The Best Restaurant Business Loans of 2020

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Restaurant Loans Overview

Restaurant owners typically have trouble getting financing for their businesses. And unfortunately, a lack of startup financing and working capital is one of the top reasons why many restaurants fail. However, with the emergence of more alternative lenders and different ways for entrepreneurs to access business loans, there are now more options for restaurant owners than ever.

In this guide, we’ll explore the 12 best sources for restaurant loans, as well as discuss the types of financing that are available to you as you start or grow your restaurant. Plus, we’ll answer some frequently asked questions about getting financing for your restaurant.

Top Lenders for Restaurant Loans

Getting a business loan is no easy task for any small business owner, but it’s even tougher when you’re looking for restaurant financing.

Luckily, these days there are a variety of small business lenders who can provide restaurant loans for business owners who need them.

Here’s an overview of the top restaurant loan lenders:

  1. Apple Pie Capital
  2. ARF Financing
  3. Balboa Capital
  4. CAN Capital
  5. eBusiness Funding
  6. FORA Financial
  7. National Business Capital
  8. Rapid Finance
  9. Kabbage
  10. Funding Circle
  11. OnDeck
  12. Crowdfunding

Let’s learn more about these lenders and what kind of restaurant loans they can offer your business.

1. Apple Pie Capital

If your restaurant is a franchise, this lender might be able to provide the franchise financing you need.

Apple Pie offers traditional term loan products, SBA loans, and equipment loans with monthly repayment schedules.

Additionally, Apple Pie Capital can work with you to find the right restaurant loan for your new or existing business, with flexible collateral options, no prepayment penalty options, and competitive fixed and variable rates.

Terms with this lender range from five to 10 years, and the proceeds can be used for everything—from purchasing your first franchise to expanding into multiple units, remodeling, or buying existing franchise locations.

2. ARF Financing

The lender ARF Financial puts a lot of focus on the food services industry, offering restaurant loans in the form of working capital loans, lines of credit, commercial bridge loans, and equipment financing.

With ARF, you can receive an instant online quote and approval and funding in as little as three days. ARF states that their process is simple with limited documentation, plus, they don’t require collateral on loan amounts up to $750,000. Terms range from 12 to 36 months.

Moreover, this company works with a wide variety of restaurant franchises, although you don’t need to be a franchisee to borrow.

3. Balboa Capital

Balboa Capital is another lender that specializes in franchise financing: They offer restaurant loans up to $1 million and credit lines up to $500,000 for acquisitions, remodeling, furniture fixtures, and equipment.

There’s minimal paperwork, they’ll consider all credit, and Balboa Capital makes a decision on your loan application in as little as one hour, generally financing their restaurant loans in just a few days.

4. CAN Capital

Although they don’t specialize in the restaurant financing industry, CAN Capital is an alternative small business financing company that makes it easy to apply for a merchant cash advance or short-term restaurant loan for expansion, remodeling, equipment financing, or working capital for your restaurant.

Short-term loans from CAN Capital can range from $2,500 to $250,000 with terms from six to 18 months.

You can complete their short application and receive funds in as little as 48 hours, but you must have been in business for at least four months and meet certain minimum revenue levels.

5. eBusiness Funding

Restaurant loans are a focus for eBusiness Funding, which provides business loans and merchant cash advances.

eBusiness Funding can offer merchant cash advances to restaurants that have been in business for at least six months and have monthly revenues of $10,000 or more.

You can receive a merchant cash advance of up to $500,000 within 72 hours after your application is approved.

6. FORA Financial

Restaurants are the number-one industry financed by FORA Financial.

You can receive merchant cash advances, as well as small business loans, as long as you have been in business for three months and have the minimum required sales.

The application is simple, and restaurant loans up to $500,000 can be approved in as little as 72 hours.

The capital from FORA can be used in a variety of different ways, plus they offer food-trucking financing as well.

7. National Business Capital

In addition to franchise financing, National Business Capital provides a wide range of restaurant loans that are useful for business owners, like SBA loans, short-term loans merchant cash advances, equipment financing, and commercial mortgage financing.

National Business Capital also offers startup loans for new businesses.

The application takes only a few minutes, approvals can take less than 24 hours, and you can get funding in just a few days.

8. Rapid Finance

Rapid Finance offers several types of restaurant loans—including small business loans, lines of credit, SBA bridge loans, cash advance loans, and more.

SBA bridge loans can be especially useful for restaurant owners, because they bridge the gap between when your SBA loan actually funds and when you need the money.

