Though the cadence of a busy kitchen and the sizzle of a hot grill may fuel the excitement of running a restaurant, restaurateurs are familiar with the pitfalls: broken equipment, customer gripes and employee turnover. But the financial requirements, in particular, can be overwhelming, even for the savviest business owners.
That’s why running a restaurant often requires funding, whether from investors, business credit cards or small-business loans.
But you don’t want to take on more debt than you can handle. Before you apply for financing, consider how much you need and how you’ll use the money. We’ve rounded up online financing options below based on your needs.
Restaurant loans for small purchases
Running a restaurant is expensive, but not everything you need to spend money on requires excessive debt or long-term financing, especially things like replacing a small piece of equipment or making minor repairs or upgrades to the dining room. Here are some short-term loan options for these types of smaller purchases.
Kabbage: If your personal credit is lacking, consider Kabbage, which offers lines of credit of up to $100,000 with no minimum credit score requirement. However, higher-risk borrowers could face a steep annual percentage rate; some Kabbage loans hit a 99% APR. To qualify, you need at least one year in business and $50,000 or more in annual revenue.
StreetShares: StreetShares offers lines of credit and term loans of up to $100,000 with APRs of 9% to 40%. However, the company limits your borrowing to 20% of your annual revenue, so don’t expect large lump sums. To qualify, you need one year of business history or more, a personal credit score starting at 600 and at least $25,000 in annual revenue.
- Loan amount: $2,000 to $100,000.
- APR: 24% to 99%.
- Loan term: Six or 12 months.
- Funding time: A few minutes to several days.
- Read our Kabbage review.
- Loan amount: $2,000 to $100,000 for term loans; $5,000 to $100,000 for lines of credit
- APR: 9% to 40%
- Loan term: Three to 36 months
- Funding time: One to five days
- Read our StreetShares review
Restaurant loans for big investments
Now for the big stuff. When it’s time to expand, refurbish the entire kitchen or open a second location, look at loans that can provide a large lump sum with a longer repayment period. For longer-term loans, you’ll want to consider options that let you save on interest if you repay the loan quicker. The following lenders do not assess prepayment fees for standard loan products.
SmartBiz: SmartBiz provides Small Business Administration loans through its online platform, connecting you with the lowest rates — 8% to 8.7% — among online alternative lenders. Loans range from $30,000 to $350,000, making them a prime option for middle-of-the-road purchases. To qualify, you need two or more years in business and a solid personal credit score, starting at 600 for loans between $30,000 and $150,000 and 650 for loans above $150,000. The lender also requires a minimum annual revenue of $50,000.
- Loan amount: $30,000 to $350,000.
- APR: 8% to 8.7%.
- Loan term: 10 years.
- Funding time: As quickly as seven days but typically several weeks.
- Read our SmartBiz review.
Bond Street: If you’re looking for faster funding than you’d get with SmartBiz, which can take several weeks to a few months, consider Bond Street, which can provide funding in as fast as three days.
Bond Street offers competitive annual percentage rates for an online lender, ranging from 8% to 25%. The lender offers term loans of $10,000 to $1 million, but you need two or more years in business and a solid personal credit score starting at 640 to apply. The lender also requires a minimum annual revenue of $200,000.
Able Lending: Restaurants are one of the top businesses Able Lending finances, the company says. The lender offers financing up to $1 million under a unique lending model. If you’ve been in business at least a year, you can apply for an Able Growth loan or an Able-funded loan, the former being a mix of backers — friends and family plus Able — and the latter being backed only by the lender. Besides a year of business history, you’ll need a personal credit score starting at 600 and at least $100,000 in revenue to qualify.
- Loan amount: $10,000 to $1 million
- APR: 8% to 25%
- Loan term: One to three years
- Approval time: Average of three to four days
- Read our Bond Street review.
- Loan amount: $25,000 to $1 million
- APR: 8% to 25%
- Loan term: One to five years
- Funding time: Up to seven days for Able-funded loans; up to one to two days after full backer contribution for Able Growth loans.
- Read our Able Lending review.
OnDeck: If your credit is lacking but you need a large sum of cash, OnDeck offers term loans of up to $500,000 with a 500+ personal credit score. However, APRs can reach up to 99%. Even though you could qualify for a large amount, OnDeck offers repayment periods of only up to three years. The company doesn’t charge penalties on the early repayment of the loan, but you won’t save any money because OnDeck has fixed fees.
- Loan amount: $5,000 to $500,000.
- APR: 9% to 99%.
- Loan term: Repaid daily or weekly for three to 36 months.
- Funding time: As fast as 24 hours but typically a few days.
- Read our OnDeck review.
Summary of options: Restaurant loans
Want to compare more financing options?
NerdWallet has created a comparison tool of small-business loans to meet your needs and goals. We gauged factors including lender trustworthiness, market scope and customer experience, and arranged the lenders by categories that include your revenue and how long you’ve been in business.
Updated Feb. 24, 2017.