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Best Financing Options for Restaurant Equipment

Restaurant equipment financing can help ease the financial burden of operating your restaurant.
Jackie ZimmermannSeptember 20, 2021
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Managing a successful restaurant means monitoring a lot of moving parts, including chefs, wait staff, daily specials — and your equipment.
And there’s good news: Restaurant consultant David Kincheloe notes that it’s often easier to qualify for restaurant equipment financing than other types of financing because the transaction produces collateral. When you finance an oven, you can use that oven to secure your loan.
Brand-new big-ticket items such as stoves, refrigerators or dishwashers typically last seven to 10 years, a prime length for mid- or long-term financing. Because equipment financing often comes with a high annual percentage rate, Kincheloe doesn’t recommend using it to buy smaller items (like microwaves) unless you can bundle them with a larger purchase.
Here are recommendations for restaurant equipment financing.

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SBA 7(a) loan

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Est. APR

5.50-8.00%

Min. Credit Score

650

7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.

Pros

  • Available as a term loan or line of credit.
  • Interest rates are capped.
  • Long repayment terms available.

Cons

  • Personal guarantee is required.
  • Collateral is typically required.
  • Longer processing times than online lenders.
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Qualifications:

  • Be a for-profit U.S. business.
  • Must first use alternative financial resources, including personal assets.
  • Financial qualifications determined by individual lender.
Lowest interest rate
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OnDeck - Online term loan

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Est. APR

9.00-99.00%

Min. Credit Score

600

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

Pros

  • Cash can be available within the same business day.
  • Requires low minimum credit score.
  • Less paperwork than most lenders.

Cons

  • Fixed-fee structure means early repayment will not save interest.
  • Requires frequent (daily or weekly) repayments.
  • Requires business lien and personal guarantee.
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Qualifications:

  • Minimum credit score: 600.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $100,000.
  • No bankruptcies in the past 2 years.
May fund quickly
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Funding Circle - Online term loan

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Est. APR

12.18-36.00%

Min. Credit Score

660

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.

Pros

  • Cash can be available within 3 business days.
  • Competitive rates among online lenders.
  • No minimum revenue requirement.

Cons

  • Requires business lien and personal guarantee.
  • Not available in Nevada.
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Qualifications:

  • Minimum credit score: 660.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: None.
  • No bankruptices in the past 7 years.
May fund quickly

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Summary of Best Financing Options for Restaurant Equipment

LenderEst. APRMin. Credit ScoreNext Steps

SBA 7(a) loan

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5.50-8.00%650
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OnDeck - Online term loan

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9.00-99.00%600
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Funding Circle - Online term loan

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12.18-36.00%660
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If you’ve been in business for 1+ years

OnDeck provides capital to restaurants that are beginning to simmer but haven’t been in business long enough to reach a full boil. Its term loans are accessible with a 600 minimum credit score and one year in business. That could make OnDeck a good option for restaurateurs who are still finding their footing. However, it’s important to note that OnDeck term loans max out at 18 months, so they’re best used for short-term equipment financing needs.

If you’ve been in business for 2+ years

SBA loans have lower APRs and more favorable terms than those offered by many alternative lenders. They also have more stringent qualifications, which means they’re most suitable for established restaurant owners who are ready to invest in new, high-end gear.
For established businesses, Funding Circle also offers competitive APRs. If approved, you can get funding within a week (compared to an SBA loan, which typically takes several weeks) making it a prime option for restaurateurs looking to cash in on flash sales or equipment discounts.

Find and compare the best small-business loans

If you’re still on the hunt for small-business loan options, compare options on our small-business loan marketplace, which includes different loan types, from term loans to lines of credit. We always recommend borrowers compare multiple options to find a loan with costs, terms and features that match your needs.
Last updated on September 20, 2021

To recap our selections...

Best Financing Options for Restaurant Equipment

Does your business need funding? Find your best loan options with Fundera by NerdWallet.

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