Restaurant Loans and Equipment Financing: Rates and Options (2026)

The short version

Start with

SBA 7(a) for build-out, equipment and working capital
Equipment financing for kitchen gear, since the equipment backs the loan
SBA Microloan for needs under $50,000

Use with care

Merchant cash advances. Fast, but the cost can equal a very high yearly rate
Online short-term loans with starting rates above 20%
Personal credit cards for build-out

The SBA caps what a lender can charge on a variable-rate 7(a) loan. At today's 7.00% prime rate, that cap is 10% for loans over $350,000 and 13.5% for loans of $50,000 or less. Faster options cost more, so plan early enough to use the slow, cheap money.

Your options side by side

Restaurant financing options, from SBA rules and lenders' published terms, October 2026
Option	Up to	Term	Cost	Good for
SBA 7(a)	$5 million	10 years (equipment, working capital), 25 years (real estate)	Capped at prime + 3 to 6.5 points, plus an SBA guaranty fee	Build-out, equipment, working capital, buying a restaurant
SBA Express	$500,000	Up to 10 years for lines of credit	Same rate caps as 7(a)	Faster decisions on smaller loans
SBA 504	About $5 million (SBA pages differ)	10, 20 or 25 years	Fixed rate tied to the 10-year Treasury	Buying a building or long-life equipment. Not for working capital or inventory
SBA Microloan	$50,000 (average about $13,000)	Up to 6 to 7 years	Generally 8% to 13%	Equipment, furniture, inventory, working capital
Equipment financing	Often up to $150,000 to $250,000	1 to 5 years	Lenders advertise from about 6%	Ovens, hoods, walk-ins, POS hardware
Merchant cash advance	Based on card sales	Repaid from daily or weekly sales	Factor rate of 1.1 to 1.5	Short gaps only, when nothing else is available

SBA 7(a) maximum rates at today's prime

The SBA sets the highest variable rate a lender may charge, based on loan size. The base is usually the prime rate, which the Federal Reserve reported at 7.00% in October 2026.

SBA 7(a) maximum variable rate by loan size (prime 7.00%)
Loan amount	Max spread over prime	Max rate today
$50,000 or less	6.5 points	13.5%
$50,001 to $250,000	6.0 points	13.0%
$250,001 to $350,000	4.5 points	11.5%
Over $350,000	3.0 points	10.0%

These are ceilings. A strong application can get a lower rate. Since March 2026, lenders may also tie the rate to Treasury yields or SOFR, but the cap above still applies. The SBA also charges an upfront guaranty fee on the guaranteed part of the loan. It changes each federal fiscal year, so ask the lender for the current fee in writing.

The SBA guarantees 85% of loans up to $150,000 and 75% above that. The guarantee protects the lender, not you. You still owe the full amount, and most lenders want a personal guarantee from each owner with 20% or more.

What a merchant cash advance really costs

A merchant cash advance is not a loan. The provider buys part of your future card sales. You repay a fixed amount, set by a factor rate, out of each day's sales. Example: a $50,000 advance at a 1.4 factor rate means you repay $70,000. If that takes six months, you paid $20,000 for six months of money.

As a rough comparison, that is about 40% of the advance in half a year. The true yearly rate is higher, because you start repaying the next day. A 10-year SBA loan of the same size at the 13% cap costs about $750 a month in payments. Use an advance only for a short gap, and only after the cheaper options say no.

What lenders ask for

A business plan with numbers. Sales forecast, startup budget and a cash cushion. The startup cost calculator builds the budget part.
Your own money in the deal. Lenders want to see the owners take risk too.
Personal credit and tax returns for every owner who guarantees the loan.
A signed or pending lease, and quotes for build-out and equipment.
Your business documents: LLC filing, EIN and operating agreement. See how to set up a restaurant LLC.

Expect a no or a partial yes. In the Federal Reserve's 2025 survey of small employers, about 80% of firms that applied got at least some financing, but only 41% got everything they asked for.

Want lenders to come to you? The SBA's free Lender Match sends your request to SBA lenders. You can also tell us what you need and we will point you to lenders that fit.

Common questions

What is the best loan to open a restaurant?

For most new restaurants, an SBA 7(a) loan. It can cover build-out, equipment and working capital, terms run up to 10 years for those uses, and the SBA caps the rate. At a 7.00% prime rate the cap is 10% to 13.5%, depending on loan size.

Can I get an SBA loan for a new restaurant with no history?

Yes, but it is harder. Lenders look at the owners' credit, industry experience, the cash they put in, and the business plan. A smaller first loan, an SBA Microloan of up to $50,000, or equipment financing can be easier to get.

How does restaurant equipment financing work?

The lender pays for the equipment and the equipment backs the loan, so approval can be easier than for an unsecured loan. Terms usually run one to five years. Some lenders advertise rates from about 6% for strong borrowers.

Is a merchant cash advance a good idea for a restaurant?

Usually only as a last resort. Factor rates of 1.1 to 1.5 mean you repay 10% to 50% more than you received, often within months. That is far more than an SBA loan costs.

Sources

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