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Your Guide to Business Loans for Restaurants

Written by Marc Guberti

Marc Guberti is a Certified Personal Finance Counselor who has been a finance freelance writer
for five years. He has covered personal finance, investing, banking, credit cards, business
financing, and other topics.
Marc’s work has appeared in US News & World Report, USA Today, Investor Place, and other
publications. He graduated from Fordham University with a finance degree and resides in
Scarsdale, New York.
When he’s not writing, Marc enjoys spending time with the family and watching movies with
them (mostly from the 1930s and 40s). Marc is an avid runner who aims to run over 100
marathons in his lifetime.

Updated February 5, 2024​

7 min. read​

business loans for restaurants

Starting and operating a restaurant involves a wide range of planned and unplanned expenses. A substantial amount of working capital is needed to hire staff, buy ingredients and culinary equipment, advertise your restaurant on social media, and pay for utilities like water and electricity.

Plus, you also have to consider some of the higher costs of operating a popular restaurant, such as upgrading equipment, renovations, opening a branch in a new location, etc.

In this article, we’ll tell you about some of the best business loans for restaurants that can help you cover these expenses and find success in the restaurant industry.

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Are There Loans Specifically Catering to Restaurant Businesses?

Yes, there are various types of restaurant loans designed specifically to meet the business needs of new and established restaurant owners. Depending on your needs, you can find both short- and long-term financing options for your restaurant business.

While some of these loans are perfect for setting up a brand-new eatery, others are better suited to restaurant owners who have been in business for a few years already.

Common Types of Loans You Can Get for a Restaurant

  • Restaurant Equipment Financing: As the name suggests, this restaurant financing option can be used to purchase essential equipment like stovetops, industrial ovens, food processors, refrigerators, etc. You can usually borrow up to 100% of the cost, with the equipment serving as the collateral for the loan.
  • Working Capital Loan: This is a type of short-term business loan that can be used to cover the day-to-day expenses of operating a restaurant. These loans can be processed quickly, and the loan amounts are typically small, rarely exceeding $250,000.
  • Inventory Financing: A vast inventory of food and beverages is the lifeblood of your restaurant business, but maintaining it can be quite expensive. For this reason, inventory financing provides you with the short- or medium-term loan you need to purchase the required inventory for your eatery, which in turn acts as the collateral for the loan.
  • Small Business Administration (SBA) Loan: Partially guaranteed by the U.S. Small Business Administration, SBA loans are hard to qualify for but offer relatively low-interest rates and flexible repayment terms. If you meet the minimum credit score requirements, then this can be a good way to get the funds you need to renovate your restaurant, buy equipment and inventory, pay your staff, etc.
  • Business Line of Credit: A flexible financing solution for restaurant owners, a business line of credit allows you to draw on funds as and when you need them instead of receiving a big lump sum at once. You only have to pay interest on the amount of money you used, and you can use it to tide you over the slow periods if you run a seasonal restaurant.
  • Business Term Loan: A term loan might be the best financing option if you need a lump sum of cash upfront to smooth over a cash flow gap – such as settling an outstanding invoice with a vendor or paying an insurance premium. You can usually borrow any amount between $25,000 and $500,000 for one to ten years through this financing option.
  • Merchant Cash Advance: This type of loan will allow you to borrow money against your restaurant’s future debit and credit card receipts. So, if your restaurant has high volumes of credit and debit card sales, then you can borrow anywhere between 50% to 250% of the average income from such sales within a couple of business days.
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Is It Easy to Get a Loan for a Restaurant?

Qualification requirements for restaurant loans can vary widely depending on the lender and type of loan. The interest rates and repayment terms can also be quite variable.

Since most banks and other institutional lenders view the restaurant industry as risky and volatile, restaurant owners may have a harder time getting their loans approved. So, you should keep an eye on your credit score and get all your documentation in order before applying for a restaurant business loan.

The type of loan you seek will also affect the level of difficulty you face. For example, SBA loans and inventory financing are relatively harder to qualify for, while a business line of credit can be much easier, especially if you have a good financial track record.

How Can You Qualify for Restaurant Business Loans?

There are a few factors that’ll determine whether or not you qualify for a restaurant business loan, such as your personal credit history, age of the business, and the collateral you can put up against the loan.

Of course, the exact eligibility requirements will depend on your lender and the type of loan you’re seeking.

SBA loans, for instance, are harder to qualify for than a working capital loan or a merchant cash advance. And the eligibility criteria for restaurant financing will usually be far stricter at a traditional brick-and-mortar bank than at an online lender.

All other things being equal, however, here are a few of the important factors you should keep in mind when trying to qualify for a restaurant business loan.

Years of Experience

Some loans are geared towards startups and new business owners, while other lenders will only entertain restaurant owners who have at least two years of experience under their belt.

If you have years of work experience in the restaurant industry, that might also help you secure an SBA or other type of loan, even if you’ve never owned a business before.

Before approaching a lender, therefore, you must check their requirements in this area, especially if you’re a new restaurant owner.

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Personal Credit History

Most lenders will thoroughly examine your credit history before granting you a small business loan for your restaurant. For instance, you’ll need a minimum credit score of 680 to qualify for an SBA loan.

Many online lenders will provide you with an equipment or inventory loan as long as you have a FICO score of 600 and above, especially if the restaurant is already well-capitalized.

