Restaurant loans and funding: how independent restaurants pay for growth

Running an independent restaurant means big costs that don't wait: a walk-in cooler that dies on a Friday, a patio build-out before summer, a second location when the first one has a line out the door. Most owners can't pay for those out of the till. The good news is that restaurants have more funding options than many owners realize, including several built around daily card sales.

What restaurant owners usually need funding for

• Kitchen equipment: ovens, fryers, refrigeration, hoods.
• Renovations: a dining room refresh, a patio, a bar build-out.
• Inventory and payroll ahead of a busy season.
• Opening another location, or adding catering or a food truck.
• Covering a slow stretch without falling behind on suppliers.

The main options

Equipment financing

Finance new or used kitchen equipment and pay for it over time, with the equipment as collateral. Often the best fit for a single, clear purchase. How equipment financing works.

Merchant cash advance

Restaurants take in steady card sales, which is exactly what a merchant cash advance is based on. You get a lump sum up front and repay through a share of future sales or fixed daily or weekly payments. Fast, and approval leans on sales rather than credit, though it's typically one of the pricier options. Best for short-term needs with a clear payoff.

Working capital

A lump sum for everyday needs like inventory, payroll or marketing, usually repaid with fixed daily or weekly payments.

Business line of credit

A revolving limit you draw from when you need it, great for smoothing out seasonal ups and downs. Line of credit vs. merchant cash advance.

Bank and SBA loans

Often the lowest cost for established restaurants with strong credit and financial statements, but slower, with more paperwork. A good fit for major, planned projects like a second location.

How to choose

Your need	Often the best fit
A specific piece of equipment	Equipment financing
Cash fast, strong card sales	Merchant cash advance or working capital
Seasonal ups and downs	Line of credit
A big planned expansion, strong financials	Bank or SBA loan

Get approved faster

• Keep sales flowing through one business bank account and your card processor.
• Have three to six months of bank statements, and your processing statements, ready.
• Know your average monthly sales and your busiest and slowest months.
• Be specific about the plan: "a second fryer to cut ticket times on weekends" is stronger than "upgrades."

Also worth reading for restaurant owners: the best ways to advertise a small business locally.