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Did you know it takes approximately $498,888 to open a restaurant? This amount covers land and building costs, kitchen, bar  and construction costs. Some restaurateurs are fortunate enough to use their own personal funds to get their restaurants up and running, but a majority seek outside funding to cover the necessary costs. A restaurant business loan is an excellent option if you’re looking to obtain funding for your business.

Whether you want to open a casual diner or a fine dining establishment, here’s what you need to know about restaurant startup loans:

The Costs of Opening a Restaurant

Applying for a restaurant business loan can be daunting. To streamline your loan process, it’s important to be prepared. Before you ask lenders to fund your business, you should have an estimated amount that is needed to get your project off the ground. Your total funding must be able to cover the following business expenses:

  • Loan Guarantee Fee
  • Commercial Lease
  • Loan Repayment (plus interest)
  • Staff Wages and Benefits
  • License Fees
  • Restaurant Insurance
  • Kitchen Equipment
  • Renovations
  • Working Capital
  • Marketing Capital
  • Beginning Stock and Inventory

Requirements when Applying for a Restaurant Loan

Before applying for any type of business loan, you need to create a detailed business plan. Additional documents potential lenders may also ask to see, include:

  • Personal Background and Financial Statement
  • Loan Application
  • Ownership and Affiliation Documents
  • Projected Financial Statements
  • Profit and Loss Statement
  • Business Certificate/License
  • Resume
  • Business Overview
  • Income Tax Returns
  • Loan Application History

Best Types of Restaurant Business Loans

There’s no one-size-fits-all when it comes to choosing the type of restaurant loan that’s just right for you. What works for you may not work for others. There are numerous factors to consider when choosing a restaurant business loan, such as down payments, interest rates, and collateral requirements.

To help you choose the best financing option for you and your business, the following are some of the most popular restaurant business loans:

1.    SBA Loans

An SBA loan is a loan program created by the Small Business Administration to help small business owners secure long-term financing. The funds you obtain from an SBA loan can be used in any way you like as long as it’s for the benefit of your business. Small businesses find it easier to apply for an SBA loan since every loan is partially guaranteed by the Small Business Administration.

2.    Equipment Financing

The equipment you’re using has a direct impact on the quality of food and service your restaurant provides. An equipment loan will provide you with the funds you need to purchase or upgrade equipment. The terms of the loan will depend on your personal credit, your business’ financial strength and the type of equipment purchased.

3.    Business Line of Credit

If you’re familiar with how a credit card works, then it’s easier for you to understand a business line of credit. With this type of loan, lenders set a maximum credit limit that you can withdraw from. Unlike a term loan, you only have to repay the amount of money you withdraw plus interest.

Are you looking to apply for a restaurant business loan? The experts at SMB Compass can help you. We offer different types of loan programs for businesses all over the United States, including yours.

Don’t hesitate to contact us today by phone at (646) 569-9496 or email us at