# Restaurant business loans

Source: https://businessloanbroker.ai/industries/restaurants/
Site: BusinessLoanBroker.ai (powered by Levr)

> Restaurants get funded most often through equipment financing, SBA 7(a) loans and merchant cash advances. Typical amounts, documents and decline reasons.

Restaurants get funded most often through [equipment financing](https://businessloanbroker.ai/business-loans/equipment-financing/), [SBA 7(a) loans](https://businessloanbroker.ai/business-loans/sba-7a-loans/) and [merchant cash advances](https://businessloanbroker.ai/business-loans/merchant-cash-advance/). Banks are cautious because margins are thin and failure rates are high, so conventional term loans are rare for independents. Equipment lenders like the resale value of kitchen gear, SBA lenders accept restaurants with a guarantee behind them, and advance lenders price off your daily card sales.

## Key facts
- **Typical amounts:** $10,000 to $250,000 for working capital, up to $5 million through SBA
- **Products that fit:** Equipment financing, SBA 7(a), MCA, short term loans
- **Usually decline:** Bank term loans and large lines under two years in business
- **Documents asked for:** 3 to 6 months of bank and card statements, lease, permits, tax returns
- **Typical minimums:** 6 months open and $10,000 a month for advances, 2 years for banks

## Which loans work best for restaurants?

Equipment financing works best for ovens, hoods, walk in coolers and espresso machines, because the lender can resell the equipment. SBA 7(a) is the main bank path for openings, buyouts and renovations, and restaurants are one of the most common SBA industries. Merchant cash advances fund fastest, usually within days, and repay as a percentage of card sales.

- Equipment: 2 to 7 years, 0% to 20% down, typically 7% to 25% APR.
- SBA 7(a): up to $5 million, 10 year terms for working capital.
- MCA: factor rates of 1.2 to 1.5, repaid daily or weekly.
For a slow month, a [short term loan](https://businessloanbroker.ai/business-loans/short-term-loans/) is often cheaper than an advance.

## What do lenders like and dislike about restaurants?

Lenders like card heavy sales, because processing statements verify revenue, and a lease with several years left. They like an owner with prior restaurant experience and a second location that already makes money.

They dislike the failure rate, the thin margins, and the way cash sales hide true revenue. A restaurant with $60,000 a month in deposits but three NSF days is harder to fund than one with $35,000 and clean statements. Short leases, seasonal locations and stacked advances all push lenders away, and full service dining is seen as riskier than quick service.

## How much can a restaurant borrow?

Working capital products typically lend 50% to 100% of one month of revenue, so a restaurant doing $50,000 a month can usually get $25,000 to $50,000 from an advance or short term lender. Equipment lenders fund the invoice, typically $5,000 to $500,000, with a down payment for weaker credit. SBA 7(a) can reach $5 million, but the amount is sized by cash flow: projected profit must cover the payment with about 1.25 times to spare. The [how much can I borrow](https://businessloanbroker.ai/tools/how-much-can-i-borrow/) tool gives a rough range.

## What documents will you be asked for?

Advance and short term lenders usually want 3 to 6 months of bank statements, card processing statements and a driver license. Equipment lenders add the vendor quote. SBA and bank lenders want more:

- Two to three years of business and personal tax returns
- Year to date profit and loss and balance sheet
- The lease, health permit and liquor license if you hold one
- Point of sale reports by month
- A plan and projections for an opening
- Purchase agreement and seller financials for a buyout
The full list is in the [document checklist](https://businessloanbroker.ai/guides/document-checklist/).

## What are the common uses of funds?

Most restaurant loans pay for one of five things.

- Kitchen equipment: a $40,000 hood and line replacement financed over five years.
- Renovation: an SBA 7(a) loan for a $300,000 dining room and patio refresh.
- A second location: see [opening a second location](https://businessloanbroker.ai/situations/second-location/), where the first unit's profit carries the application.
- Working capital: a $30,000 short term loan to cover January after a strong December.
- Buying a restaurant: an SBA acquisition loan with 10% down and a seller note.

## What usually gets a restaurant application declined?

The most common decline reasons are declining card sales over the last three months, more than three NSF or negative balance days, and a lease that expires within a year. Lenders also decline on two or more existing advances, unpaid sales tax, or a restaurant open under six months. For banks, add a personal credit score under about 650 and a profit and loss that shows a loss after owner salary. Read [why loans get denied](https://businessloanbroker.ai/guides/why-loans-get-denied/) and fix what you can first, because each application is pulled and counted.

## How to apply

Apply once on this site with your bank statements and basic details and your application reaches equipment, SBA, advance and short term lenders at the same time. Or connect your AI assistant to our MCP server through the [agents hub](https://businessloanbroker.ai/agents/) and it can read your statements, fill the application and submit it for you. It is free for the business, and offers come back to the same place.

| Product | Amounts | Typical cost | Speed | Best for |
|---|---|---|---|---|
| Equipment financing | $5,000 to $500,000 | 7% to 25% APR | 2 to 7 days | Kitchen gear, hoods, coolers |
| SBA 7(a) | $50,000 to $5M | Prime plus 3% to 6.5% | 30 to 90 days | Openings, buyouts, build outs |
| Merchant cash advance | $5,000 to $250,000 | Factor rate 1.2 to 1.5 | 1 to 3 days | Fast cash against card sales |
| Short term loan | $10,000 to $250,000 | 15% to 60% APR | 1 to 5 days | A slow season or a repair |

## Questions and answers
**Can a new restaurant get a loan?**

Rarely from a bank. Equipment lenders will fund a new restaurant with a solid owner credit score and 10% to 20% down. SBA 7(a) lenders fund openings when the owner has restaurant experience, a lease, a plan and roughly 10% to 20% of the project in cash. Advance lenders want six months of card sales first.

**Do merchant cash advances hurt a restaurant?**

They can. An advance repaid daily takes 10% to 20% of each day's card deposits, which squeezes a thin margin. One advance for a clear purpose is manageable. Two or three stacked advances are the most common reason restaurants cannot refinance into cheaper debt later.

**Does a liquor license help?**

Yes, in two ways. It raises margins, which improves cash flow coverage, and in some states the license has resale value that lenders treat as collateral. Keep it in good standing, because a lapsed or suspended license is a decline reason at almost every lender.

**Can I finance a franchise restaurant?**

Yes, and often more easily than an independent. Many lenders have programs keyed to brands with strong unit economics, and SBA lenders use the brand's history in underwriting. See franchise financing for how the franchise fee, build out and equipment are usually split across products.

## Related
- [Equipment financing](https://businessloanbroker.ai/business-loans/equipment-financing/)
- [SBA 7(a) loans](https://businessloanbroker.ai/business-loans/sba-7a-loans/)
- [Merchant cash advances](https://businessloanbroker.ai/business-loans/merchant-cash-advance/)
- [Franchise financing](https://businessloanbroker.ai/business-loans/franchise-financing/)
- [Financing a second location](https://businessloanbroker.ai/situations/second-location/)
- [Business loan document checklist](https://businessloanbroker.ai/guides/document-checklist/)

## Apply
Apply for the business: https://apply.businessloanbroker.ai/signup?utm_source=direct&utm_medium=organic&utm_content=md-restaurants
MCP server for AI agents: https://mcp.businessloanbroker.ai/mcp (docs: https://businessloanbroker.ai/agents/mcp/)