SBA 7(a) is the workhorse for restaurant acquisitions, buildouts, and equipment up to $5M. SBA 504 for owner-occupied real estate (90% LTV). Specialty restaurant equipment lenders (National Funding, Stearns Bank, Crest Capital, Direct Capital, plus OEM captives) typically offer better terms than general lenders for kitchen and POS. Acquisitions usually include 5-25% seller note (often on full standby). Working capital for cash flow and seasonal swings — lines of credit beat MCAs almost every time. Specialty restaurant SBA lenders (Live Oak, Newtek, ApplePie Capital) understand the vertical and price more aggressively.
Restaurants are one of the most-financed verticals in U.S. small business, with deep specialty lender markets and a long history of well-understood deal structures. They're also one of the highest failure rates in financing distress, mostly because of MCA stacking. This guide covers the products, the lenders that actually fit, and the playbook for the most common transactions: acquisitions, equipment, working capital, and real estate. For broader context see SBA loans and buying a business financing guide.
Financing Products by Need
| Need | Product | Range |
|---|---|---|
| Restaurant acquisition | SBA 7(a) | $200K-$5M |
| New restaurant buildout | SBA 7(a) or term loan | $100K-$2M |
| Kitchen equipment | Specialty equipment loan | $25K-$500K |
| POS systems | Equipment loan or POS-specific lease | $5K-$50K |
| Hood/ventilation | Specialty mechanical loan | $15K-$150K |
| Owner-occupied real estate | SBA 504 or conventional CRE | $500K-$5M |
| Working capital / cash flow | WCL or line of credit | $25K-$500K |
| Emergency cash (avoid if possible) | MCA | $10K-$500K |
Restaurant Acquisition Playbook
Most restaurant acquisitions use SBA 7(a) with seller financing. Representative $1.5M independent restaurant purchase:
- SBA 7(a): $1.2M (80% of purchase). 10-year amort, 10.75% APR. Monthly P&I ~$16,440.
- Seller note: $225K (15% of purchase) on full standby for 24 months, then 5-year amort at 6%.
- Buyer equity: $75K (5% cash) + the standby seller note covers SBA equity requirement.
The lender will require a Phase I environmental for the property and an FF&E appraisal. Liquor license transfer is typically the slowest gating item — budget 60-120 days for state ABC review.
Specialty Restaurant Lenders
- Live Oak Bank — one of the largest U.S. SBA lenders, deep restaurant book including franchise concepts
- Newtek Small Business Finance — very active SBA 7(a) restaurant lender
- ApplePie Capital — franchise-focused lender (concept-by-concept underwriting expertise)
- Stearns Bank — equipment-focused restaurant deals
- National Funding / Crest Capital / Direct Capital — specialty equipment lenders for kitchen and POS
- Wells Fargo SBA — large-volume general SBA with restaurant deals
- Huntington National — major Midwest SBA restaurant lender
Kitchen Equipment Specifics
Kitchen equipment financing has unusual characteristics: relatively short useful life on some categories (fryers, ranges, walk-ins), aggressive depreciation, and a deep aftermarket. Specialty lenders understand both the asset class and the restaurant cash-flow cycle. Rates: 8-15% APR, terms 3-7 years, 0-20% down. OEM captives (Hobart, Vulcan, True Manufacturing) sometimes write competitive deals on their own brands.
Owner-Occupied Restaurant Real Estate
SBA 504 is the workhorse for restaurant property purchases by the operating restaurant. 90% LTV, fixed CDC rate (~5.5-7% on 40% CDC portion), 25-year amortization. Many independent restaurant operators eventually buy their building — rent stabilization is a big economic win. See SBA 504 vs conventional CRE.
A Hard Word on MCAs
Restaurant MCAs are common, fast, and dangerous. Daily ACH or daily card-percentage holdback at factor rates of 1.30-1.50 (~40-100% APR). Stacking multiple MCAs is the leading cause of restaurant financing failures. If you currently have an MCA, the right move is usually to refinance into an ACH loan or working capital loan as soon as you can qualify. See ACH loan vs MCA.
Next Step
Whatever your restaurant financing need — acquisition, equipment, real estate, working capital — specialty lenders in this space typically beat general lenders. Get matched with a restaurant lender.
Frequently Asked Questions
What financing do restaurants use?
SBA 7(a) for acquisitions and buildouts (the workhorse), equipment loans for kitchen and POS, working capital loans/lines for cash flow, MCAs for fast cash (often expensive and to be avoided when possible), and SBA 504 for owner-occupied real estate. Specialty restaurant lenders price more aggressively than general SBA lenders.
How do I finance buying a restaurant?
SBA 7(a) is the workhorse for restaurant acquisitions: up to $5M, 10% borrower equity, 10-year amortization, prime + 2.25-2.75%. Most restaurant acquisitions also include a 5-25% seller note (often on standby for 12-24 months). Lender will require a Phase I environmental for the building plus FF&E appraisal.
Can a new restaurant get SBA financing?
Yes — SBA 7(a) for new restaurant startups exists but is harder than acquisitions because there's no operating history. Lenders typically want experienced operator (5+ years), 25-30% borrower equity, detailed financial projections, and signed lease/LOI. Live Oak Bank and Newtek are unusually active in restaurant startups.
How do I finance kitchen equipment?
Equipment loans through specialty restaurant equipment lenders — National Funding, Stearns Bank, Crest Capital, Direct Capital, plus OEM captives. $25K-$500K typical. 5-7 year terms, 8-15% APR, 0-20% down. Hood/ventilation and walk-in cooler systems sometimes require specialty refrigeration lenders.
Should I take an MCA on a restaurant?
Almost never as a first choice. Restaurant MCAs price 40-100%+ APR via daily ACH or daily card-percentage holdback. They're appropriate only when: (1) you can't qualify for ACH loan or working capital loan, AND (2) the use case has a clear short-term payback. Stacking MCAs is the leading cause of restaurant failures in financing distress.
Still deciding? Tell us about your business and compare real options. Free, no obligation, and checking won't affect your credit.