6 Small Business Loans for Restaurant Owners & How to Use Them

There are a lot of costs that go into running a restaurant, from equipment to marketing to hiring staff. As a restaurant owner, you may find yourself struggling to find the funds to make necessary investments in your business.

This is where small business loans come in - they can provide the financial support you need to grow and expand your restaurant. In this guide, we'll explore the different types of small business loans available to restaurant owners and how they can use them to their advantage.

What are the General Requirements to Obtain a Business Loan?

before you can secure a loan, there are several requirements that must be met. Among the most important factors are your personal credit score, the amount of time your business has been established, and your monthly revenue. Lenders will often weigh all of these factors to determine your eligibility for the loan and set the terms of repayment.

If you have a strong credit score, a track record of consistent revenue, and a well-established business, you may be able to secure more favorable loan terms and rates. Now let's dive into some different small business loan options to consider for your restaurant.

1. Traditional Bank Loans

One of the most common types of small business loans is a traditional bank loan. These loans are secured and require collateral, such as property or equipment. The interest rates are typically low, but the application process can be lengthy and difficult. Restaurant owners who have consistent revenue and good credit score may be able to qualify for a traditional bank loan to finance their restaurants' growth.

2. SBA Loans

Another option for restaurant owners is an SBA (Small Business Administration) loan. These loans are partially guaranteed by the SBA, making them less risky for lenders. SBA loans typically have longer repayment terms and lower interest rates than traditional bank loans, but they require more documentation. Restaurant owners who are looking to expand their business or purchase new equipment may benefit from an SBA loan.

Fundid Recommendation: Explore your loan options with our partner Lendio. With an online marketplace of 75+ lenders, they’re ready to find the perfect loan for your growth.

Lendio's basic requirements for an SBA loan:

• 600+ FICO credit score
• $8,000+ in monthly revenue
• 2+ years in business

See if you qualify for a loan from Lendio today.

3. Equipment Loans

Restaurant equipment can be expensive, and many owners may not have the cash on hand to purchase it outright or make upgrades when needed. This is where equipment loans come in. These loans are specifically designed to finance equipment purchases and are often secured by the equipment itself. Restaurant owners who need to upgrade their kitchen appliances or purchase new furniture may benefit from an equipment loan.

Lendio's basic requirements for an equipment loan:

• 650+ FICO credit score
• $4,200+ in monthly revenue
• 1+ years in business

See if you qualify for a loan from Lendio today.

4. Merchant Cash Advances

A merchant cash advance is a type of small business loan that's based on your restaurant's credit card sales. The lender will give you a lump sum of cash in exchange for a percentage of your future credit card sales. This type of loan can be appealing to restaurant owners who have inconsistent revenue or who need cash quickly.

However, the interest rates are often higher than traditional loans, making it important to carefully consider whether a merchant cash advance is the right choice for your restaurant.

5. Line of Credit

A line of credit is a flexible type of loan that allows restaurant owners to borrow as much or as little money as they need, up to a set limit. a business line of credit can help smooth out any cash flow gaps that may arise, enabling restaurant owners to cover expenses like rent, inventory, and staff salaries without having to wait for customer payments or dipping into personal savings. Additionally, a business line of credit can help owners take advantage of sudden opportunities, such as seasonal menu changes or equipment upgrades, without disrupting current cash flow. 

6. Business Term Loan

Business term loans provide businesses with predictable monthly payments and fixed interest rates, which make budgeting easier. With a Funding Circle term loan starting at $25,000, you could invest in everything from new equipment to marketing efforts to expanding your physical space.

For example, you might use the funds to purchase top-of-the-line kitchen appliances that will help you streamline your operations and provide even better food to your customers. Alternatively, you could put the funds toward a targeted advertising campaign that will help you reach new audiences and bring in more business.

Fundid Recommendation: Funding Circle offers fast funding for business owners. Their term loans start at $25,000 and go up to $500,000 for those who qualify.

Funding Circle's basic requirements:

• 660+ FICO credit score
• $4,200+ in monthly revenue
• 2+ years time in business

See if you qualify for a Funding Circle term loan.

Find Your Next Lending Partner Through Fundid

As a restaurant owner, there are several types of small business loans available to help you grow and expand your business. Whether you're looking to purchase equipment, hire more staff, or upgrade your restaurant's decor, there's a loan out there for you. It's important to carefully consider your options and choose a loan that meets your specific needs and goals. With the right financing in place, you can take your restaurant to the next level and achieve long-term success.

Explore the Fundid Capital Marketplace to find the funding that is best for your restaurant. Search over 15 different loan options from our vetted small business lending partners.