How to Get Restaurant Financing in 2026

Starting your dream business is exciting, but many people get stuck with financing it. Between equipment, staff, rent, and supplies, the costs add up fast. If you don’t plan ahead, it’s easy to run out of money before you even open your restaurant.

Maybe you’ve already got the concept, the name, and even a menu. But when it comes to budgeting and finding the right funding, things feel less clear. You’re not alone. One of the biggest reasons restaurants fail early on is that owners underestimate how much money they actually need.

That’s why having a plan, especially about the right kind of financing, is so important. Let’s go through how much you need to start a restaurant and the best ways to fund your new business.

How much money do I need to start a restaurant?

Before you look for restaurant financing options, you must have an idea of how much you really need. Going through the necessary startup costs helps you avoid underestimating expenses, which is a common reason restaurants fail early on. By doing so, you save your business from becoming part of the 17% that fail in the first year.

Lease deposits, monthly rent, and expenses for renovations or build-outs are one of the largest expenses to consider. Depending on location and size, these can range from $10,000 to over $500,000 upfront.

Next, you’ll need various licenses such as health permits, liquor licenses (if applicable), and business registrations. These can cost between $1,000 and $10,000 or more.

You also have to invest in essential equipment, including kitchen appliances, POS systems, furniture, and signage, costing around $15,000 to over $100,000. This largely depends on whether you purchase new or used items.

Aside from equipment, you need to stock up on food, beverages, and smallwares to start a restaurant, which should be around 25% to 35% of your startup budget.

Hiring, onboarding, and providing a payroll buffer for the first few months are also essential restaurant costs to consider. Labor expenses make up as much as 30% of your budget and revenue thereafter, so it’s crucial to budget carefully.

It’s best to have three to six months of operational costs ready as working capital. This way, you can maintain smooth restaurant operations even when you need to cover unexpected expenses, like repairs and maintenance, or slow business periods. 

9 restaurant financing options to consider

Once you know how much funding your restaurant needs, it’s time to figure out how to get it. From bank loans to equipment financing, there are many ways to raise the capital needed to launch or grow your restaurant.

The right option depends on your budget, timeline, risk tolerance, and business plan. For instance, our additional $6 million funding last year allowed us to grow our team and expand integrations.

Restaurant owners should put a lot of thought into the type of funding they choose. Different financing methods suit different business stages and goals. 

1. Traditional loans

Traditional restaurant business loans are a common way to finance your business. These are term loans from banks or credit unions, where you borrow a set amount and repay it over time with interest. They often require collateral, such as business assets or personal guarantees.

When you apply for a traditional loan, the lender checks your credit history, business plan, and financial projections. If approved, you’ll receive a lump sum to use for your restaurant’s needs, such as purchasing equipment or covering operating expenses. Repayment terms typically range from three to 10 years, with monthly payments that include both principal and interest.

The approval process for traditional loans can take between 30 and 60 days. This timeline includes application submission, document review, underwriting, and final approval. It’s important to plan accordingly, as this process can be lengthy compared to other financing options.

If you qualify, traditional loans have lower interest rates that range from 6.54% to 11.7% and longer repayment terms, which allow for manageable monthly payments.

However, you do need to have a strong credit history and collateral. Plus, there’s the lengthy application process and documents you need to fulfill. Traditional loans also usually require personal guarantees, putting personal assets at risk.

These are best suited for experienced restaurant operators with solid financials and a strong credit profile. Traditional loans are available for significant investments, such as franchise compliance or expansion of existing restaurant locations.

2. Small Business Administration (SBA) loans 

The U.S. Small Business Administration (SBA) offers several loan programs to support small businesses, including restaurants. These loans are provided through SBA-approved lenders and come with government-backed guarantees, making them more accessible and often more affordable than traditional loans.

The SBA 7(a) loan is the most versatile SBA loan program. You can use it to purchase equipment or as working capital. Loan amounts can go up to $5 million, with repayment terms extending up to 25 years for real estate and 10 years for equipment or working capital.

The borrower and lender can discuss interest rates, but these are still subject to SBA maximums. To be eligible, you must meet the SBA’s “small business” size standards, which are typically less than 500 employees or a specific revenue threshold.

There’s also the SBA 504 loan, which is designed for purchasing fixed assets like real estate or equipment. It involves a partnership between a conventional lender and a Certified Development Company (CDC), with the SBA guaranteeing a portion of the loan.

Eligibility requirements include having a net worth under $15 million and an average net income of under $5 million for the last two years. Another requirement is that the restaurant must create or retain jobs, or meet public policy goals (like revitalizing business districts or going green).

For smaller financing needs, the SBA Microloan program offers loans up to $50,000. These are ideal for startups or businesses needing a smaller capital infusion. You just need to show a viable business plan, the purpose for the funds, and the ability to repay.

