Small Business Loans for Restaurants

The restaurant industry is booming! According to the National Restaurant Association, there are over 1 million restaurants in the United States, with more than 1.7 million restaurant jobs expected by 2026. To keep pace with the competition, restaurant owners need access to fast, affordable funding.

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Financial options for restaurants

Finding a restaurant business loan with the right interest rate can be challenging. From SBA loans to bank term loans, we’ll break down the information you need to know so you can make the best choice to strengthen your business. Some small business loans are fast, others take more time, some are costly, and others offer low-cost funds.

The SBA 7(a) Loan Program

If you qualify, low-cost SBA 7(a) loan can be your best option. SBA loans have low rates, long terms, and very low payments to fuel stability, growth, and savings.

An SBA 7(a) loan can be used for a variety of purposes.

  • Working Capital – Working capital is the common measure of a restaurant's overall health. Calculating working capital is pretty simple: deduct current liabilities from current assets. If your current assets do not exceed your current liabilities, your business needs additional working capital. Restaurant owners should make sure to have enough working capital in the bank to meet financial obligations and cover day-to-day expenses. Proceeds from an SBA working capital loan can be used for hiring, inventory, and equipment like ovens, ranges, fryers, and freezers, as well as smaller, regular expenses like utensils and dish towels.
  • Debt Consolidation Loans – Refinance merchant cash advances, short-term business loans, high interest business loans, daily or weekly payment loans, or business credit cards.
  • Commercial Real Estate – Buy an office building or other owner-occupied commercial space. Commercial real estate SBA loans can also be used to refinance an existing commercial real estate mortgage.

Advantages of SBA 7(a) loans for restaurants

SBA 7(a) loans are known as the “gold standard” in small business funding because of their low rates and 10-year terms. (Commercial real estate SBA loans have 25-year terms) Other advantages include:

  • Very low monthly payments
  • Available for many uses
  • Helps build business credit
  • No prepayment penalty
  • Available nationwide

Read why SBA loans are so popular on the SmartBiz website here.

Requirements to apply for an SBA 7(a) loan for restaurants

Each lenders has unique eligibility requirements for an SBA loan. For example, some lenders may require a business plan while others do not. (SmartBiz Loans does not require a business plan). Requirements for an SBA loan from a bank in the SmartBiz network include:

  • Time in business must be above 2 years
  • Business owner’s personal credit score must be above 650
  • The business must be U.S. based and owned by US citizen or lawful permanent resident who is at least 21-years old
  • No outstanding tax liens
  • No bankruptcies or foreclosures in the past 3 years
  • No recent charge-offs or settlements
  • Current on government-related loans

How to apply for an SBA 7(a) loan for a restaurant

Step 1: Determine if your restaurant is SBA loan ready by signing up for SmartBiz Advisor. This is a free tool that helps you learn how banks typically evaluate your business and recommends ways to increase your likelihood of approval.

Step 2: Review requirements and gather paperwork. The more organized you are, the swifter the application process will move. For a list of documents required for an SBA loan, visit the SmartBiz Blog: How to Get an SBA Loan: Documents You Need. It’s a great idea to work with your accountant, bookkeeper, or another financial professional when putting together the required paperwork.

Step 3: Choose a lender. Although SmartBiz Loans is not a lender, they have multiple banks in their network and match you with the lender most likely to fund. There’s just one streamlined application to complete and about 90% of the qualified applicants referred to banks in the SmartBiz network are funded. You won’t waste your valuable time going from bank to bank. Additionally, the SmartBiz Loans team is on hand to help guide you throughout the application. Discover if you’re prequalified for a low-cost SBA loan from a bank in the SmartBiz network in minutes without impacting your credit score here.


The SBA 504 Loan Program

This program was created to give small businesses low cost funds for expansion or modernization. Typically, up to 50% of project costs are funded by a lender backed by the SBA. CDCs (Community Development Corporations) usually fund up to 40% of the project cost. The final 10% is a cash down payment expected to come from the small business owner. A 504 SBA loan might be a good fit for small business owners interested in purchasing a commercial real estate property and if their unique business circumstances fit with the public policy goals of your local CDC.

The SBA Microloan Program

The Microloan Program is for very small businesses, including start-ups and provides loans of up to $50,000. Requirements to qualify for a microloan can vary depending on the lender. Proceeds from an SBA Microloan can be used for most business expenses but not for paying down debt or real estate purchases.

Non-SBA restaurant loans and other funding options
There are plenty of non-SBA loan options available although they may have higher rates, shorter terms, and larger payments.

Bank Term Loans

Bank Term loans from lenders in the SmartBiz network are shorter-term, fixed-rate loans with stable monthly payments. These loans are a great fit if you need funds for your restaurant more quickly than our streamlined SBA service provides. Banks in the SmartBiz network offer term loans  for working capital, debt refinance, and new equipment purchases. Here are the details:

  • $30,000 to $250,000 loan amounts
  • 2 – 5 year repayment terms
  • Fixed interest rate*
  • Monthly repayments
  • No pre-payment penalties

*Interest rate depends on loan term and the applicant's credit and financial profile.

Business Lines of Credit

A business line of credit allows you to borrow funds up to a limit based on your credit, typically smaller than a term loan. You only pay interest on the amount you use, and you can continue borrowing as necessary until you reach the set maximum. These loans are usually unsecured, meaning that you won’t have to provide collateral to qualify. For in-depth information, read this post from the SmartBiz Blog: Small Business Lines of Credit Pros and Cons.

Business credit cards are revolving lines of credit. The main distinction is that they don’t terminate once the predetermined limit is reached. They work like personal credit cards, with varying spending rewards and offers depending on the lender. Learn more here: 5 Business Credit Card Myths.

Merchant Cash Advances

A merchant cash advance (MCA) is most often used by small businesses that accept credit and debit card sales. You receive a specific sum in advance that is repaid either by a percent deduction from daily transactions or through daily or weekly payments. Keep in mind that MCAs often lead to extremely high annual percentage rates. For more info, read What You Need to Know About an MCA.

The right loan at the right time

SmartBiz Loans has worked with many restaurant owners to help them get the funding they need. Here are examples of two restaurant owners who are successfully growing and saving money with proceeds from an SBA loan and a Bank Term loan facilitated by SmartBiz.


SmartBiz Loans customer Michael Regan owns Porta Del Sol, an authentic Mexican restaurant in Minnesota. He’s successfully expanding and saving money after taking out a low-cost $55,000 SBA loan from a bank in the SmartBiz network. With a 10-year term, payments are very low and he was able to quickly put the funds to work.

“Some of my equipment was getting close to 10 years old,” he says. “I used $15,000 to upgrade. I also used $15,000 to pay off existing debt.” The remaining funds went into savings for emergencies.

Learn more about his restaurant and plans for growth here: Small Business Success Story: Porta Del Sol.


There’s a creative restaurant in California that’s an amazing place for chicken wings, craft beer, and sports watching on 14 television sets. Wicked Chicken owner Matt McClean connected with SmartBiz when he was seeking funds to help fuel his business expansion.

“Before I found SmartBiz, I took out what I call a ‘mafia loan’. It cost a ridiculous amount of money and required daily payments… I started looking for a loan with a better rate," says McClean.

McClean received a bank term loan for $75,000 from a bank in the SmartBiz network. He's using funds from to refresh the Wicked Chicken website, upgrade the POS system, add employees, and expand catering efforts.

Read more about this unique restaurant here: Wicked Chicken Business Story.