The Definitive Guide to Restaurant and Bar Financing

by Katie Sawyer, 7 minutes read
HOME blog definitive guide restaurant bar financing

This is a guest post from Sam Novick, Senior Editor at Funding Circle.

Running a restaurant is already hard. Razor-thin margins leave you with a 10% profit margin — if you’re lucky.

But, running a restaurant during a global pandemic? Much harder. With fixed expenses like rent and payroll taxes, and without revenue-generating dine-in customers and alcohol sales, it can be challenging to keep the ovens on, let alone continue to grow.

Luckily, there are business financing options available to help you bridge the gap. In this guide, we’ll walk you through how to get the infusion of cash you need for your restaurant or bar — in the wake of the coronavirus, and beyond.

Let’s get cooking.

Loan options and financial resources for restaurants and bars

With the coronavirus causing an unprecedented economic downturn impacting all facets of the hospitality industry, we wanted to kick things off by compiling a list of loans (and other financial resources) available for small businesses impacted by the crisis.


There are a number of loan options being offered by federal, state, and local governments in the United States.


  • With the government officially declaring COVID-19 a national emergency, the Small Business Administration is offering Economic Injury Disaster Loans (EIDLs) of up to $2 million at a 3.75% interest rate to businesses in eligible states and territories. You can apply here.

State and city-specific


  • Through the COVID-19 Crisis Relief Fund, the Restaurant Workers’ Community Foundation is allocating 25% of the total funds raised towards providing zero-interest loans to businesses.


Delivery and reservation services

  • Grubhub is deferring collection of up to $100 million in commissions.
  • UberEats waived delivery fees on all orders from independent restaurants across the US & Canada and “introduced a new functionality to enable same‑day payouts for any Uber Eats restaurants who request it”.
  • DoorDash and Caviar waived commission fees on pickup orders, and eligible merchants may qualify for additional commission reductions. Independent restaurants who sign up for DoorDash or Caviar will not have to pay commissions for 30 days.
  • OpenTable has waived subscription fees (if your restaurant is closed) and gift card listing fees.

Additional cash flow-boosting tips

  • Consider requesting a rent (reduction) or deferment (late payment).
  • A number of cities have temporarily banned evictions.
  • While you still have to file your business taxes by April 15, you now have an extra 90 days (until July 15) to pay the IRS — without penalties.
  • Check out The Dining Bonds Initiative from Support Restaurants (which is like savings bonds, but for restaurants). You get immediate cash by selling gift certificates  at a 25% discount.
  • Create a Gofundme and reach out to customers eager to support your employees and your business. Eater has already curated several city-specific lists (like this one in Boston) of restaurants who’ve taken this approach.
  • Reach out to creditors to see if you can get a waiver on feeds and/or reduction in interest. For example, Citi is waiving monthly service fees and remote deposit capture fees.
  • Check with your utilities providers to see if they are offering (deferred) payment plans.
  • Submit your restaurant to directories (like Rally for Restaurants) to encourage gift card purchases.
  • Many software and platform vendors are offering relief — whether it be waived fees, free setup, or other discounts. Get in contact with your vendors to see if they’re offering any breaks on their services.

UK Resources

  • The UK is offering £330 billion of government-backed loans and guarantees, including:
    • A Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
    • A 12-month business rates holiday for all hospitality businesses
    • A 3-month deferment of Valued Added Tax (VAT) payments for all businesses
    • Cash grants of up to £25,000 for businesses with a rateable value of between £15,000 and £51,000
    • Cash grants of up to £10,000 for businesses with a rateable value of £15,000 and under
    • A Coronavirus Job Retention Scheme, in which HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month
  • HMRC tax helpline offering practical help and advice to businesses concerned about paying their taxes
  • Delivery services:
    • Until March 31, Uber Eats UK is waiving delivery and activations fee
    • Just Eat is reducing its commission and waiving some fees for 30 days
  • A number of banks, including Barclays, Santandar, NatWest, Lloyds, and HSBC, are offering all or a combination of: loan repayment holidays, increased or new overdraft facilities, interest rate reductions, temporary and emergency loans.

