A restaurant business loan is a type of loan that is designed to meet the unique needs of a restaurant business owner. It can be short-term or long-term and can be from an online lender or a bank. A restaurant business loan might be a good idea for your business if you need some extra working capital, want to make improvements, or purchase restaurant equipment. There are different types of loans that can be used to purchase an existing business, buy a franchise, build a new business, or purchase equipment.
We reviewed more than a dozen restaurant business loans and chose the best ones based on customer reviews, terms, costs, and lending requirements. Read on to see which of our best restaurant loans is right for your business.
The Best Restaurant Business Loans for 2021
Best Overall : FORA Financial
Why We Chose It: We chose FORA Financial as our best overall restaurant business loan because it offers fast funding, has lenient credit qualifications, and has excellent customer reviews.
No credit score minimum
Loan approval in as little as 72 hours
Online loan monitoring
May pay higher rates
Must be in business already
Don’t loan over $500,000
FORA Financial has been in business since 2008 and offers two types of restaurant business loans. The application process is simple and it doesn’t require any collateral, and It offers loans in a variety of industries including retail and construction, but funds more restaurant business loans than any other type.
Loans range from $5,000–$500,000 and come in the form of short-term small business loans or merchant cash advances. Loans fund in as quickly as 24–72 hours and you only need to fill out a one-page application, submit proof of business ownership, and submit your business bank statements. You must be in business for at least six months and typically gross monthly sales of $12,000 or more are required.
Loan terms are between four and 16 months. Origination fees vary but can range from 1–4% of the loan amount. Other borrower fees may be as high as 10–30 % of the loan amount. However, there are early payoff discounts and no collateral is required. There is also no minimum credit score required. Instead, FORA Financial looks at your restaurant’s revenue and how long it’s been in business.
Customers like the knowledgeable and helpful agents and appreciate that they offer loans that other lenders would turn down.
Best for Franchises : Apple Pie Capital
Why We Chose It: Apple Pie Capital specializes in financing for franchises, knows the industry inside and out, and has dedicated agents to help you with the loan process.
Knowledgeable about the franchise industry
Can be used for new or existing franchises
Also offers accounts receivable and equipment financing
Loans are only for franchises
Application process can be time-consuming
No rates or fees published on site
Apple Pie Capital is our best restaurant business loan for franchises because of its specific industry knowledge and multiple types of loans. It’s a loan network dedicated to the needs of the franchise community. It offers traditional loans, Small Business Association (SBA) loans, and restaurant equipment loans.
Terms range from five to 10 years and they finance new and existing restaurant franchises. There are flexible collateral options, no prepayment penalties, and both fixed and variable rates. Loans can be used to finance equipment, build a new location, open up your first location, or anything related to the restaurant franchise. The company offers an interest-only grace period on new units and projection-based lending.
Small business loans start at $100,000 and equipment loans start at $15,000. Loan fees and rates vary based on the lender and the borrower’s qualifications. Each lender in the network charges its own lender origination fees.
The minimum credit score and documents required depend on the lender and type of loan and funding depends on the same. Typically, SBA loans take longer to fund than equipment loans.
Some customers like their focus and knowledge on the franchise industry but others complain about the lengthy application process.
Best for Short-Term Loans : Credibility Capital
Why We Chose It: Credibility Capital is our recommendation for best short-term restaurant business loan because of its excellent customer reviews, multiple loan types, and easy online application process.
Positive customer reviews
Fast loan eligibility determination online
No long-term financing
Won’t lend to borrowers with fair credit
Loans require a personal guarantee
Credibility Capital, a small business lending platform that matches businesses with institutional investors, has been in business since 2013 and its objective is to provide transparent loans to quality small businesses. It offers fully amortized loans with terms up to three years that can be funded in as little as three days, making them our choice for best restaurant business short-term loans.
Although borrowers typically have a credit score of 680 or higher, there is no minimum credit score required to get a loan from Credibility Capital; rather, it looks at the overall financial health of the business. You must own an existing business that has been running for at least 24 months and although no collateral is required, the company does require a personal guarantee, and a UCC filing is placed on the business.
