Financing program
SBA Loans
SBA 7(a) and 504 programs carry government guarantees, which lets lenders extend longer terms than conventional commercial paper. The tradeoff is documentation and time.
What is sba loans for a food business?
SBA 7(a) and 504 loans are bank loans backed by a government guarantee, which allows 10 to 25 year terms and lower payments than conventional restaurant financing. The tradeoff is paperwork and time: expect tax returns, financials, and a process measured in weeks.
Estimates, not offers: Amounts, terms, and funding times are estimates based on programs commonly available in food service. Actual terms vary by program, lender underwriting, time in business, revenue, and credit profile. Nothing here is an offer of credit or a guarantee of approval. See source and method.
Pick a state to see whether this program is offered there, and what changes if it is limited.
| Detail | |
|---|---|
| Typical amount | 50,000 to 5,000,000 |
| Term | 10 to 25 years |
| Time to funding | 3 to 12 weeks |
| Documents | Tax returns, interim financials, debt schedule, plan |
| Cost structure | Amortized interest, lowest payment of any program |
Estimates, not offers: Amounts, terms, and funding times are estimates based on programs commonly available in food service. Actual terms vary by program, lender underwriting, time in business, revenue, and credit profile. Nothing here is an offer of credit or a guarantee of approval. See source and method.
Where it fits
- /Acquisitions
- /Owner-occupied real estate
- /Refinancing expensive debt
- /Large buildouts
How the program works
- /7(a) covers working capital, acquisition, and equipment. 504 covers real estate and heavy equipment.
- /Expect tax returns, interim financials, a debt schedule, and a business plan for acquisitions.
- /Timelines run weeks, not days. Start before the need is urgent.
What it looks like in practice
An operator buys the restaurant they have managed for 9 years.
A multi unit group refinances 3 short term advances into a single amortized payment.
Cost of capital calculator
SBA payment and total cost, side by side
SBA pricing is a spread over a base rate, and the long term is the point. Run a 10 year structure against a 25 year one, or two rate scenarios at the same term, and read what the term change does to total interest.
Start from a common setup
Load a starting point, then edit any field in either column. Presets are examples, not offers.
Scenario A
Use the rate on a written offer, not an estimate.
Scenario B
Use the rate on a written offer, not an estimate.
Sensitivity: move one driver at a time
| Annual rate | Monthly payment | Change |
|---|---|---|
| 1.0% | $3,066.14 | -$210,613 |
| 15.8% | $5,808.55 | +$118,476 |
| 30.5% | $9,356.15 | +$544,187 |
| 45.3% | $13,355.17 | +$1,024,071 |
| 60.0% | $17,550.30 | +$1,527,486 |
| Term length | Monthly payment | Change |
|---|---|---|
| 60 months | $7,609.85 | -$121,959 |
| 84 months | $5,992.85 | -$75,150 |
| 120 months | $4,821.25 | — |
| 180 months | $3,978.09 | +$137,506 |
| 240 months | $3,612.66 | +$288,488 |
| 300 months | $3,430.40 | +$450,569 |
Change is measured against total cost of financing in the scenario the sliders control. Moving a slider edits that column, so the side-by-side updates with it.
Side by side
Scenario A costs $450,569 less on total cost of financing.
The arithmetic
payment = P x i / (1 - (1 + i)^-n), i is the annual rate divided by 12, n is the number of monthly payments. Total interest = (payment x n) - P. SBA guaranty fees are not included.
Sources
- 1SBA 7(a) maximum interest rates are set as a spread over a base rateU.S. Small Business Administration. 13 CFR 120.213 to 120.215 and the current SBA 7(a) rate notice set the maximum allowable spread over prime for variable rate 7(a) loans.
- 2SBA 7(a) underwriting looks for debt service coverage of at least 1.15xU.S. Small Business Administration. SOP 50 10, credit standards for 7(a) term loans, cash flow as the primary repayment source measured on a debt service coverage basis.
- 3Amortizing payment formula: P x i / (1 - (1 + i)^-n)Standard time value of money identity. The same closed form used by the PMT function, with i as the monthly rate and n as the number of monthly payments.
Education only: this calculator runs your own inputs through published arithmetic so you can compare sba loans scenarios before you talk to anyone. It is not a quote, a promise to lend, an approval, or an indication of offers to come. Real terms come from a funding partner in writing after underwriting.