Australia Resources

  • Australia announced a $17.6 billion stimulus package. This includes measures that offer financial assistance to employers, including:
    • Boosting cash flow for employers
    • Cash flow assistance  
    • Assistance to help pay the wages of apprentices or trainees
  • Support by state and territory. For example, in Queensland, the government announced a $4 billion COVID-19 economic relief package and eligible small businesses have access to:

Restaurant and bar financing: What are my options?

Aside from the resources mentioned above, there is an entire laundry list of loans available to restaurants and bars. If time is of the essence, you can get financing in as little as 24 hours with many online lenders — so make sure to do your research. There’s no one-size-fits-all funding solution, so research your options before deciding what works best for your business’s needs.

Small business loans

Business loans come in all shapes and sizes. From your classic term loans to your commercial mortgages, there are a variety of ways to finance your business — and with online lenders, you can access funds pretty quick.

SBA loan

SBA loans are government-backed financing that gives lenders the confidence they need to invest in small businesses. These loans usually come with fantastic rates, terms, and lending caps, making them one of the most competitive financing options.

Equipment financing

Equipment financing can help finance everything from your blenders to your backup generator to your shiny new set of knives. The equipment usually acts as collateral for the loan, which means you don’t need to risk your personal assets or provide a hefty down payment.

Term loan

Term loans are the classic financing that your mind probably jumps to when you hear the word “loan.” You receive a lump sum of cash with transparent rates and terms that you pay back over a predetermined period of time. Simple as that.

Business line of credit

A business line of credit is an extra line of capital you can tap when you need it, but you’re under no obligation to use it (and won’t be charged interest until you use it). You could use your line of credit to cover payroll during a slow month, purchase bulk inventory, or provide a safety net in case of an emergency.

Merchant cash advance

A merchant cash advance gives you cash now in exchange for your future earnings. If you need capital immediately and know you’ll make more sales later, a merchant cash advance is a quick way to get funding.

Commercial mortgage

Getting your commercial property ready for business is usually going to be one of your most expensive expenses. A commercial mortgage helps cover the cost of buying, building, expanding, renovating, or even refinancing — keeping your cash flow from getting tied up in one spot.

VC and angel funding

Angel investors and venture capitalists (VC) trade large amounts of cash in exchange for ownership of your business. It’s not free money, per se, because you lose equity and autonomy.

Giving up equity is almost always more expensive than small business loans in the long run. You’ll eventually pay off your loans, but equity costs a percentage of your company — and you don’t get it back (without a price).

Family and friends

Family and friends usually provide no-interest loans (or even free money) with loose terms and zero paperwork, but they don’t often have a lot to lend. Plus, mixing your business and personal life can get dicey quickly — sometimes, a little bit of interest is better than your rich uncle nagging you about your business.

Prepare to earn funding

Even if you want to borrow money from your ma and pa, they’re going to want to know how you plan to use the cash and how likely it is they’ll see that money again. Banks and alternative lenders will be even more stringent—they have a list of qualifications they look at to determine your creditworthiness.

Qualifying for financing for your restaurant isn’t a lottery. You just need to check a few of the right boxes. Follow these tips to increase your odds of scoring top-notch funding:

  • Build a Business Plan: You’ll need to explain what you’re going to do with your new-found capital and prove why your plan will work.
  • Keep Your Credit in Tip-Top Condition: Lenders want to know your creditworthy, and they determine that by looking at your personal and business credit score. Maintain good credit, and you’ll increase your odds of getting financing.
  • Pursue the Right Financing: Choose the right loan for the right project to increase your odds of getting financed.

There you have it. Now you have a good idea of what funding your restaurant or bar will need and how to get your hands on it. And how you can navigate financing through uncertain times like the coronavirus pandemic.