Opening a restaurant demands significant initial investments in purchasing/leasing space, procuring equipment, furniture, cutlery, and utensils. On the other hand, if you are already running a small restaurant, expenses for renovations, bills, payroll, and inventory are a grave concern.    

Most restaurateurs planning to start or grow their restaurants require financial help. This help comes in the form of loans, which can be obtained from different types of investors. One of the most reliable and streamlined platforms to obtain funding for small restaurants is the SBA loan.  

In this blog, we will discuss the nitty-gritties of SBA loans and how they can help new restaurateurs.  

What Is a Restaurant SBA Loan?

SBA (Small Business Administration) loans are provided by lenders approved by the U.S Small Business Administration. While the SBA does not lend money directly, its guarantee reduces risk for lenders, allowing them to offer more favorable terms to restaurant owners. SBA loans have the upper hand over other loans as they offer low interest rates, longer repayment terms, and higher approval rates. An SBA loan generally takes 30 to 90 days for approval.  

Types of SBA Loans Available for Restaurants

SBA primarily offers three types of loans for small businesses, namely:

SBA 7(a) Loan Program

SBA 7(a) loan offers a flexible loan structure, which is ideal for restaurant owners. You can use this loan for working capital, purchasing equipment, or acquiring a building. Under this program, the maximum loan amount a restaurant can have is $5 million. You can repay the loan monthly. Moreover, lenders levy competitive interest rates that are often lower than conventional loans, and the SBA guarantee reduces the lender’s risk, increasing your chances of approval. Eligibility for an SBA 7(a) loan depends on several parameters, such as the type of business and credit history.  

SBA guarantees 85% of 7(a) loans that are $150,000 or less. Interest rates vary from 6.5% plus base rate for $50,000 or less to 3.0% plus base rate for $350,000 or more.  

SBA 504 Loan

The SBA 504 loan caters to fixed asset financing for purchasing commercial real estate or equipment. This long-term loan is beneficial for entrepreneurs looking to buy a dedicated building for their restaurant. Under this program, approved applicants can get a maximum loan of $5.5 million. Moreover, borrowers can repay the loan in a 10, 20, or 25-year term. Interest rates start with 3% but are subject to an increment. Unlike the SBA 7(a) loan, you cannot utilize the SBA 504 loan for working capital or inventory.      

SBA Microloans

SBA Microloans, as the name suggests, offer a maximum loan amount of $50,000 for small businesses. However, the average loan amount for this loan is $13,000. Restaurant startups can use this loan to buy furniture, inventory, and supplies. SBA microloans are offered by nonprofit, community-based organizations experienced in lending and business management assistance.  

SBA Restaurant Loan Eligibility Requirements

SBA defines eligibility as:

"Lenders and loan programs have unique eligibility requirements. In general, eligibility is based on what a business does to receive its income, the character of its ownership, and where the business operates. Normally, businesses must meet SBA size standards, be able to repay, and have a sound business purpose. Even those with bad credit may qualify for startup funding. The lender will provide you with a full list of eligibility requirements for your loan."

However, there are different eligibility criteria depending on the type of loan. Let’s discuss each in detail.  

SBA 7(a) Loan Program

Eligibility criteria include:

• You must be an operating business.

• Operate for profit

• Be located in the U.S.

• Fall under SBA Size Requirements

• Not be a type of ineligible business.

• Not be able to obtain the desired credit on reasonable terms from non-Federal, non-State, and non-local government sources.

• Be creditworthy and demonstrate a reasonable ability to repay the loan.

To check if you are within the SBA size standards, visit the Table of size standards.

SBA 504 Loan

Eligible businesses must be:

• Operate as a for-profit company in the United States or its possessions.

• Have a tangible net worth of less than $20 million.

• Have an average net income of less than $6.5 million after federal income taxes for the two years preceding your application.

• Fall under SBA Size Requirements

SBA Microloans

SBA microloans do not mention any specific eligibility criteria. Eligibility primarily depends on the intermediary lender, which generally requires collateral and a personal guarantee.  

Documents Required for a Restaurant SBA Loan

For an SBA loan, you might require documents, such as:

• SBA Form 1919 or SBA Form 912  

• Restaurant business plan

• Tax returns (both business and personal)

• Bank statements

• Business credit score

However, all these documents are subject to the lender’s requirements. The goal of SBA is to connect you with a lender. All the documentation requirements come from the lender’s end.    

How to Improve Your Chances of SBA Loan Approval

SBA guarantees a 75% loan approval for amounts exceeding $150,000. However, there is still intense competition given the number of applicants. Here are strategies that can increase your chances of approval.  

Strengthen Your Credit Profile

A credit score is vital for loan approval. Lenders use these scores to assess your reliability. Hence, before applying, you must look to improve your credit score. You must reduce existing debts by paying outstanding credit card balances. Moreover, you must review your credit reports for inaccuracies and disputes.      

Prepare a Comprehensive Restaurant Business Plan

A well-drafted restaurant business plan demonstrates your growth path to lenders. Your business plan must include key restaurant information, such as niche, concept, and target audience. Moreover, you must have a future-ready marketing and sales plan taking into account customer demographics, menu pricing trends, and customer retention strategies. Financial projections and break-even analysis must also be part of the restaurant business plan.        

Show Industry Experience

If you have extensive experience working in the hospitality industry, it helps gain lenders’ trust. Therefore, it is beneficial to include restaurant ownership, management roles, or culinary expertise.  

Demonstrate Healthy Cash Flow  

Having a positive cash flow assures lenders that you can repay the loan. Hence, you must show historical financial statements with positive revenue trends. Moreover, you must be prepared with cash flow projections to show your restaurant is ready for the future.      

Be Prepared with All Documents

Incomplete paperwork can display a lack of professionalism, leading to your loan being denied. Therefore, you must keep all the requested documents ready in an organized manner.  

SBA Loans Can Get Things Started Quickly

SBA offers a platform to get loans quickly for your restaurant. It implements a hassle-free process for both lenders and applicants. Moreover, the interest rates are comparatively lower than those of any other funding sources. However, you must check your eligibility before applying. Furthermore, you must analyze which type of SBA loan is the right choice for your business. Getting all documents ready according to the lender’s requirements is also imperative.  

About NOVA: The All-in-One Platform Built for New Restaurant Owners

Starting a restaurant is hard enough. Managing multiple disconnected systems shouldn’t be.

NOVA is a modern, AI-native, all-in-one restaurant POS and management platform designed specifically for new and growing restaurant owners who want to open strong, operate efficiently, and scale with confidence.

From day one, NOVA brings everything you need into a single system:

• Point of Sale and payments
• Menu and pricing management
• Inventory and cost tracking
• Staff scheduling and performance insights
• Guest data and repeat-visit tools
• Real-time sales and profitability analytics

Instead of juggling multiple vendors, logins, and integrations, NOVA gives you one platform, one source of truth, and complete operational visibility from your first service to your hundredth location.

For restaurant owners using SBA loans, NOVA helps you do what lenders care about most:

• Run lean operations
• Track revenue and costs in real time
• Make data-backed decisions
• Build a scalable, compliant business from day one

Whether you’re opening your first restaurant or expanding an existing concept, NOVA is built to grow with you, without the complexity of legacy systems or patchwork tools.

If you’re investing capital to start a restaurant, invest in technology that’s built to protect margins, simplify operations, and set you up for long-term success. That’s NOVA.