Restaurant business loans: equipment, build-outs, cash advances and slow seasons

How restaurant cash flow shapes the loan you get

Your sales arrive daily, in small pieces, mostly on cards: Credit and debit cards made up 65% of US consumer payments in 2025 (34% credit, 31% debit) against 14% for cash, according to the Atlanta Fed's payment survey as reported by Pew Research Center. For a restaurant, that means a lender can see nearly every sale in your processor statements and bank deposits, and most restaurant underwriting runs on exactly that.

Your costs arrive on someone else's schedule: Food vendors bill on short terms, payroll runs every week or two, and rent is due on the first whether January was busy or not. A restaurant can be profitable over a year and still be short in a given week.

The year has a shape: Restaurants and other eating places sold $66.5 billion in February 2025 and $81.5 billion in May, not seasonally adjusted, per the Census Bureau's monthly retail trade data. February ran about 18% below May nationally, and the swing can be much larger in a beach, ski or college town.

Restaurant equipment financing: loan or lease?

Equipment financing is the easiest restaurant credit to get: because the lender can take the asset back. A range, fryer, combi oven or dish machine has a resale market. A hood system, a walk-in built into the space or new ductwork is different: it is attached to a building you probably don't own, so a lender may treat it as a leasehold improvement with little resale value.

Loan or lease comes down to how long you'll keep it: Buy what lasts, like the cooking line, refrigeration and prep tables. Lease what you expect to replace in a few years, such as POS hardware. Our equipment lease vs loan guide explains buyout options and who owns what at the end.

Worked example: an $80,000 kitchen package

Say you finance $80,000 of ranges, a fryer bank and reach-in refrigeration over 60 months at a hypothetical 11%. The payment is $1,739.39 a month, and total interest over five years is $24,363.63. Both figures illustrate the math; they are not quotes.

The tax side can offset part of that: IRS Publication 946 lists refrigerators among the property that qualifies for Section 179 expensing (IRS), and the 2026 limit is $2,560,000. Section 179 can't create a loss, so whether it helps this year is a question for your CPA; our page on equipment financing and Section 179 shows how it interacts with a loan.

Ask about soft costs before you sign: Freight, installation, gas and electrical hookups and the fire suppression contractor can add a real share to the sticker price. Ask whether the lender will include them in the financed amount, or plan to pay them in cash.

Restaurant build-out loans and your lease

A build-out loan is really a bet on your lease: If the landlord can end your tenancy before the loan is paid, the lender loses the location that produces the payments. SBA's rules spell this out: when at least $500,000 or 30% of a 7(a) loan's proceeds (whichever is less) go to leasehold improvements, the lease, counting renewal options only you can exercise, should run at least as long as the loan, and the lender should get an assignment of the lease and a landlord's waiver (SBA SOP 50 10 8.1).

SBA also caps the term: A 7(a) loan for leasehold improvements can run up to 10 years, plus up to 12 months to finish the work. Equipment loans generally run up to 10 years, or up to 15 where the IRS useful life supports it.

Worked example: a $400,000 second-location build-out

Say a restaurant borrows $400,000 through SBA 7(a) to build out a second location, over 10 years. The maximum variable rate on a 7(a) loan over $350,000 is prime plus 3 points, which is 10.00% with prime at 7.00% as of October 2026. At that cap the payment is $5,286.03 a month.

The upfront SBA fee would be $9,000: on a loan approved in fiscal 2027: 3% of the $300,000 guaranteed portion, assuming a 75% guarantee (SBA Information Notice 5000-881797). Restaurants are not on SBA's food supply chain list that pays 0%, but a restaurant located in a rural area pays 0% on loans of $700,000 or less.

Decision rule: if your lease has fewer years left than the loan you want, renegotiate the lease or its renewal options before you apply, not after. The interior work itself may qualify for Section 179 as qualified improvement property, which Publication 946 defines as interior improvements to a nonresidential building, excluding enlargements, elevators and the internal structural framework.

Restaurant merchant cash advances: how they target card sales

An MCA buys a slice of your future card sales: You get a lump sum and repay a fixed total, the advance times a factor rate, either as a percentage of each day's card receipts (a holdback or split) or as a fixed daily debit from your bank account. Restaurants are an easy fit for funders because the card processor already sees every sale. Our merchant cash advance guide covers the APR math and state disclosure laws.

The holdback version is the one built for restaurants: When the processor takes a percentage, a slow Tuesday costs you less. A fixed daily debit is the funder's estimate of that percentage, and it does not drop in February unless you request a reconciliation.

