaurants that don’t have the credit or time in business to take out a loan or line of credit with this lender but who have unpaid invoices can sell those invoices for an advance of a portion of the unpaid amount.

Loan Amounts $2,000 to $250,000
APR Range 24.00% to 99.00%%
Repayment Terms Up to 3 years
Time to Funding Typically 1 - 5 days
Click “Check Rates” to apply to StreetShares

» MORE: StreetShares Business Loan Review


Fundation’s business loans start at $20,000, with a maximum amount of $500,000 and rates ranging between 8% and 30%. With APRs in the single digits, Fundation offers lower rates than most of its competitors and flexible borrowing amounts.

For Established Restaurants Looking To Expand

Credibility Capital

Credibility Capital’s business loans start at $50,000 with a maximum amount of $400,000. This lender has a maximum APR of 25%, and a minimum of 10%. Credibility Capital is best for restaurant owners who have above-average credit scores, multiple years in business, and high annual revenue.

Loan Amount: $10,000 - $350,000
APR Range: 8.00% - 25.00%%
Time to Fund: Typically 7 days
Loan Term: Up to 3 years
How To Qualify: 680+ Personal Credit Score
$250,000+ Annual Revenue
Great Option For: Borrowers With Good Credit
Short & Medium-Term Financing
Click “Check Rates” to apply to Credibility Capital

» MORE: Credibility Capital Business Loan Review


SmartBiz offers loans starting at $30,000, with a maximum of $350,000. This lender has some of the lowest APRs in the online business lending industry, with rates starting at 9.7%, and a maximum of 11.04%.

Loan Amount: $30,000 - $350,000
APR Range: 9.7% - 11.04%
Time To Fund: As soon as 7 days
Loan Term: 10 Years
How To Qualify: 675+ Personal Credit Score
$100,000+ Annual Revenue
Click “Check Rates” to apply to SmartBiz

» MORE: SmartBiz SBA Loan Review


OnDeck offers business loans and lines of credit ranging between $5,000 and $500,000. Their rates start at 9.1%, with a maximum of 99.8% for term loans. Rates for their lines of credit range between 11% and 63.2%.  Although APRs with this lender can be quite high, they can also be competitively low for established and well-qualified businesses.

Loan Amounts $5,000 to $500,000
APR Range As low as 9.99%
Repayment Terms Term loans up to 3 years
Time to Funding As fast as 1 day
Click “Check Rates” to apply to OnDeck

» MORE: OnDeck Business Loan Review


Lendio is a funding marketplace offering several different forms of restaurant and business financing. With loans ranging between $1,000 and $5 million, repayment terms of up to 25 years, and potential annual percentage rates in the single digits, this marketplace can be a great place for well-qualified and established restaurant owners to start their funding search.

Restaurant Loan Alternatives

Kabbage vs LendingClub

Kabbage’s business lines of credit range between $2,000 and $250,000, with rates starting at 24% and capping out at 99%. LendingClub is a much lower cost business credit provider, with amounts ranging between $5,000 and $300,000, and a maximum rate of 35.11%.

Although LendingClub’s borrowers are likely to be approved for a lower rate than with Kabbage, the lender also has much more stringent requirements, with a minimum credit score of 620 to qualify.

Pros & Cons of Loans vs Credit Card



  • Fixed amount disbursed
  • Access to lump sum
  • Fixed monthly or weekly payments
  • Good for funding one-time expenses


  • Borrowers may take out more funds than they need and have to pay interest on financing that they did not need
  • Potentially high APRs
  • More difficult to get approved for a very high amount than with a business line of credit

» MORE: Compare Business Loans

Business Credit Card


  • Only pay interest on what was used
  • Have access to an amount of money, but there is no requirement to use all of it
  • Good for funding cyclical expenses


  • May require more frequent repayments than a loan
  • May have less flexible repayment terms than a long-term business loan
  • No fixed payments
  • Minimum spending requirements

How to get approved for a restaurant business loan

It’s likely that a lender will want to see financial documents including profit and loss statements, income taxes, a credit report, and more. Be prepared to produce the required paperwork so as not to further delay the process.

If your credit score is low, it’s advisable to try and bring it up by paying off debts before applying. You can also have a credit report prepared and check it to see if there are any errors. Eliminating these errors will raise your score.

Most lenders will also want to see that you have been in business for 1 -2 years and have produced a steady income ranging from $50,000 to $250,000 a year. If you can not show these qualifications, you may want to look into other financing options.


Operating a restaurant can be an expensive business, and you likely won’t be able to fund everything out of pocket. Before applying for loans, remember to evaluate your exact financial needs to figure out which form of funding is right for you. While emergency repairs might require a large loan from an online lender, cyclical expenses might warrant applying for a business line of credit. Even if you’re a first-time owner or you have a low credit score, be sure to compare multiple offers before committing to a product.

Shopping for loans can be time-consuming, but there is a way to simplify the process. The secret to fast and easy business loan shopping is PrimeRates. At PrimeRates you can check offers from trustworthy lenders from the comfort of your home or office or even mobile phone. With just a little bit of information, you can check your rate within minutes. Once you have decided which offer you want to move forward with, you can finish the approval process with the lender. 

Spice up your business. . . apply for a restaurant business loan today!

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