Business funding for Restaurants: loans, lines of credit and equipment financing

605,380 independent restaurants are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 79,108 in CA, 54,058 in TX, 51,387 in NY. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

What the money usually goes to

Businesses in this industry most often need funding for kitchen equipment, renovations, inventory ahead of busy seasons, a second location, catering or a food truck.

Steady card sales make restaurants a natural fit for sales-based funding, and equipment financing covers ovens, refrigeration and hoods.

Options that fit

Equipment financing

Equipment financing lets the equipment secure the deal, so it can be easier to qualify for than an unsecured loan. Here is how it works and what to prepare.

Merchant cash advance

A merchant cash advance gives you cash now in exchange for a share of future sales. It's fast and credit-flexible. Here is how to use one wisely.

Working capital

Working capital funding covers the money a business needs to run day to day: payroll, inventory, rent and the gap between paying bills and getting paid.

Business line of credit

A line of credit gives your business a limit to borrow from, repay and borrow again. Here is how it works, what it costs you in practice and how to qualify.

Where these businesses are

The states with the most independent businesses of this type, which is a rough guide to where the competition and the customers both are.

State	Independent restaurants
CA	79,108
TX	54,058
NY	51,387
FL	44,706
IL	24,578
NJ	23,558
PA	23,316
GA	18,197
OH	16,764
NC	16,310

What an underwriter actually looks at

Most articles about getting funded describe the application. This is the other side of the desk: the handful of things a real underwriter checks first, in the order they check them.

Deposits, not revenue. What lands in the business bank account each month, averaged over three to six months. A good month does not matter; consistency does.
Negative days and overdrafts. A file with repeated NSFs is the fastest decline there is, because it says the account cannot absorb a payment.
Existing positions. Daily or weekly debits to other funders show up immediately in the statements. Several at once is called stacking, and it closes most doors.
Time in business and industry. Both change the pricing before anyone looks at credit.
Credit, last. It matters for the cheapest products and matters far less for revenue-based ones.

Which is why the advice below is not filler: it is what moves a file from declined to approved.

Get approved faster

Keep all revenue in one business bank account.
Have three to six months of statements ready.
Know your average monthly revenue and your busiest and slowest months.
Be specific: what will the money buy, and how will it pay for itself?

Questions owners ask

What kinds of funding do Restaurants businesses use?

Common options include equipment financing, merchant cash advance, working capital, business line of credit. The best fit depends on what the money is for, how fast you need it, and your revenue and credit.

How can I improve my chances of approval?

Run all revenue through one business bank account, avoid overdrafts, have three to six months of bank statements ready, and be specific about what the money will do for the business.