How to get a restaurant business loan
By: rkapur
Read in 14 minutes

How To Get a Loan For A Restaurant: All You Need to Know

You might need a loan if you want to start or expand your restaurant. Learning the best tips on how to get a loan for a restaurant will increase your chances of being approved and growing your business.

This post will outline the steps you need to take to get a restaurant business loan; you’ll learn if it’s time to ask for financing, the different types of loans available to restaurateurs, and investment ideas you can use for your business. So, this guide is for you whether you are just starting or have been in the industry for years.

Table of Contents
1. How to get funding for a restaurant in 4 steps
2. What are restaurant business loans?
3. Why should you apply for restaurant financing?
4. Types of business loans for restaurants
5. Alternative restaurant financing options
6. Ideas to invest when getting finance for a restaurant business
7. FAQs

How to Get Funding for a Restaurant in 4 Steps

There are many different ways to get funding for a restaurant, and the best option for you will depend on your individual circumstances.

Here are some basic steps you must cover if you want to finance with traditional and online lenders.

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 personal tax returns handy and show them to the bank’s officials.

Ideally, you should prepare copies of the last three years’ returns.

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.

The restaurant lenders may require a business plan, resume, and profit, and loss statements during the loan application process. For a comprehensive list of the documents typically by a bank, read the 5 Keys to a successful loan application.

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 in a position 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 700 or more.

Even if your score is in the 600–700 range, you have a chance of getting your loan sanctioned.

However, a lower score will require you to better convince the lender about your creditworthiness.

Need to improve your business credit? Learn here the 3 Steps to improve your business credit

What will you use the loan amount for?

This is of great concern to the lender. You must be in a position to explain to the lender the purpose for which you are taking the loan.

You must use the money from a restaurant loan within the business: equipment, tableware, and even a marketing campaign that requires additional funds.

Consider the benefits your business will derive after the investment and prepare the relevant details to show to the banker.

Use this strategy to get your loan approved

It can be difficult to get restaurant business loans since lenders know that 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. To know more about this, learn the keys to optimizing the cash flow of your business.

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.

If you ask for 100% financing, your request will have a higher probability of being denied.

A restaurant loan is a great way to start up, maintain, or upgrade your business.

But it’s also a risky and complicated process. Don’t discourage; as a first step, make sure you gather all the tools you’ll need.

Apply for a business loan today

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.

Why Should You Apply for Restaurant Financing?

Getting funding for a restaurant is important because it is a costly venture. You can associate many expenses with opening and running a restaurant, including rent, equipment, supplies, and 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 need to stand out from the crowd 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 their overall operations.

Signs that you need a restaurant business loan

How do you know when it’s time to ask for a loan? Here are four signs that it might be time to consider a restaurant loan:

You’re consistently busy, and your profits are growing

If your restaurant is consistently busy and you’re seeing a steady increase in profits, it might be time to consider taking out a loan to expand your business.

Whether you’re looking to add another location or just need some 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 put a serious dent in your budget, whether it’s 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 on hand 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 just 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 just 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 if you’re facing financial challenges or have an opportunity to grow your business, it might be the right choice.

If you’re unsure whether a loan is right for your restaurant, talk to your accountant or financial advisor to get more information.

Types of Business Loans For Restaurants

Many types of loans are available for businesses, each with its own benefits and drawbacks. Here are some of the most common for restaurant owners:

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

You know that cash flow is everything if you’re a restaurant owner. 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 simply 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 types of 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 types of 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.

Apply for a business loan today

Alternative Restaurant Financing Options

Some ways to finance a restaurant don’t involve going through a traditional lender. Here are a few options:

  1. Raise money from friends and family
  2. Use a credit card
  3. Find an angel investor
  4. Participate in a crowdfunding campaign

Each option has pros and cons, so research before deciding which is right for you.

Raising Money

Raising money from friends and family can be a great way to get started, but it’s essential to ensure everyone is on the same page about the loan terms.

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 it’s important to be aware of the potential dangers.

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 From Family

You can use personal savings or money saved from the business itself.

Using savings does not require borrowing money or taking on debt. However, it is important to make sure that enough money is set aside to cover all of the necessary expenses.

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 important to ensure that the loan terms are clear.

Ideas to Invest When Getting Finance for a Restaurant Business

Having restaurant business financing, you can use the funds to grow your establishment. Some common examples include:

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 for restaurant can help to 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.

Getting finance as restaurant owners is possible!

Remember that at Camino Financial, we are here to help you.

Many of our clients are business owners: we are familiar with the singularities of your business, and we understand your needs and challenges like no other lender.

Our small business loan application is simpler and shorter than in a bank.

Contrary to some of the bank requirements explained in this post, the only documents we require are your financial records, and once we approve you, you can receive your funds in less than a week.

Learn here about our small business loans. You just have to fill in a simple application to receive an estimate of your loan cost.

Apply for a business loan today

Learn more about business

Best Credit Union for a Small Business

How to Find Angel Investors: Learn From the Experts



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 will need to 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 short answer is that the average person can get a business loan of between $5,000 and $1 million. However, the real answer isn’t quite so simple. That’s because 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.

Check if you
qualify for a loan