There’s no application fee and you can see if you’re approved within minutes with only a soft credit pull. Typically, funding can happen as quickly as 72 hours and requires bank statements, and tax returns, and other documentation may be needed depending on the type of loan. Loan amounts range from $50,000–$250,000. Terms are one, two, or three years and there are no prepayment penalties if you want to pay off the loan early.
Credibility Capital has excellent customer reviews with customers praising the fast funding times and customer service.
Best for Equipment Financing : CurrencyFinance
Why We Chose It: CurrencyFinance offers multiple types of loans that can be used for small and large equipment purchases with varying payment terms and it specializes in equipment financing.
Multiple loan products
Specialize in equipment loans
Varying loan amounts for small and large purchases
Customers complain about confusing loan documents
No online loan portal to monitor your loan
Lengthy application process for larger loans
CurrencyFinance, a division of Currency, is based out of Los Angeles and has been in business since 2001. The company provides equipment financing and working capital loans with fast funding and simple online applications. It also offers equipment financing to industries including the restaurant and aviation industries and they finance equipment up to $2 million and working capital loans go up to $500,000.
Your annual revenue must be over $120,000 and your credit score must be over 620 to qualify for a loan with CurrencyFinance. However, there is no minimum time in business requirement so it’s ideal for newer businesses.
The application can be completed online in a few minutes and funding can be as quick as 72 hours. Typically, you need business bank statements, proof of ownership, and tax returns. However, if you need a loan over $150,00,0 more documentation will be needed including debt schedules and profit and loss statements.
Rates start at 6% (as of January 2021) and terms range from six months to seven years.
CurrencyFinance has mixed reviews with some customers complaining about confusing loan docs and not knowing what they signed up for. However, other customers like the simple online application, fast funding, and equipment financing knowledge.
Best for Fair Credit : Kabbage
Why We Chose It: Kabbage doesn’t require a high credit score to qualify, lends up to $250,000, and the online application only takes a few minutes to complete.
Fair credit accepted
Fast funding times
No incentives to repay the loan early
Doesn’t offer long repayment terms
Kabbage is our choice for restaurant owners with fair credit because it only requires a 560 credit score and funds loans quickly. The company was acquired by American Express and offers small businesses loans that other lenders may turn down. You only pay for the money you use, which is similar to how a line of credit works. It funds small business loans across a variety of industries including restaurants, e-commerce, and retail.
Terms are six, 12, or 18 months, rates are 24% to 99% and fees typically range from 1–10% of the loan amount (as of January 2021). The application process is paperless, completed online, and you must link your Kabbage account to either PayPal or your checking account so the lender can verify your revenue. Funding usually only takes a few days and the money will be deposited into your linked account.
Kabbage has mostly positive reviews with customers praising the lenient credit criteria and fast funding but some complained about the responsiveness of customer service agents.
Best for Low Rates : SmartBiz
Why We Chose It: SmartBiz provides SBA loans and bank loans through its online platform with competitive rates starting at 4.75%.
Competitive interest rates
Varying loan amounts
Prequalify in minutes
No short-term loans offered
Minimum credit score needed to qualify
May take longer to fund than other lenders
SmartBiz is an online lending network that helps finance small businesses in different industries including restaurants, retail, and commercial real estate. It matches your business with the lender most likely to approve your loan, streamlining the often-complicated SBA loan process. It also offers some of the best rates among online lenders.
Rates usually range from 4.75 % to 7% (as of January 2021) which are competitive for restaurant business loans. These lower rates can help minimize your financing costs and make a loan more affordable. You can prequalify online in five minutes and it doesn’t affect your credit score. Loan funding times vary depending on the type and amount of the loan. A minimum credit score of 650 is needed as well as a personal guarantee.
The lender will also place a lien on the business until the loan is repaid. Your business must have strong financials and some loans require two to three years of being in business to qualify. SBA loan amounts range from $30,000–$5M, terms are typically 10– 25 years, and fees vary depending on the loan type.
It has excellent reviews with customers praising the customer service and loan product knowledge. It also offers a free tool to help you track the financial health of your business over time.
Best for Quick Funding : ARF Financial
Why We Chose It: ARF Financial funds franchises and non-franchises within three days and offers multiple types of loans.
