Restaurant Financing — Equipment, Build-Out and Slow-Season Cash

Loans for starting a restaurant: what a brand-new concept can actually use

A restaurant that has not opened yet has no deposits to underwrite, so the products that lean on sales history (merchant cash advances, revenue-based lines) are off the table at first. Three paths remain, and most first locations combine two of them:

1. Startup funding. Underwritten on the owner's personal credit and plan. The published criteria are no minimum time in business, no revenue minimum and a 650+ FICO, with terms of 12 months to 5 years. It is personally guaranteed.
2. Kitchen equipment financing. The range, walk-in, hood system and POS secure their own financing. Published floor 580 FICO with no minimum time in business; businesses under two years old are capped at $50,000.
3. An SBA 7(a) loan. The longest terms and lowest cost, and the slowest (30–45 days from a complete file). For a startup, SBA rules require the owner to put in cash equity, a minimum of 10% of the total project, plus a full business plan with projections. Industry experience carries real weight with SBA lenders.

What to have ready before you apply

• A signed lease or letter of intent, and a build-out budget with contractor quotes.
• Equipment quotes with make and model. They become the equipment loan's collateral.
• Your personal credit score and how much of your own cash goes in.
• Your restaurant experience: years managing a kitchen or front of house, in writing.

Once you are open, the picture changes. After about six months of deposits, a line of credit covers slow seasons and payroll. See how SBA lenders fund the industry in our restaurant SBA lending data. All of these are review criteria, not approvals.