How To Get Restaurant Financing

Camino Financial30 Jan 2024
How To Get Restaurant Financing
Finding the right restaurant financing option is crucial and can make all the difference in getting off to a successful start. This post describes the steps you need to take to get the funds you need, the different types of loans available to restaurateurs, and investment ideas to strengthen your business.
Table of Contents
1. What is restaurant financing
2. Types of restaurant business loans
3. How to prepare your restaurant for a successful business loan application
4. How to get restaurant financing in 4 steps
5. Best restaurant loans
6. How to compare and evaluate lenders
7. Why you should apply for restaurant financing
8. How to invest funds in your restaurant business
9. Alternative restaurant financing options
10. FAQs

What Is Restaurant Financing?

Restaurant financing refers to the process of obtaining funds or capital to start, expand, or sustain a restaurant business. It usually comes in the form of a loan. It is crucial for these types of businesses because they often require a significant upfront investment for various expenses such as:
  • leasehold improvements
  • equipment purchases
  • inventory
  • staffing
  • marketing
  • working capital

Types Of Restaurant Business Loans

Business Loans

Banks, credit unions, or other financial institutions typically offer traditional business loans. The amounts available vary depending on the lender and your business's creditworthiness. Interest rates for traditional loans may vary based on factors such as the loan amount, repayment term, and your restaurant's financial health. One advantage of traditional business loans is that they often offer competitive interest rates compared to alternative financing options. Additionally, these loans provide a structured repayment plan, allowing you to make fixed monthly payments over a predetermined period. Business loans provide stability and predictability, making them suitable for restaurant owners who prefer a conventional financing approach. Apply for a business loan today

SBA Loans

SBA 7(a) Loan

The SBA 7(a) loan is the most popular type of SBA loan, and you can use it for starting or expanding a restaurant.

The maximum loan amount is $5 million, and the interest rate is typically lower than other types of loans.

SBA 504 Loan

The SBA 504 loan is for businesses that want to purchase or improve commercial real estate, such as a restaurant. The maximum loan amount is $5 million, and the interest rate is typically lower than other types of loans.

Equipment Financing

If you need to purchase equipment for your restaurant, you may be able to get financing through a lender that specializes in equipment loans. The interest rate will depend on the type of equipment you're purchasing and the creditworthiness of your business.

Working Capital Loans

A sudden drop in sales or an unexpected expense can quickly put you in the red, and that's why having access to working capital is so important. Small business owners can use a working capital loan to get the funds they need to cover short-term expenses and keep their businesses running smoothly. Whether you're looking to purchase inventory, make repairs, or tide yourself over during a slow period, a working capital loan can give you the flexibility and breathing room you need.

Business Credit Cards

Business credit cards can be a good option for financing your restaurant if you have good credit and can pay off the monthly balance. The interest rate on business credit cards is usually higher than other loans, but there's no need to put up collateral.

Invoice Financing

If your restaurant has unpaid invoices, you may be able to get funding through invoice financing. With this loan, you borrow against the value of your invoices and typically have to pay a fee, plus interest, on the amount you borrow.

Personal Loans

If you're starting a restaurant, you may be able to get a personal loan from a bank or online lender. The interest rate on personal loans is usually higher than other loans, but there's no need to put up collateral.

Merchant Cash Advances (MCA)

A Merchant Cash Advance is not a loan but an advance on your future sales. That means you don't have to worry about making fixed monthly payments- instead, your repayment will be a percentage of your daily credit card sales. So, if the business is slow, you won't have to worry about falling behind on your payments. You know that cash flow is everything if you're a restaurant owner. Without it, you can't keep the doors open, let alone make improvements or expand your business. This option can provide the influx of capital you need to keep your restaurant running smoothly.

Business Line of Credit

A line of credit for restaurants can be a great way to finance your business. It can provide the capital you need to purchase equipment, inventory, or make repairs and improvements. A line of credit can also help you manage cash flow and keep your business running smoothly.

How To Prepare Your Restaurant For A Successful Business Loan Application

Develop A Business Plan

Create a comprehensive business plan that outlines your:
  • restaurant concept
  • target market
  • competitive analysis
  • marketing strategies
  • financial projections
  • funding requirements
A well-prepared business plan demonstrates your understanding of the industry and ability to manage a successful restaurant.

Organize Financial Documents

Gather all relevant financial documents, including:
  • tax returns
  • bank statements
  • financial statements
  • any existing business loans or debts
Lenders will want to assess your financial history and ability to manage funds.

Improve Personal And Business Credit

Check your personal and business credit scores and take steps to improve them if necessary. Some things that can strengthen your creditworthiness are:
  • paying bills on time
  • reducing outstanding debt
  • resolving any credit issues

Research Funding Options

Explore various restaurant funding options like:
  • online loans
  • bank loans
  • SBA loans
  • crowdfunding
  • investor partnerships
Research each option's specific requirements, terms, and interest rates to determine which best suits your needs.

