Your Guide to Financing for Restaurants in 2024

Guide to financing a restaurant 2023

So, you’re ready to open a restaurant? 

Congratulations! And good luck!

Whether you’re buying a restaurant or starting one from scratch, you’re going to need money to get started. 

And we make this differentiation because your financing options are going to look very different depending on whether you are buying a restaurant or opening one. 

In today’s blog, we’re going to look at the differences between acquiring a restaurant and starting one and give you our advice for financing your restaurant in 2024. 

Let’s dive in!

Restaurant Financing: Buying a Restaurant

When it comes to buying a restaurant, you can expect to pay 3-5X EBITDA for the purchase price. 

With 3X being a typical restaurant and 5X for highly profitable, multi-unit establishments. 

The bank/SBA will typically loan you 80% or less of the purchase price, meaning you will need to have cash or a seller loan (from the people selling the business). 

So, what do you need to do to obtain the necessary debt for the purchase?

There are a few things that a bank will consider when financing your restaurant acquisition.

Here are a few questions the bank will ask when lending money for a restaurant acquisition:

  • How is the cash flow? The restaurant you’re acquiring needs to have healthy cash flow management.
  • What trajectory are sales going? The financial books should show that it’s trending in the right direction
    • If the restaurant spikes up or down or is in a decline, your bank is going to question it.
  • Who is going to run the business? What is your experience in running a restaurant? The bank is investing in you so you need to be someone who has the expertise to run the business.
  • What assets do you have, personally? Every bank is different and will have different ratios that they have to meet. One thing that every bank will require is collateral, which includes personal guarantees on the loan. In other words, the more equity you have in your house, the better. The more assets you have, the easier it is to pass through a credit committee for financing. 
  • What is your personal credit score? The bank is going to take a look at your personal credit score, and anything under 700 is going to cause issues.
  • What personal debt do you have? How is your personal cash flow?  You could have a good credit score but if you have large debt in student loans, your house, etc. —- the bank will look at the income from the restaurant and if it can’t support your personal loans, they won’t do the deal.


As for other funds aside from financing, when you purchase an existing restaurant, you are acquiring a business that is already operating successfully and bringing in customers and generating sales. So, a stash of working capital reserves are not the priority since you will be generating cash flow right away. 

The food is there, the employees are there, and there are sales the moment you take over so you really only need one month of working capital at a minimum—although it’s always good to have more to cover unexpected issue like repairs for broken equipment.

Restaurant Financing: Opening a Restaurant

Now, let’s look at the financing you’ll need when starting a restaurant from scratch. It will look quite different from the financing you need for acquisition. 

The most notable difference is the working capital you’ll need. There are a lot of unforeseen costs that you need to calculate when determining how much money is required to start your own restaurant. 

Here are a few of the costs to consider: 

  • Fixed costs prior to opening. With a new restaurant, you are going to have to pay bills long before sales start coming in the door. Rent, employees, chefs, and electricity will all add up quickly before you even make your first $1. 
  • Testing of recipes & pre-opening tests. When opening up a restaurant from the very beginning, you’ll need to do a lot of testing. This means that you will be paying chefs to create recipes, spending money on food costs to try the recipes, spend money on drinks to test the drinks, without actually making any money. You’ll need to spend a lot of money before you open and collect sales.
  • Equipment. Equipment is expensive, and opening a restaurant from scratch means you’ll need to fund all of it yourself from the very beginning. 
  • Improvements to an existing space or build: Improvements to an existing space or building can be costly when striving to create the restaurant as envisioned.


Considering all the upfront costs you’re responsible for, along with the lack of incoming sales, your working capital needs will be much, much more than if you were acquiring a restaurant. 

You should have sufficient funds to cover payroll and inventory costs for the initial slow months after opening. We recommend having at least 3 months’ worth of expenses covered, at a minimum

Finally, when it comes to funding the opening of their own restaurant, many restaurant owners choose to self-fund. 

This is simply due to the fact that a bank is not likely to give you a loan for an unproven restaurant or business model. 

We’ve seen a bank lend money to open a second location from scratch, but rarely for a restaurant owner’s first gig, unless their risk is small because you are putting in larger amounts of equity.

So, whether you come up with the money yourself or look for investors, you will need to raise the money somehow. 

What we see many restaurant owners do is pay out of pocket for the building and fit out (you can also get assistance from the landlord to help with these costs), and get a bank loan for the equipment, since the equipment has collateral value to the bank. If your restaurant fails, they can still sell the equipment. 

If you’d like to learn more about your financial options before opening your restaurant, we strongly recommend getting in touch with an experienced restaurant accountant

We’ve saved restaurant owners tens of thousands of dollars simply by lending our expertise in terms of leasing, financing, and other important decisions.

financing for restaurants 2023

Need Help With Your Restaurant Financing?

Are you considering opening a restaurant, acquiring a restaurant, or opening a second location and needing a second opinion? 

At U-Nique Accounting, that’s our job! It’s what we’re here for. 

We help restaurant owners review their finances and evaluate their opportunities for success. 

If you’d like to see how we can help, you can book a complimentary first call anytime. 

Simply use this quick form or our calendar below to get started. 

Until next time! 

Matt C


Enter Your Email To Download