Worked example: a $50,000 advance through a slow month

Say a restaurant with $100,000 of card sales in its busy month and $82,000 in its slow month (the same 18% gap as the national figures above) takes a $50,000 advance at a hypothetical 1.32 factor rate. It owes $66,000, so the advance costs $16,000 no matter how it is collected.

Now price the same $50,000 on a line of credit: Drawn in full and repaid in seven equal monthly payments at a hypothetical 15% APR, it costs $2,531.05 in interest. The difference, about $13,500, is what the advance charges for speed and for not having to qualify for the line.

Count the advances you already have: An advance offered through your POS system or a delivery platform is repaid out of the same sales, so the next funder sees it as an existing position. Each added daily debit shrinks what is left for food and payroll; see two merchant cash advances at once and, if you're already stacked, how to consolidate MCAs.

Restaurant working capital: slow seasons and food-cost swings

Seasonality is predictable, so set up the line before you need it: Apply in your strong months, when your statements look best, and draw in the slow ones. A lender reading three months of January and February deposits will size you smaller than one reading your summer.

Food-cost swings are a pricing problem, not a financing one: USDA's Economic Research Service forecasts wholesale beef prices up 8.5% in 2026, against a 3.5% rise in what restaurants charge (USDA ERS Food Price Outlook, updated September 2026). If beef is $10,000 of your monthly food purchases, an 8.5% increase adds $850 a month, or $10,200 a year, that your menu may not be covering.

Borrowing to cover a margin squeeze only delays it: Use a line of credit for timing gaps, such as a large vendor bill due before a busy weekend's deposits clear. If the gap never closes, the fix is menu pricing, portions or suppliers; our guide to working capital loans shows how to size a true timing gap.

Read the industry numbers the way a lender does: The National Restaurant Association projects $1.55 trillion in restaurant and foodservice sales for 2026, yet 60% of operators reported lower traffic in 2025. Lenders see a large industry with thin margins, so a clean, well-documented file counts for more here than in most businesses.

Liquor licenses and bar build-outs

A liquor license is set by state rules, and in some states it is scarce: California, for example, limits general licenses (beer, wine and spirits) in each county based on population, issues new ones once a year by drawing when applicants outnumber licenses, and otherwise requires buying an existing license from a current holder (California ABC). Its priority application fee for an original on-sale general license is $19,840, before a single tap is installed.

Most of a bar's cost finances like the rest of the restaurant: The bar build, coolers and draft systems are build-out and equipment. The license is different: whether and how it can be pledged depends on state law, and when an SBA loan finances buying a restaurant that comes with a transferable liquor license, SBA's SOP requires the lender to secure the license as collateral.

Timing rule: get the license approved, or the approval date in writing, before you close on build-out money that only pays off with alcohol sales. Until it is issued, a delay is your risk, and a lender will ask about it.

What lenders look at in a restaurant application

• Processor statements and bank deposits. Recent card processing summaries show that deposits are sales and how they split between card and cash.
• Your lease: years remaining, renewal options, and whether the landlord will sign a waiver or assignment.
• Permits and licenses: health permit, business license, and the liquor license or its status. Have them current before you apply.
• Sales tax returns. Lenders compare them with deposits, and unpaid sales tax can turn into a state tax lien.
• Existing advances. Every daily or weekly debit to a funder, including POS and delivery-platform advances.
• Delivery share. Third-party delivery payouts arrive net of commissions, so lenders count what lands in the bank, not the menu price.
• For a new location: a build-out budget with contractor bids, and projections based on your first location's actual numbers.

Decision rule: size any payment to your slowest month, not your average one. If the new payment plus existing debits would take more than your slow month can spare after food, labor and rent, borrow less or pick a longer term.

Restaurant financing through Quordx

Quordx is a broker, so it can't approve a restaurant or set its rate; lenders decide. What it can do is send one application, about 10 minutes, to lenders that place equipment financing, term loans, lines of credit and working capital advances. Those lenders generally look for around $17,000 a month in revenue and about a year in business, so a restaurant that hasn't opened yet is usually better served by an SBA lender or its equipment vendor.

For a build-out, SBA loans through Quordx generally start around $400,000. A smaller SBA loan, or a 504 loan to buy your building, is easier to find through SBA's Lender Match. Quordx does not serve Virginia, Connecticut, Missouri or North Dakota, and the restaurant pays Quordx nothing: the lender pays it when a deal funds.