SBA Loans / Restaurants

SBA Loans for Restaurants

SBA financing is the cheapest capital a restaurant can get, and the price of that is documentation and time. Starting before the need is urgent is the whole strategy.

How does sba loans work for restaurants?

SBA 7(a) and 504 loans give restaurants 10 to 25 year terms with the lowest monthly payment of any program, backed by a government guarantee. They are used for acquisitions, owner occupied real estate, refinancing expensive short term debt, and major buildouts, and the process takes 3 to 12 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.

What this covers

/7(a) covers acquisition, working capital, equipment, and refinancing up to 5,000,000.
/504 covers owner occupied real estate and heavy equipment with a long fixed rate.
/Down payments generally run 10 to 20 percent for acquisitions.
/Owners at 20 percent or more sign a personal guarantee.
/Existing high cost advances can often be consolidated into the SBA facility.

SBA Loans at a glance
	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

What it looks like in practice

A general manager buys the restaurant they have run for 9 years with 10 percent down.

A 3 unit group consolidates 4 short term advances into a single 10 year amortized payment.

Other financing for restaurants

Equipment Financing for RestaurantsFinance ovens, walk-ins, hoods, dish machines, and POS systems for your restaurant. Funding in 1 to 5 days, no hard credit pull to see options.Working Capital for RestaurantsCover payroll, inventory, rent, and slow months with unrestricted working capital. Funding in 1 to 3 days on bank statements.Restaurant Buildout and Expansion FinancingFund construction, permits, hoods, furniture, and opening payroll for a remodel or a second restaurant location.Restaurants overviewFull service, fast casual, and quick service operators nationwide.SBA Loans program detailsLonger terms and lower payments for operators who can wait on the process.

Questions operators ask

Can I buy a restaurant with an SBA loan?

Yes. Acquisition of a profitable existing restaurant is among the most common uses of SBA 7(a).

How long does an SBA restaurant loan take?

Plan on 3 to 12 weeks from complete application to funding, longer when real estate is involved.

What down payment is required?

Typically 10 to 20 percent on acquisitions and 10 percent on 504 real estate.

Can SBA refinance a merchant cash advance?

Often yes, when the refinance improves the business's cash flow and the lender's requirements are met.

What documents are required?

Three years of business and personal returns, interim financials, a debt schedule, a personal financial statement, and the purchase agreement for acquisitions.