3. Online business loans and fintech lenders

Online business loans and fintech lenders, like OnDeck, Bluevine, and Funding Circle, provide quicker and more flexible options compared to traditional banks. They can approve applications in as little as 24 to 72 hours, allowing restaurant owners to address urgent financial needs promptly.

These lenders often have more lenient requirements, so it’s easier for newer restaurants or those with less-than-perfect credit to qualify. Some fintech lenders also offer unsecured loans, which reduces risk for the borrower.

APRs can be quite high, though, ranging from 14% to 99%, which is higher than traditional loans. Plus, loan terms are often under two years, which leads to higher monthly payments.

They also require business owners to have spent at least one year in business and have proof of revenue. As such, newer restaurants might struggle to qualify.

Online business loans are best suited for covering short-term expenses like inventory purchases or equipment repairs. You can also use them to manage cash flow gaps during slow seasons.

4. Business line of credit

Think of a business line of credit as a credit card for your restaurant. You have a predetermined credit limit, and you can draw funds as needed.

Once you repay the borrowed amount, the funds become available again. This flexibility provides ongoing access to capital without the need to reapply each time. Additionally, timely repayments can help improve your business credit score, which makes it easier to secure future financing.

One downside to this type of financing is that lenders typically require a minimum credit score of 600, at least six months in business, and annual revenue of $36,000 or more. Make sure you’re also aware of potential fees, including annual fees, draw fees, and maintenance fees, which can add to the cost of borrowing.

A business line of credit is best suited for restaurant owners who need flexible, short-term financing to manage day-to-day operations or handle unexpected expenses. It’s not typically used for large, long-term investments like purchasing real estate or major renovations.

To apply for a business line of credit, you’ll typically need to provide your business financial statements, tax returns, bank statements, and a business plan outlining how you intend to use the funds.

Approval times can vary, but are generally quicker than traditional loans, with some online lenders offering decisions within a few days.

5. Merchant Cash Advances (MCA)

With a Merchant Cash Advance (MCA), a restaurant receives upfront funds and agrees to repay the advance by allowing the lender to deduct a fixed percentage, typically between 10% and 20%, from daily credit card sales. This repayment continues until the total amount, including fees determined by a factor rate (often between 1.1 and 1.5), is fully repaid.

For example, a $20,000 advance with a 1.3 factor rate would require a total repayment of $26,000.

MCAs can provide funds quickly, within 24 to 48 hours, which is helpful if you have urgent financial needs. Moreover, repayments adjust with daily sales, which means you don’t have to panic about paying during slower periods.

However, daily deductions can also strain cash flow, especially during low-revenue periods. MCAs also carry highly effective APRs, sometimes reaching 350%, due to factor rates and fees.

MCAs are best for restaurants with steady credit card sales that need quick capital and may not qualify for traditional loans. However, due to the high costs and potential cash flow challenges, you must be sure whether this financing option aligns with your restaurant’s financial health and long-term goals.

6. Equipment financing

In equipment financing, a lender provides funds to purchase necessary equipment, which you then repay over time with interest. Since the equipment acts as collateral, lenders are more willing to offer favorable terms. This is particularly beneficial for restaurants needing to invest in high-cost items like commercial ovens, refrigeration units, or POS systems.

By spreading the cost over time, you keep cash flow for other operational expenses. Plus, payments on equipment financing may be tax-deductible as a business expense, though it’s advisable to consult with a tax professional. At the end of the loan term, you own the equipment outright, which adds to your restaurant’s assets.

If you’ve already purchased equipment but need to free up capital, a sale-leaseback arrangement might be suitable. In this scenario, you sell your equipment to a lender and then lease it back, allowing you to continue using the equipment while accessing immediate funds. This can be an effective way to improve cash flow without disrupting operations.

While equipment financing offers many benefits, you must consider the total cost over time, including interest rates and fees. Make sure that the monthly payments fall within your restaurant’s revenue projections to avoid financial strain.

7. Purchase order financing

Purchase order financing is a short-term funding option that helps restaurants fulfill large customer orders when they lack the cash to pay suppliers upfront. The financing company pays the supplier directly to produce and deliver the goods.

Once the restaurant fulfills the order and the customer pays, the financing company deducts its fees and remits the remaining balance to the restaurant. This process allows restaurants to accept large orders without straining their cash flow.

The main advantage of purchase order financing is that restaurants can fulfill large orders without upfront capital. By covering restaurant costs, this financing method helps maintain healthy cash flow.

Fees can range from 1.8% to 6% per month, translating to an annual percentage rate (APR) of 20% to 75%, which is on the high end. Companies also take a bit of time in evaluating the restaurant’s creditworthiness, which can delay order processing.

This type of financing is best for restaurants looking to expand into catering or CPG markets, especially when they receive large orders that exceed their current cash capabilities. 

