Term Loans for Restaurants
Some investments need predictable financing. Kitchen renovation, major equipment packages, or expansion deserve fixed monthly payments you can plan around. When you need to budget precisely within tight restaurant margins, term loans provide the certainty variable payments cannot.
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When Term Loans Work for Restaurants
Term loans are not the most flexible option, but they excel for substantial investments where payment predictability matters more than daily sales alignment.
Fixed Payment Budgeting
A $120,000 term loan at 16% for 60 months means $2,920 monthly, every month, for five years. This predictability lets you build financing into your budget with complete confidence.
Margin Planning
Fixed payments can be incorporated into food cost, labor, and overhead calculations. Know exactly what financing costs as a percentage of revenue.
Cost Comparison
A 5-year term loan often costs less in total than shorter-term MCA or revenue-based products. Lower monthly payment also preserves cash for operations.
Equity Building
Each term loan payment reduces principal. You build equity in what you financed while making manageable payments.
When Predictable Payments Matter
Variable-payment products work for some situations, but major investments often demand fixed monthly obligations.
Variable Payment Uncertainty
MCA payments vary daily with sales. When you cannot predict monthly financing costs, margin management becomes difficult.
Major Investment Scale
Renovation, kitchen buildout, or expansion require substantial capital that short-term products do not efficiently provide.
Budget Integration
Fixed financing costs can be incorporated into P&L projections and menu pricing. Variable costs complicate planning.
Thin Margin Reality
3-9% restaurant margins require precise cost management. Predictable financing helps maintain margins.
Long-Term ROI Matching
A $75,000 kitchen renovation performing for 10 years should not be financed over 12 months.
Refinancing Path
Term loan track record supports future refinancing to SBA or better rates. MCA does not build the same history.
Term Loan Process for Restaurants
Term loans require more documentation but provide structured, predictable financing.
Application
Complete application with business information, revenue data, and funding purpose.
15 minutes
Documentation
Provide bank statements, tax returns if requested, and project details if applicable.
Gather documents
Underwriting
Detailed review of financials, card processing, credit, and business history.
5-14 days
Funding
Receive your loan with clear terms: amount, rate, monthly payment, term length.
1-3 days after approval
Structured Financing for Major Investments
Term loans provide predictable monthly payments over extended periods. When your restaurant needs substantial capital for planned investments, term loans offer budgeting certainty within tight margins.
Fixed Monthly Payments
Same payment every month for the entire loan term. Build financing into P&L with complete confidence.
Extended Terms
Terms from 1-5 years spread payments to manageable levels. Match loan term to investment payback.
Clear Total Cost
Interest rate and amortization schedule show exact total repayment. No surprises.
Restaurant Awareness
We understand restaurant economics and thin margins. Financing structured sustainably.
Larger Amounts
Term loan structures support larger funding amounts appropriate for renovation and expansion.
Build Business Credit
Regular term loan payments build your business credit profile for future needs.
Restaurant Term Loan Applications
Situations where fixed-payment term loans provide the right structure.
Kitchen Renovation
Major kitchen upgrade with commercial equipment. Structured financing over equipment life.
Typical funding: $50K-$200K
Dining Room Refresh
Complete dining room renovation to maintain customer appeal.
Typical funding: $30K-$100K
Equipment Package
Major equipment investment: range, refrigeration, hood system bundled.
Typical funding: $40K-$150K
Second Location
Expansion to additional location. Predictable payments for growth planning.
Typical funding: $100K-$400K
Debt Consolidation
Replace multiple MCA products with single term loan. Simplify and reduce cost.
Typical funding: $50K-$200K
Concept Change
Rebrand or concept pivot requiring significant investment.
Typical funding: $75K-$250K
Term Loans vs. Alternative Restaurant Financing
Understanding when term loans make more sense than flexible alternatives.
| Feature | Term Loan | MCA | Revenue-Based |
|---|---|---|---|
| Payment Structure | Fixed monthly | % of daily deposits | % of deposits |
| Repayment Term | 1-5 years | 6-18 months | 6-18 months |
| Payment Predictability | Complete | Variable | Variable |
| Margin Planning | Calculable | Varies | Varies |
| Effective Cost | Lower | Higher | Higher |
| Approval Speed | 1-3 weeks | 24-72 hours | 24-72 hours |
| Best For | Planned major investments | Speed/flexibility | Daily flex |
| Documentation | More required | Minimal | Minimal |
Term Loan Requirements for Restaurants
Term loans have higher qualification requirements but provide better terms.
Business History
Established restaurant with substantial operating history.
2+ years preferred
Business Revenue
Sufficient revenue to demonstrate capacity for fixed monthly payments.
$300,000+ annual
Owner Credit
Term loans typically require good personal credit from owners.
640+ preferred
Profitability
Demonstrated profitability with positive cash flow.
Profitable operations
Tax Returns
Business and personal tax returns often required.
2 years returns
Clear Purpose
Defined use of funds. Term loans work best for specific investments.
Documented purpose
Strong card processing volume and demonstrated profitability support term loan qualification.
Real Results
Harbor Grille
Waterfront Restaurant, Massachusetts
The Challenge
Harbor Grille wanted to renovate their dining room ($65,000) and upgrade kitchen equipment ($45,000). MCA quotes created unpredictable monthly costs that complicated renovation budgeting.
The Solution
We structured a 60-month term loan for $110,000 at 15.5% with fixed monthly payments of $2,650. Predictable payments allowed precise renovation planning.
The Result
Renovation completed on budget. Fixed payments easily incorporated into P&L. Restaurant traffic increased 25% after refresh. Term loan on schedule for payoff.
“MCA payments would have varied $2,000-$5,000 monthly. I needed predictable costs to budget the renovation properly. Fixed payments made planning straightforward.”
Restaurant Term Loan Data
Industry benchmarks for term loan financing in restaurants.
Term Loan Advantages for Restaurants
Strategic benefits of fixed-payment financing for food service.
Budget Certainty
Build fixed financing costs into P&L. Know exactly what you owe monthly.
Margin Management
Fixed costs enable precise margin calculations within thin restaurant economics.
Lower Total Cost
Extended terms and competitive rates often mean less total cost than MCA.
Renovation Planning
Predictable payments enable proper renovation and expansion budgeting.
Professional Structure
Traditional financing structure expected by investors and landlords.
Refinancing Path
Establish term loan track record for future SBA or better-rate refinancing.