Create A Pitch Deck

Develop a compelling pitch deck highlighting your:
  • restaurant concept
  • market potential
  • financial projections
  • funding requirements
This concise presentation should capture the interest of potential lenders or investors.

Prepare Financial Projections

Generate realistic financial projections that outline your expected revenues, expenses, and profitability over a specific period, typically three to five years. These projections should demonstrate the potential return on investment for lenders or investors.

Review Legal And Licensing Requirements

Ensure that your restaurant complies with all necessary legal and licensing requirements. Potential lenders or investors will want assurance that your business operates within the law's bounds.

Seek Professional Advice

Consult with a financial advisor, accountant, or lawyer specializing in restaurant financing. They can:
  • offer valuable insights
  • help you navigate the process
  • provide guidance on legal and financial matters

Know What You Will Use the Loan Amount For

Understanding the purpose and intended use of the loan amount is crucial. Having a clear plan and allocating the funds wisely is essential to maximize their impact on your restaurant's success. By identifying the specific areas where you can use the loan, you can align your financial goals and allocate the funds accordingly. By having a well-defined purpose for the loan, you can accurately estimate the required funding amount and structure repayment terms accordingly. This knowledge also demonstrates your preparedness and commitment to lenders, enhancing your chances of securing the loan. Additionally, the lender will want to know what you'll use the funds for, and the answer may impact your application. Calculate the amount of funding you require by considering what you need to invest in, for example:
  • start-up costs
  • equipment purchases
  • leasehold improvements
  • working capital
Be realistic and ensure your funding request aligns with your business plan and financial projections.

Strengthen Your Cash Flow

Getting the best restaurant business financing can be difficult since lenders know many restaurants fail. However, the failure of so many restaurants is not the lack of customers or profits but the lack of cash flow. Whether you are considering applying for a loan or not, your cash flow should always be in good health.

Invest Your Own Money Too

Banks need to know that their business will succeed. One way to do this is to tell them the amount of the investment you have made from your own funds. The higher your own stake, the greater the likelihood of getting your loan. For example, if you buy restaurant equipment, you could put up 30% to 40% of its cost. Most lenders would be willing to finance the remaining amount. Some lenders will probably deny your request if you ask for 100% financing.

Keep Your Credit Report Ready

The lender will access your business credit score directly. But, you need to familiarize yourself with the report. The first step is understanding the difference between your personal and business credit. Then you need to know how to read your credit report. Also, if you have delayed payments in the past, you should be able to explain the reasons. The loan officer will be particularly interested in knowing how eventually resolve the problem. Your chances of getting your loan approved increase with a higher credit score. A good score is 650 or more. However, a lower score will require you to better convince the lender about your creditworthiness.

How To Get Restaurant Financing In 5 Steps

Decide the Type of Funding

Determine the specific type of financing that suits your restaurant's needs. This can include options like bank loans, SBA loans, equipment financing, lines of credit, or even personal investments. Consider factors such as interest rates, repayment terms, and the amount of funding available.

Research Lenders or Financing Options

Explore different lenders or financing options that cater to restaurant businesses. Look for institutions or programs that specialize in restaurant financing. Research their requirements, eligibility criteria, interest rates, repayment terms, and any other relevant details. This will help you identify potential lenders or financing sources that align with your needs.

Prepare the Necessary Documents

Gather and organize the required documentation to support your loan application. This typically includes your business plan, financial statements, tax returns, licenses, permits, lease agreements, and any other relevant records. Ensure that your financial documents are up to date and accurately reflect your restaurant's financial health.

Get Your Paperwork In Order

You can reassure lenders if you can produce documents that substantiate your claims.
  • It is a good idea to keep your tax returns handy and show them to the lender.
  • You should prepare copies of your tax returns for the last three years.
  • Make sure your bank statements are in order. They provide proof of your sales volumes and expenses.
  • If a significant portion of your sales is in cash, you can show the deposits you have made into the bank and tie up these figures with your sales records.
  • You might also have to provide a business plan, resume, and profit and loss statements during the loan application process.

Start Your Application

Begin the application process with your chosen lender or financing source. Submit your application along with the supporting documents. Provide all the necessary information and be transparent about your restaurant's financial status, projections, and any collateral you may have. Respond promptly to any additional requests for information or documentation from the lender.

8 Best Restaurant Loans

Camino Financial

  • Loan Amount: $10,000 to $50,000
  • Payment Terms: 24 months
  • Interest Rates: 32% to 45%
  • Credit Score: 670
  • Requirements: 12+ months in business
Apply for one of our restaurant loans today! Apply for a business loan today


  • Loan Amount: Up to $250,000.
  • Payment Terms: 6 to 12 months.
  • Interest Rates: Starting from 4.8%.
  • Minimum Credit Score: 600.
  • Requirements: 6+ months in business, $10,000+ monthly revenue, no specific collateral required.

