An SBA loan is a regular bank loan that the U.S. Small Business Administration partially guarantees, which lowers the lender’s risk and makes financing easier to get for a business as risky as a restaurant. The SBA does not hand you the money — a bank, credit union, or non-bank lender does, following SBA rules. The two programs restaurants use most are the 7(a) and the 504.
The 7(a) is the flexible workhorse: one loan (up to $5 million) that can cover almost anything — buying an existing restaurant, working capital, equipment, leasehold build-out, even refinancing debt. The 504 is narrower: long-term, fixed-rate money for major fixed assets, mainly commercial real estate and heavy equipment. It comes in two pieces — a bank loan plus a loan from a nonprofit Certified Development Company (CDC) — and usually carries a below-market fixed rate. If you are buying the building, compare both. If you are buying a business or need working capital, the 7(a) is almost always the fit.
| SBA 7(a) | SBA 504 | |
|---|---|---|
| Best for | Acquisition, working capital, equipment, build-out, refi | Real estate & heavy fixed equipment |
| Max amount | Up to $5 million | Up to $5–5.5 million (CDC portion) |
| Rate type | Often variable, tied to prime | Long-term fixed, typically below market |
| Down payment | ~10–20% (acquisitions) | ~10% (real estate) |
| Structure | One lender | Bank + CDC + your equity |
| Term | Up to 10 yrs (25 for real estate) | 10, 20, or 25 years |
SBA money can cover the things a restaurant genuinely needs: equipment, furniture, POS systems, a build-out, opening inventory, franchise fees, and reasonable working capital. It generally will not fund things like paying yourself a large owner distribution, speculative real estate unrelated to the business, or refinancing debt on unfavorable terms. Startups can qualify, but lenders lean heavily on your credit, industry experience, and a credible business plan. For gear specifically, weigh SBA financing against dedicated equipment financing and the Section 179 deduction, and consider stretching your budget with used equipment.
Expect to put in real equity — commonly around 10% for 504 real estate and roughly 10–20% for a 7(a) business acquisition. “No money down” SBA deals are rare and usually involve seller financing or existing equity. On timing, a 7(a) through an experienced “preferred” lender often closes in about 45–60 days; a 504 can run 60–90 days because of the CDC and bank coordination. Start early, and have clean books, tax returns, and a written plan ready. To size the total capital you need first, run our cost-to-open calculator and read how much it costs to open a restaurant. Also compare the full menu of choices in our restaurant financing options overview.
This guide is general education, not financial, tax, or legal advice. Loan terms, rates, and insurance requirements change and vary by lender, state, and your business profile — confirm specifics with a licensed lender, agent, or accountant before you commit.