All lenders, regardless of whether they’re online or offline, will want to ensure that you don’t have any recent debt delinquencies, bankruptcies, defaults, or repossessions before approving a loan.


Most lenders will offer you a lower interest rate if you can put up collateral against your restaurant loan.

You can, however, get a small business loan without collateral, especially if you have a good credit score and make a substantial down payment for larger projects – such as restaurant renovation or equipment upgradation.


To successfully apply for a restaurant business loan, you’ll need to provide the lender with certain documentation. Some of the documents you’ll need are as follows:

  • A business plan for the restaurant;
  • Three years of tax returns, both business and personal;
  • A year-to-date balance sheet of the restaurant;
  • Proof of business ownership;
  • Year-to-date profit and loss statement;
  • All relevant business licenses

Having the relevant paperwork ready in advance could go a long way in helping you qualify for the restaurant loan you need to grow your business.

How Can You Use the Funds of a Restaurant Business Loan?

Business loans for restaurants can be used for a wide range of projects, such as upgrading the equipment at your eatery, renovating the restaurant to attract more customers, paying for a marketing campaign, or setting up a new location to keep up with increasing demand. Some of the most common use cases are as follows:

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Renovate Your Restaurant

Would you like to spruce up your restaurant with a fresh coat of paint or a set of new drapes and carpets?

The exterior and interior décor of your restaurant plays an important part in the overall vibe or ambiance. And having a great ambiance is just as essential as serving delicious food if you want to attract customers to your eatery.

If you’d like to undertake more extensive renovations, then you can opt for a term loan to finance a new banquet room or a gorgeous outdoor patio. Smaller renovations can be financed with a short-term loan or merchant cash advance.

Open a New Restaurant Location

If you’re ready to grow your business and open up new branches of your restaurant in various locations around your city or state, then a business term loan might be your best financing option.

You’ll receive a lump sum from the lender, which you can then use to rent space for a new restaurant unit across town, decorate the new unit, market it to new and existing customers, and much more.

Hire Restaurant Staff

If your restaurant business is growing fast and attracting more and more diners every day, then you’ll need to hire and train lots of new staff quickly.

Hiring experienced and skilled chefs, bartenders, wait staff, and cleaning crews is essential if you want to provide your patrons with a great customer experience, which will keep them coming back for more.

But hiring and training new staff isn’t cheap, especially if you want people with industry experience and a great work ethic. This is where a short-term restaurant loan can help you meet your staffing needs during times of rapid growth.

Purchase Restaurant Equipment

Equipment is essential for any business, and no restaurant can function properly without essential appliances like ovens, refrigerators, and stand mixers.

Properly maintaining these essential appliances, and replacing them when necessary, is key to the success of your restaurant, but this can often get quite expensive.

This is when a restaurant loan geared towards equipment financing might come in handy.

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Stock Up on Restaurant Supplies

To prepare the food that your customers love, you need high-quality ingredients like fresh produce, meats, a wide variety of sauces and spices, coffee beans, alcoholic beverages, and much more.

Purchasing all these ingredients can get quite expensive, especially during the busiest seasons of the year.

A working capital loan – or even just a short-term loan geared towards inventory financing – can help tide you over and keep you from ever having to compromise on the quality of the ingredients at your restaurant.

Promotion and Marketing for Your Restaurant

No matter how delicious the food or how amazing the ambiance is at your restaurant, it can’t grow without some investment in marketing and promotion.

Word-of-mouth might be the most potent marketing tool, but it’ll work far better if backed up by a few social media ads, promotional videos, and appreciative posts from local food bloggers.

Whether you hire a dedicated marketing team or choose to do it yourself, all these marketing tactics require money. So be sure to use some of the funds from your restaurant business loan on marketing, as it’ll play a big role in helping you improve your bottom line.

Where to Get a Loan for Your Restaurant?

If you’re trying to choose between the many restaurant financing options, you should check out the website of ROK Financial, an online lending marketplace that connects lenders with small business owners.

The company has helped many restaurant owners throughout the U.S. find and access financing solutions that best fit their needs.

Through ROK Financial, small business owners can obtain same-day financing, and most applicants don’t have to wait more than five working days to receive their capital.

This is because the company, founded in 2020, works with a wide variety of lenders to provide small business owners with several financing options, such as:

  • Line of Credit
  • Accounts Receivable Financing
  • Term Loan
  • Asset Based Loan
  • Franchise Financing
  • Equipment Financing
  • SBA Loan
  • Startup Funding
  • Merchant Cash Advance

ROK Financial allows restaurant owners to access all these small business loans with great terms, such as:

  • You only need to have about six months of business experience to be approved for most of these loans.
  • You can access restaurant financing even if you have a relatively poor credit score since ROK Financial offers small business financing options for all credit profiles.
  • Your restaurant needs only about $60,000 in gross sales annually in order to qualify for a small business loan on this platform.
  • The loan application process at ROK Financial is extremely simple and rarely takes more than 15 seconds to complete.
  • Advanced fintech solutions pair business owners with the financing option that’ll give them the lowest interest rates along with the highest funding amounts available.

So, if you’d like to experience some of these benefits while searching for the perfect restaurant loan, then you should navigate to the ROK Financial website and fill out their simple form.

You’ll soon be contacted by an experienced Business Financing Advisor from the ROK Financial team, who’ll guide you through the loan application process and help you get the right financing solution for your business.

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