How we can help
Acquisitions are usually financed with SBA loans. If you already own a restaurant and are buying another, we may be able to fund equipment or improvements at the new location.
Check if my restaurant qualifies →Key takeaways
- Most restaurant purchases are financed with an SBA 7(a) loan, buyer cash, and often a seller note.
- Lenders value the restaurant on documented cash flow, so unreported cash doesn't count.
- The lease is critical. If it can't be assigned or is too short, the deal (and the loan) can fall apart.
Market overview
- Typical structure
- SBA 7(a) + buyer cash + optional seller note
- Down payment
- Often 10%–20%
- Terms
- 10 yrs (business); up to 25 with real estate
- Time to close
- Typically 60–120 days
Typical market ranges, not offers.
How restaurant purchases are financed
| Source | Typical share | Notes |
|---|---|---|
| SBA 7(a) loan | 70%–90% | Can finance goodwill, equipment, inventory, and working capital |
| Buyer cash | 10%–20% | Must be documented; gifts and some home equity can qualify |
| Seller financing (owner financing) | 0%–20% | A note the seller carries; part may count toward SBA equity if on full standby |
What lenders and smart buyers verify
- Three years of tax returns plus year-to-date P&L that reconcile to bank deposits
- POS sales reports by month and daypart
- Prime cost (food + labor) as a percentage of sales
- The lease: remaining term, renewal options, rent increases, and whether it can be assigned to you
- Equipment age and condition, especially refrigeration, hood, and HVAC
- Health inspection history and any open violations
- Liquor license status and whether it transfers or must be reissued
- Staff: key employees, wages, and whether the chef or GM is staying
The “real cash” problem
Sellers sometimes say the restaurant makes more than the tax returns show. Lenders can only finance reported income, so base your offer on documented numbers, and don't pay for cash you can't verify.
Illustrative example: Buying a neighborhood restaurant
A buyer purchases an established restaurant for $450,000 including equipment, goodwill, and a modest working capital cushion. With 10% down, the SBA 7(a) loan is about $405,000. Over 10 years at an assumed 10.5%, the payment is roughly $5,465/month. The lender wants the restaurant's documented cash flow, after paying the new owner a fair salary, to cover that by about 1.25x.
Hypothetical scenario for illustration. Numbers are rounded and are not a quote or offer.
Owner (seller) financing
Many restaurant sellers carry part of the price as a note. It lowers the cash you need, keeps the seller invested in a smooth handoff, and is common for smaller restaurants that banks won't finance in full. Pair it with a training period and a non-compete.
Already own a restaurant?
If you're buying a second location, your current restaurant's cash flow can strengthen the application, and it may qualify for fast funding for equipment or improvements at the new spot.
Frequently asked questions
How do I get a loan to buy a restaurant?
Will a seller finance a restaurant sale?
How much down payment do I need to buy a restaurant?
Sources
We cite primary sources: federal agencies, regulations, and official program rules. Rules vary by state and change over time.
General education, not legal, tax, or financial advice. Loan programs, licensing rules, and lender requirements change and vary by state. Disclosures.