SBA loans for restaurants

Can you get an SBA loan to open or buy a restaurant?

Yes. Restaurants are eligible for SBA financing, and the SBA 7(a) loan is the program most restaurant owners use. Common uses include:

• Buying an existing restaurant, including goodwill, equipment and inventory. See business acquisition loans.
• Opening a new restaurant or franchise unit. See SBA start-up loans.
• Build-out and leasehold improvements in a leased space
• Kitchen equipment, furniture and point-of-sale systems
• Working capital for opening inventory, payroll and the ramp-up period. See working capital loans.
• Buying the building, or refinancing existing debt

The SBA treats a business that has been generating revenue for 1 year or less as a start-up. Start-ups face a required equity injection and closer review of the business plan.

Is it hard to get an SBA loan for a restaurant?

It can be harder than in many industries. Many lenders view restaurants as higher-risk because margins are thin, local competition is intense, and results depend heavily on the operator. Some lenders limit restaurant lending, especially to start-ups.

It’s far from impossible, though. Lenders are more comfortable when you bring:

• Hands-on restaurant management experience, ideally with a similar concept
• Equity beyond the minimum, or strong personal finances
• A detailed business plan with realistic sales and cost projections
• A workable lease, or an established franchise brand behind you

Lenders that regularly fund restaurants know how to read these deals, which is why choosing the right lender matters as much as the application itself.

How much down payment do you need for a restaurant SBA loan?

The SBA minimum depends on what you’re financing:

• Start-ups and purchases: at least 10% of the total project cost. Many lenders ask for more on start-ups.
• Seller financing: on a purchase, a seller note on full standby can cover up to half of the required injection.
• Established restaurants: for equipment, build-out or working capital, the SBA sets no minimum and the lender decides.
• Buying a building with a 504 loan: 10% for an established business, or 15% for a business that has operated for 2 years or less.

What do lenders look for in a restaurant loan?

Lenders underwrite the restaurant, the location and you as the operator. Expect them to focus on:

1. Experience. Restaurant management experience, ideally running a similar concept with responsibility for staff, food costs and profit and loss.
2. Sales history. For an existing restaurant, tax returns, monthly sales reports and point-of-sale data that show stable or growing sales.
3. Food and labor costs. Lenders compare your food and labor costs with similar restaurants, because those two costs largely decide whether a restaurant makes money.
4. Cash flow. For a first-time purchase, the SBA requires debt service coverage of at least 1.25x. Start-ups need projections that reach coverage of at least 1.15x, backed by a business plan.
5. Lease terms. The rent, the remaining term and renewal options. Lenders generally want the lease, with options, to run at least as long as the loan, and may need the landlord’s consent to take a lien on equipment.
6. Collateral. Lenders aren’t required to take collateral on 7(a) loans of $50,000 or less. Above that, they take business assets and often a lien on personal real estate if the loan isn’t fully secured.
7. Ownership and guarantees. Since March 1, 2026, all owners must be U.S. citizens or nationals. Owners of 20% or more personally guarantee the loan.

Can you use an SBA loan for restaurant build-out and equipment?

Yes. Build-out is often the largest cost of opening a restaurant in a leased space, and kitchen equipment is close behind.

Definition

Leasehold improvements: Permanent changes you make to a space you lease, such as ventilation hoods, grease traps, plumbing, electrical work, flooring and restrooms. They stay with the building when the lease ends.

Lenders usually want contractor bids and a signed lease before closing, and many release build-out funds in stages as work is completed. Ask your landlord about a tenant improvement allowance, which reduces how much you need to borrow.

Kitchen equipment can be repaid over up to 10 years, or longer when its useful life supports it, and used equipment can qualify too. When one loan covers build-out, equipment and working capital, the lender blends the terms. See SBA equipment loans.

For smaller requests, a 7(a) Small Loan goes up to $350,000 and an SBA Express loan up to $500,000, usually with simpler paperwork.

Can you get an SBA loan for a restaurant franchise?

Yes. Franchise restaurants use the same 7(a) program for new units and resales. The brand must be listed in the SBA Franchise Directory, which shows the SBA has found its franchise agreement eligible.

A 7(a) loan can typically cover the initial franchise fee, build-out, equipment and working capital for a new unit. Lenders review the Franchise Disclosure Document and the brand’s track record, and some are more comfortable with established concepts that have strong support systems. Check the directory before you sign a franchise agreement. See SBA franchise loans.

Can you buy a restaurant building with an SBA loan?

Yes, as long as your restaurant occupies at least 51% of an existing building, or 60% of a building you construct. You can lease some of the remaining space to other tenants.

You have two options:

• A 7(a) loan repaid over up to 25 years, which can also cover equipment and working capital in the same loan
• A 504 loan with a fixed rate on the SBA portion and a term of up to 25 years

See SBA commercial real estate loans for how the two compare.

How do you find lenders that fund restaurants?

Lenders differ a lot on restaurants. Some finance restaurants and franchise units regularly; others avoid the industry or lend only to experienced operators.

SBA Loan Connect ranks lenders using the SBA’s public 7(a) and 504 loan records by NAICS code, so you can see which lenders actually fund restaurants like yours before you apply. Lenders we partner with are labeled as partners. See how we rank lenders.