8. Grants and state or local government programs

Grants for restaurants are rare, but not impossible to find. While most restaurant funding options involve loans or equity, there are select grant programs that offer non-repayable funds to eligible businesses. These grants are typically competitive and often tied to specific criteria such as location, ownership demographics, or community impact.

Many cities and states have economic development agencies that offer grants to stimulate local business growth. These grants may be available for restaurants that contribute to job creation, tourism, or revitalization efforts. For example, some programs focus on supporting businesses in underserved areas or those that promote cultural heritage.

There are also grants specifically designed to support minority- and women-owned businesses. Programs like the Amber Grant provide monthly grants to women entrepreneurs, including those in the restaurant industry. Similarly, the Minority Business Development Agency (MBDA) offers resources and occasional grant opportunities for minority-owned businesses.

It’s important to note that business loan availability, grants, and tax incentives can vary widely by state. To explore options specific to your location, consider reaching out to State Small Business Development Centers (SBDCs), which may offer free business consulting and training services, and Local Chambers of Commerce. Tax credits may also be available for restaurants that invest in certain areas or meet specific criteria.

9. Commercial real estate loans

If you’re planning to buy a property for your restaurant instead of leasing, a commercial real estate loan can help you finance the purchase. These loans function similarly to mortgages but are tailored for business properties.

Most lenders require a down payment ranging from 20% to 30% of the property’s purchase price, as well as a strong credit history. They’ll also assess your restaurant’s financial statements to confirm that you can handle monthly payments.

Owning your restaurant’s property can offer long-term financial advantages. You’ll build equity over time and gain more control over your operating costs by avoiding unpredictable rent hikes.

For growing restaurants, it also gives you flexibility to remodel, expand, or lease out part of the space. However, ownership also means you’re responsible for property taxes, insurance, repairs, and maintenance, so be sure to factor those costs into your cash flow projections.

These loans are typically best for experienced restaurateurs with a stable business model and long-term vision. If you’re planning to stay in one location for years or want to expand your footprint with multiple properties, a commercial real estate loan can be a strategic move.

Just make sure you understand the terms, including your interest rate structure, repayment timeline, and any balloon payments down the road. Talking with a lender who understands the restaurant industry can also help you secure the best terms for your needs.

Get funds for your day one needs

Get your restaurant up and running by understanding the real costs and finding the right type of financing. Each approach, from traditional loans to SBA-backed options, comes with its pros and cons. The key is to choose the one that fits your goals, budget, and timeline.

Tools like 7shifts can help you manage labor costs, optimize schedules, and stay compliant, which are all key factors that show lenders your restaurant runs efficiently and is ready to grow. With better control over staffing, you protect your margins and also build confidence with potential investors and financial partners.

FAQs

How do I get funding for my restaurant?

Getting funding for your restaurant starts with understanding exactly how much money you need and what the funds will be used for. Most lenders or investors will want to see a solid business plan, clear financial projections, and evidence that your concept can generate profit.

Once you’ve outlined your startup or growth costs, you can explore different restaurant financing options. These include traditional bank loans, SBA loans, online business loans, equipment financing, and business lines of credit. Each has its own benefits and requirements.

What is the main reason that restaurants need financing?

Most restaurants need financing to cover startup costs, which can range from $275,000 to $750,000. Opening a restaurant involves expenses like leasing a space, remodeling, buying kitchen equipment, securing permits and licenses, stocking inventory, hiring staff, and launching a marketing campaign.

Even after opening, many restaurants need working capital to stay afloat during slow seasons or while waiting for revenue to build. Financing also plays a big role in supporting expansion plans. For example, if you’re planning to open a second location, start a food truck, or renovate the dining area.

Can I get a loan to start a restaurant with no experience?

While it’s not impossible, getting a loan with no prior restaurant experience can be challenging. Lenders consider experience an important factor because it shows that you understand the industry’s risks, operations, and cost structures.

However, if you don’t have restaurant experience, you can still strengthen your application in other ways. For example, showing that you’ve assembled a qualified management team or have a partner with restaurant experience can help build lender confidence.

Doing restaurant market research and including a competitive analysis, your expected customer base, sales projections, and a detailed use of funds is also important. You may have better luck starting with smaller financing options like a microloan, equipment financing, or a business line of credit. These can help you prove your ability to manage money and grow your business.

You could also explore starting with a smaller concept, like a food cart or ghost kitchen, to build credibility before applying for larger loans.

How do I show lenders that my restaurant is a good investment?

To show lenders that your restaurant is a good investment, you need to prove that you have a well–thought–out business plan and can run a sustainable restaurant. Start with a detailed business plan that outlines your concept, target market, competitive advantage, and revenue strategy clearly.

Include realistic financial projections, a breakdown of startup and operational costs, and how you plan to use the loan. Lenders want to see that you’ve thought through every detail, from marketing to staffing to inventory control.

Strong financial documentation is key. Be ready to share your credit score, personal and business financial statements, and any past business performance if applicable.