What Are the Best Restaurant Financing Options?

What Are the Best Restaurant Financing Options?

Reading Time: 5 minutes(Last Updated On: August 22, 2021)

The restaurant business is cut-throat and might just be one of the toughest businesses out there. If you’ve managed to fulfill your culinary dreams and open up, you’ll know that only half the battle’s won. Given the ongoing high operating costs, the permits needed, the unexpected costs not to mention the juggling of employees, finding new equipment and seasonal changes. The list is endless.


With restaurant failure within the first year estimated at 20% (according to the SBA) – the restaurant business is certainly tough, but not impossible. What’s more surprising is the reasoning behind this failure – a lack of access to startup capital. Traditional lenders know that restaurants are risky business, and are less than willing to hand out their precious funds.

So what’s a restaurant to do? You need some money to make money. If a restaurant can’t invest in itself and harbor enough financing to make their business profitable, they will become trapped in a vicious cycle. This is where Superman (in the form of alternative funding) comes to the rescue.


What types of restaurant financing options exist?

Now, there are many types of funding options out there and it’s imperative that owners look through all of the restaurant funding options carefully. By choosing the right funding solution for your restaurant business, you should be able to keep a steady cash flow and make sure that you don’t just become another failure statistic. When it comes to your restaurant financing options, there are five main types that you can look into.

1. Equipment financing

Owning a restaurant, you’ll know that there are all sorts of equipment you’ll need, besides the table and cheers. Behind closed doors, you’ll need big industrial ovens (especially for bakeries), perhaps a pizza oven, large fridges and stovetops and it all adds up. Some are lucky enough to be able to fund these costs from their savings, but what about when it comes to upgrading? When you need to make large equipment purchases, laying down large sums of money may be infeasible. And that’s where equipment financing comes in, which as the name implies, is specifically for the purchasing of equipment.

The great thing about an equipment loan is that no collateral is needed. The equipment itself will serve as collateral.

2. Restaurant lines of credit

A restaurant line of credit is a great way to finance your business due to the flexibility they provide. The best part is, you only pay interest on the funds that you draw, and you can choose when and how much that is.


Seasonal restaurants would highly benefit from this type of funding. Be sure to get your line of credit when your business is up, that way you can ensure you bag the best rates. The line of credit will quietly wait until you need it in the off-season, where covering your costs will become more difficult.

3. Short-term loans

Short-term loans, otherwise known as unsecured business loans, are ideal for restaurant owners seeking once-off business expenses. Perhaps you want to revamp your restaurant and redesign, maybe you’re moving location, or perhaps you want a new marketing budget, whatever it is, if you need funds fast for a one-off payment then a short-term unsecured business loan is the way to go. Keep in mind that this type of financing is for purchases up to $500,000 – so if you need more than that, you’ll have to look elsewhere.


An unsecured business loan has no collateral, the process is extremely quick (you could get your funds the very same day) and should you need additional funds, getting re-approved will be doubly as easy.

4. SBA loans

The Small Business Administration (SBA), provides loans with HUGE offers and long terms for restaurants looking to grow. In some cases, you could choose to take up to ten years or even longer to repay the loan, what’s more, is that the interest rates tend to be much friendlier than other options.


If you have a big expansion project coming up and need a large amount of money, this could be a good option, seeing as SBA funding will allow you to receive up to a whopping $10 million!


Well $10 million may be a little over-optimistic, but the point is, you can borrow as much (or as little) as you please. SBA loans are one of the most common ways that restaurant owners get their hands on funds.

SBA loans, however, take a little longer than the other options mentioned here, though the low rates may just make them worth the wait. They usually it take up to a few months through the bank but with Become it can take just a few weeks.

5. Cash advances

A merchant cash advance isn’t technically considered a loan – though practically speaking, it is.


It’s an advance that you repay as a percentage of your daily credit. If you’re a restaurant owner that can’t qualify for other methods of funding, this could be a good option, as high credit scores aren’t a make or break. Another big plus of merchant cash advances is that your payments will change depending on your number of sales, so if business is slow, you won’t be caught out.  

This is an exceptionally speedy way of getting funds, though there is a catch. The APR rates can range from 50 to 250% making this a relatively expensive way of financing your restaurant.

The best Restaurant business loans

This is a very objective question. As outlined above, there are quite a few restaurant funding options and each type suits different needs.

Here we’ll sum-up which option is the best fit for different needs:

Finance Type Best For
Equipment financing Heavy-equipment purchases
Restaurant lines of credit Unexpected costs
and seasonal businesses
Short-term loans Those who need very fast funds for a one-off payment
SBA loans large projects with long terms low rates and those that don’t need a fast loan
Merchant cash advance Those with low credit scores

How to get a restaurant business loan

If you’re wondering how to get funding for a restaurant, it’s not as complicated as you may believe.


In fact, the application process is very simple.


At Become, we believe that ‘Every business is unique, funding should be too’. If you aren’t sure which funding method is best for your restaurant or business, be sure to fill out our quick online application (it’s free, with no hard credit check). Long gone are the days of going back and forth to your bank, you can complete an application within a few minutes, right NOW.

To apply for funding click here or simply begin filling in the form below:

You’ll be shown your top funding options and if you aren’t sure which option to go for, one of our friendly representatives will be sure to discuss your options with you.


How to get a loan to start a restaurant?

If you’re right at the very beginning of your restaurant venture and wondering how to get a loan to START a restaurant, then most of these options won’t apply to you, as your revenue hasn’t started pouring in. For now, your best bet would be to get a startup loan or fund the beginnings of your restaurant with savings or even credit cards. Become can also help you with these options, so be sure to go back to the section above ‘how to get a restaurant business loan’ to see how you can apply.


Will I qualify for a restaurant financing?

In this article, we’ve outlined the 5 best restaurant financing options – each of which have different criteria to qualify for. Generally, to qualify for a restaurant business loan with Become, you’ll need to have the following minimum requirements:

    • three months in business with $10,000 monthly revenue
  • or six months in business with $2,000 monthly revenue


Bon Appétit!

Disclaimer: The information contained in this article is provided for informational purposes only, should not be construed as legal advice on any subject matter and should not be relied upon as such. The author accepts no responsibility for any consequences whatsoever arising from the use of such information.