Availability: Program availability varies by state, and not every program is offered everywhere we operate.
Compare all 6 programs
How sba loans compares against every other program on amount, term, speed, cost structure, and what underwriting expects. Compare total dollars repaid rather than the monthly payment.
| Typical amount | Term | Time to funding | Cost structure | |
|---|---|---|---|---|
| Equipment Financing | 5,000 to 500,000 | 24 to 84 months | 1 to 5 business days | Fixed monthly payment |
| Working Capital | 10,000 to 500,000 | 3 to 18 months | 1 to 3 business days | Fixed daily, weekly, or monthly payment |
| SBA Loans | 50,000 to 5,000,000 | 10 to 25 years | 3 to 12 weeks | Amortized interest, lowest payment of any program |
| Business Line of Credit | 10,000 to 250,000 | Revolving, reviewed periodically | 2 to 7 business days | Interest on the drawn balance only |
| Merchant Cash Advance | 5,000 to 250,000 | Repaid as card volume arrives | 1 to 3 business days | Factor rate, highest total cost |
| Buildout and Expansion | 50,000 to 2,000,000 | 36 to 84 months | 1 to 4 weeks | Fixed payment, often with a draw schedule |
Estimates, not offers: Amounts, terms, and funding times are estimates based on programs commonly available in food service. Actual terms vary by program, lender underwriting, time in business, revenue, and credit profile. Nothing here is an offer of credit or a guarantee of approval. See source and method.
| Time in business | Credit | Revenue | Collateral | |
|---|---|---|---|---|
| Equipment Financing | Month 1 with a down payment, common by month 6 | Options below 600, best terms above 700 | No minimum when the quote and asset are strong | The equipment itself |
| Working Capital | 6 months of deposits | Options below 600, pricing improves above 650 | About 15,000 per month in deposits | General business lien, no specific asset |
| SBA Loans | 2 or more years, exceptions for acquisitions | 660 and above with clean recent history | Documented profit and debt service coverage | Business assets, often real estate, plus a personal guarantee |
| Business Line of Credit | 12 months | 650 and above for most limits | Consistent monthly deposits across 12 months | General business lien |
| Merchant Cash Advance | 4 to 6 months of card processing history | Options in the low 500s | About 10,000 per month in card volume | Future card receivables |
| Buildout and Expansion | 12 months, or a funded project with an executed lease | 650 and above for most structures | Sized to the project and the operator contribution | The project, with 10 to 30 percent operator contribution |
Estimates, not offers: Amounts, terms, and funding times are estimates based on programs commonly available in food service. Actual terms vary by program, lender underwriting, time in business, revenue, and credit profile. Nothing here is an offer of credit or a guarantee of approval. See source and method.
Every request
- /Completed program application with ownership details
- /3 to 6 months of business bank statements
- /Time in business and entity details
Equipment and buildout
- /Vendor quote including delivery, installation, and freight
- /Contractor bids and the draw schedule on construction
- /Executed lease for the space
SBA and conventional term
- /3 years of business and personal tax returns
- /Interim profit and loss statement and balance sheet
- /Debt schedule and personal financial statement
- /Purchase agreement and seller financials on an acquisition
SBA Loans by business type
Guides and calculators for sba loans
SBA Loans questions
Can a restaurant get an SBA loan?
Yes. Restaurants are eligible for both 7(a) and 504 programs, and SBA financing is commonly used for acquisitions, owner occupied real estate, and refinancing expensive short term debt.
How long does an SBA loan take?
Plan on 3 to 12 weeks from complete application to funding. Acquisitions with real estate sit at the longer end.
What down payment does an SBA loan require?
Typically 10 to 20 percent for acquisitions, and 10 percent for 504 real estate transactions.
What documents are required?
Three years of business and personal tax returns, interim financials, a debt schedule, a personal financial statement, and for acquisitions, the purchase agreement and seller financials.
Can I use an SBA loan to buy the restaurant I manage?
Yes. Acquisition of an existing profitable restaurant is one of the most common uses of SBA 7(a) financing.
Is a personal guarantee required?
Yes. Any owner with 20 percent or more of the business signs a personal guarantee on SBA financing.