Small Business Loans for Starting or Expanding a Restaurant

Bradley Robbins
Empty formal restaurant seating with tableware and glasses prepared.
Reading Time: 3 minutes

Whether you are just about to launch your dream restaurant or are finally getting that expansion you so desperately need, you’re likely to find yourself looking into getting a small-business loan tailored for your culinary creations. Lenders offer loans to restaurants all the time, and it makes sense — it’s estimated that Americans spend around 48% of their food budget eating out. With all that money going around, why wouldn’t lenders want a piece of the proverbial pie?

Restaurant Startup Loans

If you’ve got a great restaurant concept, it’s going to require financing to make your dreams come true. While everyone hopes for angel investors who will take a little and give a lot, financing is likely to come in the form of startup loans from banks and professional lenders.

These loans may or may not be backed by government incentives and collateral. Some lenders may even require a piece of the business or a seat at the boardroom table to help ensure their return on investment (ROI). Knowing the difference between common startup loans can help borrowers save time and frustration in the long run.

Small Business Administration (SBA) Loans

Armed with your carefully vetted business plan, seek out lenders who offer loans backed by the U.S. Small Business Administration’s guaranteed loan program. This program enables banks to offer lower rates to those looking to fund their small business by taking some of the risk off of their shoulders and placing it with the U.S. government. Banks and other lending institutions are more likely to approve loans and can offer better rates than they could without such guarantees.

Commercial Bank Loans

Turning to commercial lenders might not always seem like the best bet, but it is a tried and true method of securing startup funding. Commercial bank loans typically offer lower interest rates than peer-to-peer and other nontraditional sources, but those lower rates come at a cost when they’re not backed up by a guarantee from a stable source such as the U.S. government.

Instead, these loans often require very good to excellent credit. Some lenders may require collateral, including business assets or ownership, in case of loan forfeiture. Commercial lenders are often slower than other sources of startup funds as well.

Peer-to-Peer Crowdlending

As far as nontraditional funding goes, peer-to-peer lending is currently king. For a fee, online services help borrowers meet lenders who are willing to take a chance on ventures that catch their interest. Rates are typically higher due to the increased risk associated with crowdlending, as well as the need for a greater return on investment to entice lenders.

Loans may either be secured, typically with company assets or ownership, or unsecured. Late payment penalties and uncommon forfeiture rules may also apply. Peer-to-peer crowdlending is often faster than traditional bank loans, however.

Restaurant Loans

If you’ve already got a restaurant, then you can apply for traditional loans for expansion, equipment purchases, and for many other common small-business purposes. Lenders are more likely to take the longevity and revenues of your restaurant into account along with your business or personal credit score when considering interest or loan approval rates. These are a few common resources for restaurant loans as of 2019:

ARF Financial

ARF Financial offers loans between $5,000 and $1,000,000 to existing restaurants without requiring a hard personal or commercial credit limit. A lower credit limit may help you get better terms, but the company considers revenue and history above all. The lender features a focus on helping restaurants with bridge loans, equipment purchases, and operating expenses.

Credit score: None.
Annual restaurant revenue: $100,000 per year.
History requirement: 30 days in business.

CAN Capital

CAN Capital is also a good choice for those looking for a small-business restaurant loan who may have less-than-stellar credit. The company has a lower annual revenue requirement than many competitors, but it does require that the borrower be able to prove at least one year in operation. CAN Capital offers loans of up to $250,000.

Credit score: 550.
Annual restaurant revenue: $50,000 per year.
History requirement: 1 year in business.


Kabbage is an all-around small-business lender without a focus on any specific industry. Its requirements are similar to those of CAN Capital, but it lacks the additional tools available through lenders who focus specifically on the restaurant trade.

Credit score: 560.
Annual restaurant revenue: $50,000 per year.
History requirement: 1 year in business.


If your credit score is over 600, and you’d like to make that a major point of your application, check out StreetShares. Since they lend to borrowers seen as less-risky, they can offer better terms from the outset for your expansions or equipment purchases. Like Kabbage, however, they may not have the additional tools and support of restaurant-focused lenders.

Credit score: 600.
Annual restaurant revenue: $50,000 per year.
History requirement: 1 year in business.

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