With Rapid Finance, you can apply for a loan online, or by speaking to a dedicated business advisor, and get funded in as little as one day.

9. Kabbage

The alternative lender Kabbage provides lines of credit for general working capital purposes. Although not specifically a restaurant loan, Kabbage can meet your restaurant financing needs via an accessible line of credit.

If you need new equipment for your restaurant, need to hire more help, or invest in advertising efforts, therefore, Kabbage could be a good fit. Kabbage offers lines of credit from $2,000 to $250,000 and approves applications in as fast as one day.

10. Funding Circle

The alternative lender Funding Circle offers term loans for larger financing needs.

Funding Circle loans range from $25,000 to $500,000 and terms are set from six months to five years. When you look at these numbers, Funding Circle seems most comparable to a traditional bank loan—but it’s just a little bit easier to secure and doesn’t take as long to fund.

Funding Circle doesn’t specifically have a restaurant financing product, but their term loan can be a great fit for large equipment purchases or restaurant renovations.

11. OnDeck

Yet another online alternative lender, OnDeck Capital is a quick restaurant funding option that business owners in a pinch should absolutely know about.

OnDeck offers short-term loans ranging from $5,000 to $500,000, and lines of credit ranging from $6,000 to $100,000. Again, OnDeck doesn’t specifically offer a restaurant loan product, but that doesn’t mean they aren’t a great option for your restaurant financing needs. If you have smaller, short-term purchases for your restaurant coming up, OnDeck could be a great lender to pursue.

12. Crowdfunding

Finally, although crowdfunding technically isn’t a type of restaurant business loan, nor is it a specific restaurant lender, it may still be a worthwhile option for your funding needs.

Crowdfunding may be a good option if you’re just starting your restaurant, or if you don’t qualify for banks, the SBA, or alternative lenders.

For a startup restaurant, you might have to get more creative by raising money via crowdfunding platforms like GoFundMe or Kickstarter. On these platforms, many people contribute to your funding goals with small investments and donations. In return, business owners typically offer a discount, early-access preview, or just a simple thank you note to show their gratitude for the investment.

If you already have customers coming to your restaurant, you can get creative with your marketing by showing that you’re raising money for your restaurant on a crowdfunding platform. Happy customers might be inclined to contribute to the cause to keep your restaurant in business.

Types of Restaurant Loans

Now that we’ve explored some of the top sources of restaurant loans, let’s learn a little bit more about the different types of restaurant financing.

As we’ve seen, there are several loan types available, so you’ll want to consider all of your options and choose the one that will work best for your business.

Equipment Loans

If you own a restaurant, you know just how expensive the equipment can be. New industrial ovens and stovetops can really add up.

Just because you might not be able to pay for your restaurant’s new equipment out-of-pocket doesn’t mean you can’t upgrade to the most state-of-the-art machines and vehicles. When you need help gathering the capital you need to purchase equipment for your restaurant, consider restaurant equipment financing. You can finance up to 100% of the value of your new equipment with this kind of restaurant loan.

Plus, with this type of loan, the equipment itself serves as collateral—which means you’ll be able to access secured restaurant financing without putting any of your personal assets on the line.

Working Capital Loans

Of all of your restaurant loan options, working capital loans offer the best catch-all financing for restaurant owners. Working capital loans are essentially short-term loans that help you cover expenses and keep your restaurant finances operating smoothly.

Working capital loans are a great option for restaurant owners who need a business loan fast that isn’t too big—maximum loan amounts are typically $250,000.

Inventory Financing

Covering food costs can be one of the most common challenges for restaurant owners.

Therefore, when you need capital to finance inventory purchases for your restaurant, you might want to consider inventory financing. Inventory financing can take many forms—a short-term loan, medium-term loan, or a business line of credit—and it’s for the specific purpose of buying inventory for your restaurant. Inventory financing isn’t all that different from equipment financing: The inventory you’re buying acts as collateral.

And as long as you’re purchasing only inventory with the proceeds—and, of course, making payments on time—that inventory is yours to use as you need.

Lines of Credit

Lines of credit are fantastic financing products for all small business owners—restaurant entrepreneurs especially.

With this flexible financing solution, you’re approved for a set pool of funds that you can tap into whenever you want or need.

You only pay interest on the restaurant funding you draw from your line of credit, and when you’ve repaid what you drew, your credit line is refilled to its original amount.