Funding Circle

  • Loan Amount: Up to $500,000.
  • Payment Terms: 6 months to 5 years.
  • Interest Rates: Starting from 4.99%.
  • Minimum Credit Score: 620.
  • Requirements: 2+ years in business, $150,000+ annual revenue, no recent bankruptcies or tax liens.


  • Loan Amount: Up to $150,000.
  • Payment Terms: 12 or 24 weeks.
  • Interest Rates: Starting from 4.66%.
  • Minimum Credit Score: 500.
  • Requirements: 6+ months in business, $50,000+ annual revenue, connected business bank account or accounting software.


  • Loan Amount: Up to $500,000.
  • Payment Terms: 3 to 36 months.
  • Interest Rates: Starting from 9.99%.
  • Minimum Credit Score: 600.
  • Requirements: 1+ year in business, $100,000+ annual revenue, no recent bankruptcies or tax liens.

Small Business Administration (SBA) Loans

  • Loan Amount: Up to $5 million.
  • Payment Terms: Up to 25 years for real estate loans or up to 10 years for working capital loans.
  • Interest Rates: Varies, but typically lower than market rates.
  • Minimum Credit Score: Requirements vary, but most lenders prefer scores above 650.
  • Requirements: SBA loan application, personal and business financial documents, business plan, collateral (if applicable), and down payment.


  • Loan Amount: Up to $400,000.
  • Payment Terms: 6 to 18 months.
  • Interest Rates: Starting from 9.99%.
  • Minimum Credit Score: 500.
  • Requirements: 6+ months in business, $15,000+ monthly revenue, no recent bankruptcies or tax liens.

Rapid Finance

  • Loan Amount: Up to $1 million.
  • Payment Terms: 3 to 60 months.
  • Interest Rates: Varies based on creditworthiness and financial profile.
  • Minimum Credit Score: 500.
  • Requirements: 3+ months in business, $5,000+ monthly revenue, no specific collateral required.

How To Compare And Evaluate Lenders

Interest Rates And Fees

Consider whether the lender offers fixed or variable rates. Also, consider any associated costs, such as origination fees or prepayment penalties. Lower interest rates can lead to significant savings over the life of the loan.

Loan Amount And Payment Terms

Examine the repayment terms, including the duration of the loan and the frequency of payments. Longer terms may result in lower monthly payments but potentially higher interest costs.

Eligibility Criteria

Assess your own credit score and determine if you meet the criteria. Additionally, consider other eligibility requirements such as time in business, minimum revenue thresholds, and any specific collateral requirements.

Funding Speed

Determine the time the lender takes to approve and fund the loan. If you need funds quickly, opt for lenders that offer expedited processing and quick disbursement of funds.

Repayment Flexibility

Evaluate the flexibility offered in repayment options. Some lenders may allow early repayment without penalties, while others may have restrictions. Consider your ability to make prepayments or adjust payment schedules per your restaurant's cash flow.

Total Cost Of Financing

Evaluate the total cost of financing by considering the interest paid over the loan term and any associated fees. Compare the total costs among different lenders to determine which option is the most affordable in the long run.

Why You Should Apply For Restaurant Financing

Getting funding for a restaurant is vital because it is a costly venture. You can associate many expenses with opening and running a restaurant, including:
  • rent
  • equipment
  • supplies
  • labor
It can be challenging to cover all of these costs and make a profit without adequate funding. Additionally, restaurants face stiff competition from other businesses. To succeed, they must stand out and offer something unique to attract customers. Having adequate funding can help a restaurant achieve this by allowing them to invest in marketing and advertising and improve its overall operations.

4 Signs That You Need A Restaurant Business Loan

You're Consistently Busy, And Your Profits Are Growing

If your restaurant is consistently busy and you're seeing a steady profit increase, it might be time to consider taking out a loan to expand your business. Whether you want to add another location or need extra funds to cover expansion costs, a loan can help you make your growth plans a reality.

You're Facing Unexpected Expenses

Even the most well-run restaurants can face unexpected expenses from time to time. These unexpected bills can seriously dent your budget, whether a sudden spike in food costs or an unplanned repair. If you don't have the cash on hand to cover these unexpected expenses, a loan can help you get the funds you need to keep your business running smoothly.

You Want To Take Advantage Of A Business Opportunity

Sometimes, the best opportunities come at the worst times. If you're presented with a business opportunity that could help your restaurant grow but you don't have the cash to take advantage of it, a loan can help you make it happen. Whether you're looking to buy a new piece of equipment or need some extra funds to get started, a loan can give you the boost you need to seize the opportunity.

