Bar loans are the financing owners use to open a bar, buy an existing one, build out a space, replace draft systems and coolers, or carry payroll and inventory through slow months. Most bars end up with a mix: an SBA or bank loan for the big purchase, equipment financing for fixtures, and a line of credit or sales-based financing for working capital.
This page is part of our restaurant business loans guide. It covers what makes bar financing different, the loan types that fit, what lenders check, and the licensing and collateral questions that come up with a liquor license. Figures checked on September 21, 2026.
What makes financing a bar different
- The liquor license. A bar can’t open without state and local alcohol licenses, and the license can be one of its most valuable assets. Whether a lender can take it as collateral depends on state law (more on that below).
- Federal registration. On top of state licensing, the Alcohol and Tobacco Tax and Trade Bureau (TTB) says no one may sell distilled spirits, wine or beer without first registering the business with TTB on form TTB F 5630.5d. TTB lists bars and restaurants among the businesses this covers, and registration is needed at each location.
- Card-heavy, cash-flow-driven revenue. Most sales come through the point-of-sale system daily. That makes sales-based financing easy to set up, but it also means lenders look closely at your card volume and bank deposits.
- Gaming income. Some bars earn part of their revenue from licensed gaming machines or lottery sales. That matters for SBA eligibility, as explained below.
Bar financing options compared
Pricing depends on the lender and your file, so compare offers by total cost and APR, not the payment alone. APR (annual percentage rate) is the yearly cost of borrowing including interest and most fees. Some products instead quote a fixed fee or a factor rate (a multiplier such as 1.25, meaning you repay $1.25 for every $1 received), which does not change with how long repayment takes.
| Option | Typical use for a bar | How it’s priced | Trade-offs |
|---|---|---|---|
| SBA 7(a) loan | Buying a bar, build-out, equipment, working capital, refinancing | Interest rate | More paperwork and a longer process; collateral required on larger loans |
| SBA 504 loan | Buying or renovating the building you operate in | Interest rate; long fixed terms | Can’t fund working capital or inventory |
| Bank term loan | Established bars with strong financials | Interest rate | Higher bar for approval |
| Equipment financing | Draft systems, coolers, ice machines, POS hardware, kitchen equipment | Interest rate or lease payment | Covers equipment only |
| Business line of credit | Seasonal inventory, payroll, repairs | Interest on what you draw, plus any fees | Renewal reviews; limits may be modest at first |
| Sales-based financing or merchant cash advance | Fast working capital repaid from card sales | Fixed fee or factor rate | Higher effective cost when repaid quickly; daily deductions |
SBA loans for bars
The SBA’s lender eligibility page does not list bars among ineligible businesses, so an otherwise qualified bar can apply for SBA-backed financing. The SBA 7(a) program goes up to $5 million and can fund real estate, working capital, equipment, furniture and fixtures, refinancing and changes of ownership. Under the SBA’s lender rules, maximum maturities are 25 years for real estate and 10 years for equipment, working capital or inventory.
The SBA’s 7(a) loan types page lists 7(a) Small loans up to $350,000 and SBA Express loans up to $500,000. Lenders are not required to take collateral on 7(a) Small loans of $50,000 or less.
For the building itself, the SBA 504 program funds the purchase, construction or renovation of buildings and land, and long-life machinery, up to $5.5 million, with 10-, 20- and 25-year terms. It can’t be used for working capital or inventory.
Gaming revenue. The SBA’s ineligible-business rules cover gambling, but they do not restrict loans to otherwise eligible businesses that get less than one-third of their annual gross income from state lottery ticket sales or legal gambling licensed and supervised by the state. If your bar has video gaming terminals or sells lottery tickets, have your gaming income broken out in your financials so the lender can check this quickly.
For a deeper look at SBA options, see SBA loans for restaurants and 7(a) vs. 504 vs. microloans. SBA has issued a revised rulebook for lenders, SOP 50 10 8.1, which takes effect on October 1, 2026. If you are buying a bar or applying around that date, ask your lender which version of the rules applies to your loan.
Can a liquor license be used as collateral?
It depends on the state. A July 2023 article in the American Bankruptcy Institute Journal (a third-party legal source) explains that states treat a liquor license either as property or as a privilege. It gives Pennsylvania as a state where a license may be granted as collateral, and New Jersey as a state that prohibits liens on liquor licenses. The same article lists Florida, Massachusetts, Michigan, Montana, New Mexico, Pennsylvania and South Dakota as states that permit liens on a liquor license.
