SBA 7(a) for restaurants: the cheapest capital you can get, if you have the time.
Prepline Capital packages SBA 7(a) and SBA Express files for restaurants and hotels and places them with our SBA-preferred bank partners. $50,000 to $5,000,000, 10% down, up to 10 years on working capital and 25 years on real estate, with a 680 minimum FICO and 24 months in business. SBA Express closes in 10 to 21 days; a standard 7(a) in 30 to 45.
What are the criteria?
SBA 7(a) / SBA Express — criteria
- Amount
- $50,000 – $5,000,000 (SBA Express capped at $500,000)
- Term
- Up to 10 years working capital and equipment; up to 25 years on owner-occupied real estate
- Down payment
- 10% on an acquisition or a start-up with experience
- Minimum credit score
- 680
- Minimum time in business
- 24 months (start-ups considered with industry experience and a 20%+ injection)
- Documents
- 3 years business + personal tax returns, YTD P&L and balance sheet, debt schedule, SBA Form 1919/1920, business plan and projections for an acquisition, franchise agreement if applicable
- Collateral
- Available business assets; real estate pledged if the loan is real-estate-secured. Personal guarantee from all 20%+ owners.
- Uses allowed
- Working capital, equipment, leasehold improvements, business acquisition, partner buyout, refinance of qualifying business debt, owner-occupied real estate
- Uses not allowed
- Paying off a merchant cash advance is generally not an eligible refinance use. Ask us before you plan around it.
- Timeline
- SBA Express 10 – 21 days · Standard 7(a) 30 – 45 days
- Path
- Packaged by Prepline Capital, placed with SBA-preferred bank partners. Prepline does not underwrite SBA credit in-house.
SBA 7(a) and SBA Express are packaged by Prepline Capital and placed with SBA-preferred bank partners. See disclosures.
Do restaurants actually get approved for SBA loans?
Full-service restaurants (NAICS 722511) are one of the most SBA-financed industries in America.
| Metric | Value |
|---|---|
| Total SBA loans to full-service restaurants | 41,841 |
| Total volume | $20.2 billion |
| Average loan size | $483,000 (42% above the $340,000 SBA average) |
| Average term | 148 months |
| Historical average rate | 7.49% |
| Program split | 89% SBA 7(a), 11% SBA 504 |
| Charge-off rate, matured 2018–2021 cohort | 9.9% |
| All-industry SBA charge-off rate, same basis | 15.4% |
| SBA penetration of the industry | 16.26% |
Source: SBA 7(a)/504 loan-level disclosure data for NAICS 722511, as compiled by PeerSense.
Restaurants default on SBA debt at roughly two-thirds the all-industry rate. The idea that restaurants are uniquely bad credit is not supported by the lending data.
Is SBA actually right for you?
SBA is right if
You’re buying a restaurant or a second location, you have 680+ credit and two years of filed returns, you can put 10% down, and you can wait 30 to 45 days.
The payment on a 10-year SBA loan is a fraction of a 12-month advance for the same money.
SBA is wrong if
The hood died Friday, your landlord wants the arrears by the 1st, or your credit is in the 500s. That is what working capital exists for.
We will tell you this on the phone rather than let you spend three weeks assembling a package that was never going to close.
Franchise restaurants and the SBA Franchise Directory
Most national restaurant franchise brands are listed on the SBA Franchise Directory. That listing is what makes the franchise fee itself financeable inside an SBA 7(a) loan, alongside the build-out, the FF&E package and the opening working capital.
Tell us the brand before the file is built. Prepline checks the directory for the brand first, because the answer changes which product we start with and whether the franchise fee goes into the loan or comes out of your pocket.
Who funds an SBA loan at Prepline. SBA 7(a) and SBA Express files are packaged by Prepline Capital and placed with SBA-preferred bank partners. Prepline does not make SBA credit decisions and does not underwrite SBA credit in-house. The partner is identified to you in writing before you sign.
Working capital, lines of credit, equipment financing and factoring are underwritten and funded in-house. See disclosures.
What a restaurant needs to qualify.
Every number below is a real criterion. If you clear these, apply. If you don’t, call us and we’ll tell you what would change it.
| Minimum monthly revenue | $15,000 in business bank deposits |
|---|---|
| Minimum time in business | 6 months |
| Minimum credit score | None for working capital, equipment financing, or factoring. 600+ for a line of credit. 650+ for a term loan. 680+ for SBA. |
| Funding range | $10,000 to $2,000,000 for working capital and equipment. Up to $5,000,000 for term loans, SBA, and factoring facilities. |
| Time to a real offer | About 4 business hours on a complete file. |
| Time to funding | 24 hours. Same day if a clean file is signed before 11:00 AM ET. |
| Documents required | Application plus your 3 most recent months of business bank statements. 4 months if your business is seasonal. |
| Contract length | 2 pages. |
| Repayment | Fixed daily or weekly ACH from your operating account. No POS split funding. No holdback percentage. No lockbox. |
| Prepayment discount | Up to 30% off the remaining balance when a working capital advance is paid off within the first 30, 60, or 90 days. |
| Cash sales | Counted. We underwrite bank deposits, not card volume alone. |
| POS requirement | None. Toast, Square, Clover, Aloha, Micros, Lightspeed, SpotOn, or a cash drawer — it makes no difference to underwriting. |
| Hospitality types approved | Full-service and quick-service restaurants, pizzerias, bars, taverns, nightclubs, breweries and taprooms, coffee shops, bakeries, caterers, event and banquet venues, food trucks and mobile vendors, ghost kitchens, hotels, motels, B&Bs, hookah lounges, and franchise restaurant groups. |
| Not required | Collateral for working capital. A business plan. Tax returns under $500,000. A specific POS. A minimum number of locations. A liquor license — but we fund venues that hold one. |
| Open to | U.S. businesses with a U.S. business bank account. All 50 states. |
Four minutes. Three bank statements. No credit impact to apply.
SBA questions, answered.
Can I use an SBA loan to buy a restaurant?
Yes. Business acquisition is an eligible SBA 7(a) use, with 10% down on an acquisition. The loan can cover the purchase price, working capital for the transition, and the franchise fee where the brand is on the SBA Franchise Directory. Expect 30 to 45 days on a standard 7(a).
Can an SBA loan pay off a merchant cash advance?
Generally no. Paying off a merchant cash advance is usually not an eligible SBA refinance use. If you are carrying advances, the realistic consolidation path is a term loan. Ask us before you plan around it.
How much do I have to put down on an SBA restaurant loan?
10% on an acquisition or on a start-up where the owner has industry experience. Real-estate-secured loans and expansion files vary; the required injection is stated in the term sheet before you sign.
What credit score do I need for an SBA restaurant loan?
680. SBA is the highest credit bar of the six Prepline products. A line of credit needs 600+, a term loan 650+, and working capital, equipment financing and factoring have no minimum credit score at all.
How long does an SBA restaurant loan take?
SBA Express closes in 10 to 21 days. A standard SBA 7(a) takes 30 to 45 days. If you need money this week, that is what working capital exists for.
Does Prepline fund SBA loans directly?
No. Prepline Capital packages SBA files and places them with SBA-preferred bank partners, and does not make SBA credit decisions. Working capital, lines of credit, equipment financing and factoring are underwritten and funded in-house.
The cheapest restaurant capital, if the clock allows it.
$50,000 to $5,000,000, 10% down, 680+ FICO, 24 months in business. Apply once and we’ll tell you honestly whether SBA or something faster is the right file.