If you run a seasonal restaurant, a working capital line of credit can function especially well for you. It’ll sit in your back pocket until you need to access it—perhaps during the lead up to the busy season, or when business gets slow and you need to cover your regular operational costs.

See Your Loan Options

Applying for Restaurant Loans

With all of these lenders and financing options in mind, let’s discuss what the process of applying for a restaurant loan might look like.

Whether you submit an application online or speak with a representative, lenders will want a variety of information about your business to confirm your legitimacy and financial history. You’ll need to provide documentation and answer any questions they have.

Of course, the list of business loan requirements will ultimately depend on the specific lender you’re working with; however, you can expect to encounter the following questions:

    What type of restaurant is it and how long have you been in business?

    Most lenders will want to get a sense of what kind of restaurant you run. You should be prepared to put together a business plan that explains your financial projections for your restaurant, along with more qualitative goals for your growth.

    Why is your restaurant unique and important? How will it grow in the next five years? These are questions that your business plan should answer.

    Lenders will also want to know how long you’ve been in business. Any young, small business is considered risky in a lender’s eyes, but restaurants are particularly risky for lenders.

    If you can prove that your restaurant has been around for a while and can weather any challenges that might come your way, you’ll be a great candidate for a small business loan.

    How do you manage your restaurant's money?

    Lenders will ask for a lot of financial documents when you apply for a small business loan.

    They’ll probably require your business’s bank statements, profit and loss statements, personal and business tax returns, cash flow forecast, and more.

    All these documents prove your restaurant’s revenue and profits—and most importantly, they show the lender how good you are at managing your business financials.

    If you’re great at bringing in the cash and keeping it in your business, the lender will be confident that you’ll be able to repay your restaurant loan.

    What are you like as a borrower?

    For any of the restaurant loans you might apply to, you’ll need to provide your personal and business credit score.

    Lenders will want to gauge how trustworthy you are with the money you borrow—which is exactly what your credit score shows.

    If you have a stellar credit score, you’ll be a great candidate for the best types of restaurant financing.

    On the other hand, if your credit score shows that you don’t have a great track record of paying back what you borrow on time and in full, lenders might be hesitant to work with your business.

    You don’t need an amazing credit score to secure a business loan, but if you can prove you’re responsible with your finances, you’ll be more likely to qualify for the best products.

Questions to Ask Before You Apply

As you can see, the process to work with a lender and apply for a restaurant loan will be detailed and sometimes time-consuming. Therefore, before you get too involved within the application process, you’ll want to make sure you’ve asked yourself these questions:

    When do I need the money?

    If the answer to that question is “tomorrow,” then don’t delay the process in finding quick restaurant funding. There are a lot of quick business loans out there that can help you get the financing you need for your restaurant right away.

    However, if you can afford to wait on your business loan and spend more time searching and applying for one, you should take your time through the process.

    The business loans that require more paperwork and more effort in their applications tend to be the most affordable options.

    Why do I need the money?

    Answering this question will help you decide if you truly need to take on debt for your restaurant.

    Plus, if you know exactly why you need the capital for your restaurant before you go through the application process, you’re more likely to find the perfect loan product for your business

    Am I ready for the application process?

    Unless you work with the shortest-term lenders who rely on technology to process your loan, business loan applications take a long time to complete.

    And—if you aren’t fully ready to get into the search and application process, you’re doing yourself a disservice when it comes to your loan approval chances. Before you dive deep into the business loan search, fully consider the time you can commit to finding a business loan and putting together a complete loan application.

    Have I fully considered my options?

    Make sure you’ve fully considered which restaurant business loan product is right for you.

    If you have to purchase a piece of equipment, then an equipment loan might make the most sense. But general financing needs will be a little trickier to find the most suitable option.

    Short-term loans, short-term lines of credit, or merchant cash advances all serve different (but similar) purposes and come with their own nuances on terms, rates, and fees.

    Therefore, you’ll want to fully shop your options before committing to your restaurant loan.

Frequently Asked Questions

The Bottom Line

At the end of the day, although finding restaurant loans may be more difficult in comparison with loans for other types of businesses, there are still a variety of options out there for entrepreneurs to finance their restaurants.

As we’ve seen, there are numerous online and alternative lenders to consider, which are particularly useful if you can’t secure a bank loan.

Therefore, it’s ultimately up to you to decide which type of restaurant financing is best for your business and which lender to work with. If you think carefully about what your restaurant needs and what product will fulfill those needs, there’s no doubt you’ll be able to find the financing solution that’s right for you.

See Your Loan Options
Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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