You're Struggling To Keep Up With The Demand

If your restaurant is popular and you're struggling to keep up with demand, it might be time to consider financing to help you expand. Whether you need to hire more staff or need some extra funds to cover the costs of expansion, a loan can help you meet the needs of your growing business. Taking out a loan is a big decision, but it might be the right choice if you're facing financial challenges or have an opportunity to grow your business. If you're unsure whether a loan is right for your restaurant, ask your accountant or financial advisor for more information.

How To Invest Funds In Your Restaurant Business

Working Capital

Often, restaurants need access to working capital to cover operational expenses such as inventory, payroll, and marketing. A loan for a restaurant business can provide the necessary funds to keep the business running smoothly.


If your restaurant is doing well and wants to expand, you can use a loan to finance the expansion. This could include opening a new location, adding more seats to the existing restaurant, or expanding the menu.


Over time, restaurants may need to renovate to stay fresh and appealing to customers. Loans for restaurants are the perfect way to finance any necessary renovations, such as updating the décor, installing new equipment, or making repairs.

Debt Consolidation

You can use financing to consolidate the debt into one monthly payment with a lower interest rate if a restaurant has high-interest debt from multiple sources. This can save the business money and make it easier to manage debt.

Equipment Financing

If a restaurant needs new equipment, such as kitchen appliances or furniture, a small business loan can help purchase it. This can help the business save money by making necessary purchases without depleting cash reserves.

Seasonal Financing

Some restaurants experience seasonal fluctuations in business, such as during the summer or holiday seasons. Restaurant loans can provide the necessary funds to help the business through these slower periods.

Start-up Financing

You can use a loan for opening a restaurant using start-up financing. This is essential in getting the business off the ground, so you can finance equipment purchases, lease a space, and hire staff.

Bridge Financing

If a restaurant is in the process of selling, you can use a loan as bridge financing. This type of financing can help the business meet its financial obligations until the sale is complete.

Alternative Restaurant Financing Options

    Raising Money

    Raising money from friends and family can be a great way to get started, but ensuring everyone is on the same page about the loan terms is essential. You don't want to put your relationships at risk by not being able to repay the borrowed money.

    A Credit Card

    Using a credit card can be a quick way to get the money you need, but knowing the potential dangers is important. If you're not careful, you could end up with a lot of debt you can't afford to repay.

    Angel Investors

    Finding an angel investor can be a great way to get the funding you need, but you'll need to give up a portion of the equity in your business. Make sure you are comfortable with this before moving forward.


    Crowdfunding can be an excellent option for some businesses, but ensuring a good campaign strategy is vital. You can use strategies to attract investors, such as giving away a portion of your profits.

    Personal Savings Or Family Funds

    You can use personal savings or money saved from the business itself. Using savings does not require borrowing money or taking on debt. However, ensuring enough money is set aside to cover all the necessary expenses is important. Otherwise, the business may quickly become overwhelmed by debt. Another option for financing a restaurant business is to borrow money from friends or family. This can be a good option because it does not require taking out a loan from a bank. However, it is crucial to ensure that the loan terms are clear.

    Getting A Loan As A Restaurant Owner Is Possible!

    Remember that Camino Financial loans can help you. Many of our clients are restaurant owners: we are familiar with your business's singularities and understand your needs and challenges like no other lender. Our small business loan application is simpler and shorter than bank applications. We also have easier-to-meet requirements. So if you need restaurant funding, consider completing an application with Camino Financial. Apply For A Business Loan!  


    What are restaurant business loans?

    Restaurant business loans are financing that you can use to help with the costs associated with starting or expanding a restaurant. These loans can come from various sources, including banks, private lenders, and government programs.

    How do you get approved for a loan for a restaurant?

    You'll need to do a few things to get approved for a loan for a restaurant: have a detailed business plan, have good personal credit, improve your cash flow, and have some collateral.

    What kind of loans are there for restaurants?

    The most common type are small business loans, SBA loans, and merchant cash advances.

    What do I need to get a loan for a business?

    Generally, you must provide documentation about your business, such as your business plan and financials. You will also likely need to have a good credit score. Additionally, the bank may want to see that you have some personal assets you could use as collateral for the loan.

    How much can the average person get for a business loan?

    The average person can get a business loan of between $5,000 and $1 million. However, it isn't quite so simple. Many factors can affect how much you can borrow, including the type of business you're running, your personal creditworthiness, and the amount of collateral you have to offer.

    Is it hard to get a loan to buy a restaurant?

    Several factors come into play when lenders assess loan applications for restaurant purchases. These factors include the borrower's creditworthiness, business plan, experience in the industry, collateral, and the financial health of the restaurant purchased. While the process may involve some hurdles, with thorough preparation, a solid business plan, and a strong financial profile, securing a loan to buy a restaurant is possible. Working with experienced lenders specializing in restaurant financing can also significantly increase your chances of success.

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