Fast loan funding
Multiple types of loans
No terms over three years
Higher credit scores are typically needed
Personal guarantee required
ARF Financial has been in business since 2001 and was founded to simplify the financing process for restaurant business owners. It offers working capital loans, commercial bridge loans, equipment loans, and lines of credit and has fast funding times, excellent reviews, and a focus on the food services industry,
The lender looks at the overall health of the business, its revenue, what the loan will be used for, and the borrower’s credit score before approving or denying a loan. The application process is simple, online, and you can get an immediate quote and funding within three days if approved.
Loan costs depend on the type of loan and the terms offered. There is also a 3% administrative fee charged on each loan which is to be paid at closing. Rates typically range from 10–30% (as of January 2021) and vary based on loan term and borrower qualifications.
Terms range from 12–36 months and once approved, you will have multiple types of loans to choose from with varying rates, terms, and loan amounts. This is a unique feature and helps customize the loan towards your business needs.
ARF Financial customers appreciate how professional and easy it is to work with the company.
All the restaurant business loans on our list have different things to offer, so choose the one that best suits your business needs. Some offer short loan terms with higher fees, others offer longer loan terms with competitive rates, and others have less stringent borrower qualifications. You can choose from an equipment loan, a merchant cash advance, or a small business loan. Loan amounts vary and typically start at $5,000 and go into the millions.
FORA Financial is our recommendation for best overall restaurant business loan because they offer loans with varying amounts and terms, don’t require good credit, offer fast funding, and have excellent customer reviews.
|Restaurant Business Loan||Why We Picked It||Unique Feature|
|FORA Financial||Positive customer reviews and fast funding||No minimum credit score|
|Apple Pie Capital||Franchise industry experts||Interest-only grace period on new units|
|Credibility Capital||Short-term loans with fast funding||Flexible underwriting requirements|
|CurrencyFinancial||Specialize in equipment loans||Offer varying loan terms with competitive rates|
|Kabbage||Loans for borrowers with fair credit who may not qualify elsewhere||Paperless application process|
|SmartBiz||Competitive rates and long repayment terms||Free online tools and resources to help keep track of your business’ progress|
|ARF Financial||Fast funding times with multiple loans to choose from||Instant quote won’t affect your credit|
What Is a Restaurant Business Loan?
A restaurant business loan is a specialty loan product designed for the restaurant industry. It may be a short-term or long-term loan and it has varying rates, terms, costs, and qualifications. You can find a restaurant business loan at a bank, through an SBA lender, or an online lending platform. There are restaurant business loans for both existing restaurants and new restaurants.
Can I Get an SBA Loan for a Restaurant?
Yes, certain types of SBA loans can be used for restaurants if you and your business meet the SBA guidelines. For instance, the SBA 7 (a) loan is often used to help purchase commercial real estate, working capital, and equipment for a restaurant.
Keep in mind that SBA loans typically require certain revenue and credit score requirements to be met. The lender will also want to see your detailed business plan and/or financial statements.
Who Should Get a Restaurant Business Loan?
You should get a restaurant business loan if:
- You need funds to establish a new restaurant
- Your existing restaurant needs working capital
- You need to finance restaurant equipment
- You want to make improvements to your restaurant
- You want to fund the purchase of a franchise
Restaurant business loans are right for small and large restaurant owners, franchise owners, and those who want to open a new restaurant. If you don’t have the cash, don’t want to liquidate your assets, and can’t borrow money from friends or family, then a restaurant loan is a viable option.
What Does a Restaurant Business Loan Cost?
There are different types of restaurant business loans with varying costs. Expect to pay interest rates anywhere from 4.75% to 99%, depending on your circumstances. Loan origination fees, administration fees, broker fees, and other loan fees are common as well. These can be as low as 1% or as high as 30% of the loan amount.
The loan costs depend on the type of loan, amount, borrower qualifications, and loan term. Typically, the better your credit score and the longer your business has been open and producing revenue, the lower your loan costs will be.
How We Chose the Best Restaurant Business Loans
We reviewed more than a dozen restaurant business loans before deciding on the top contenders. Factors we considered include the types of loans offered, if the lender specialized in restaurant loans, industry experience and reputation, and customer reviews.
All of our top choices are lenders that have been in business for at least a few years and have mostly positive reviews as well as competitive loan rates, terms, and borrower qualifications.