In practice, this affects how much a lender will advance against a bar purchase. Where a lender can’t take the license directly, it will lean more on other collateral, such as equipment or real estate. A license transfer also goes through your state or local alcohol beverage control authority, which can add time to a purchase. Build that into your closing timeline.
What lenders look for
- Licenses in good standing. Your state and local liquor licenses, TTB registration, and health and business permits. For a new bar or a purchase, lenders want to see the license approval or transfer path.
- Sales history. Business bank statements and POS or card-processing reports. Sales-based lenders often rely mainly on these.
- Tax returns and financial statements. SBA and bank lenders want business and personal tax returns and profit-and-loss statements, and for a purchase, the seller’s figures too.
- Lease terms. Time left on the lease, and whether it can be assigned if you are buying.
- Your experience. Time managing a bar or restaurant helps a new-venture application.
- Credit and existing debt. Personal credit for owners who guarantee the loan, and any existing advances being repaid from your sales.
Sales-based financing through your POS
Many bars use a point-of-sale provider that also offers financing. Two examples, as each company describes it:
- Toast Capital. Toast says its Toast Capital loans range from $1,000 to $300,000, are issued by WebBank, and are repaid as a fixed percentage of daily card sales, with one fixed fee and no credit score requirement.
- Square Loans. Square says Square Loans offers run from $100 to $500,000 based on business performance, are issued by Square Financial Services, and are repaid from a fixed percentage of daily card sales, with the loan fee as the total cost.
These can be convenient because they are tied to the system you already use and payments fall when sales fall. The trade-off is that a fixed fee repaid over a few months can cost more in APR terms than a bank or SBA loan. Our page on restaurant merchant cash advances explains how to compare them.
Pitfalls to plan around
- Closing before the license transfers. If you are buying a bar, make the purchase and the loan conditional on the license transfer being approved.
- Stacking daily deductions. Two or three sales-based advances at once can take a large share of each day’s card sales. Check what is already being withheld before adding another.
- Funding a build-out with short-term money. A renovation pays off over years. Longer-term SBA, bank or equipment financing usually matches it better than a product repaid in months.
- Mixing gaming or lottery income into sales. Keep it separate in your books so an SBA lender can confirm eligibility.
Related pages
If you are still planning, see how to get a loan to open a restaurant, which applies to new bars too. If you are buying an existing bar, see restaurant acquisition loans. For equipment, see restaurant equipment financing, and if you brew on site, brewery loans.
Bar loan FAQs
Can I get an SBA loan for a bar?
Yes, if the business meets SBA’s general eligibility rules. The SBA’s eligibility page does not list bars as ineligible. If you have gaming or lottery revenue, it needs to be under one-third of annual gross income. 7(a) loans go up to $5 million.
Can I finance the cost of a liquor license?
Sometimes, as part of a larger loan to open or buy a bar. How a lender treats the license depends on whether your state lets it be pledged as collateral. Ask the lender early how it handles licenses in your state.
Do I need a federal permit to run a bar?
TTB requires alcohol retailers, including bars, to register using form TTB F 5630.5d before they start selling. That is separate from your state and local liquor licenses. A retailer that wants to sell alcohol to other dealers for resale needs a wholesaler’s basic permit, according to TTB’s retail dealer guidance.
What is the fastest way to get working capital for a bar?
Sales-based financing from your POS provider or a merchant cash advance usually funds fastest. Toast and Square both describe next-day funding once an offer is approved. Weigh the speed against the cost, and compare it with a line of credit if you have time to set one up.
Next step
Before you apply, gather six to twelve months of bank statements, your POS sales reports, your liquor license and lease, and a short note on what the money is for. Our restaurant business loans hub explains how SMB Compass helps you compare offers from the lenders we work with.
Sources
- TTB: Beverage alcohol retailers
- TTB: Liquor laws and regulations for retail dealers
- SBA: 7(a) loans
- SBA: 7(a) terms, conditions and eligibility
- SBA: Types of 7(a) loans
- SBA: 504 loans
- SBA Information Notice 5000-880695: Issuance of SOP 50 10 8.1
- ABI Journal: Perfecting and enforcing liquor license liens (third-party)
- Toast: Toast Capital
- Square: Square Loans
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. Figures were checked against the primary sources listed above on September 21, 2026; lenders change their terms, so confirm current terms before you apply, and let us know if you spot a figure that has changed. SMB Compass is a business financing broker: we don’t lend our own money, and we are paid by the lenders we place loans with. This page is general information, not financial, legal or tax advice.