The pressure to stay competitive is showing up in the numbers. According to Restaurant Owner, the median cost to open a restaurant is $375,500, with ranges running from roughly $175,500 to over $750,500 depending on concept and location. Research from Cornell, cited by Escoffier, points to a three-year failure rate of roughly 60% tied to undercapitalization.
Funding rarely comes from a single source. This guide breaks down 9 proven ways to get financing for your restaurant, what each option involves, and how to put yourself in the best position to get approved. Most successful operators combine three types of capital: equity from investors, business loans, and government grants or creative funding initiatives. Here's how to think through all three.
How Much Does It Cost to Open or Expand a Restaurant?
Before seeking financing, you need a clear picture of what the funds need to cover. Startup and expansion costs vary widely depending on your concept, location, and the condition of the space you're moving into.
Average startup costs by restaurant type
Costs shift significantly based on restaurant format. Ghost kitchens, which operate delivery-only with no dining room, can launch for as little as $10,000, depending on the market and setup. Further estimates from the same RestaurantOwner study place small brick-and-mortar restaurants between $50,000 and $500,000. Full-service concepts in major metros tend to sit at the higher end of that range.
Cost breakdown: equipment, lease, staffing, and working capital
Major spending categories include kitchen equipment, lease costs, staffing and working capital, along with licenses and permits, and opening inventory.
Lease costs alone can shape your entire financing strategy. The median monthly lease cost for restaurants runs around $5,000, though that figure varies widely by city and neighborhood. Working capital, the cash you need to cover operations before revenue stabilizes, is one of the most commonly underestimated line items and one of the most important to fund before you open your doors.
9 Ways to Get Funding for Your Restaurant
Most operators build their financing from a mix of personal, investor, and lender capital. Here's how each option works and who it suits best.
Self-funding
Self-funding means using personal savings, assets, or retirement accounts to cover some or all of your startup costs, with no applications, no equity given up, and no lender to answer to. The risk can be substantial: depleting personal reserves leaves little room for error if revenue takes longer than expected to stabilize. Use personal funds to demonstrate commitment to lenders or investors, not as your only source.
Raising Capital from Investors
Local angel investors and hospitality-focused groups often prefer convertible debt structures, which makes understanding the terms especially important before you sign.
Convertible debt starts as a loan and converts to ownership at a later date, typically when a larger funding round closes. The upside is no fixed repayment schedule and shared risk; the trade-off is diluted ownership and pressure to grow on someone else's timeline.
Read every convertible debt agreement carefully before you sign. Clarify three things:
When the debt converts to ownership
What valuation applies at that moment
What rights the investor receives once they have a stake.
Together, they determine how much of your business you’re giving away, and how much you’re controlling. Any deal should be formalized in a written agreement reviewed by a lawyer. Equity and convertible debt arrangements are complex — consult a financial advisor or accountant before agreeing to terms, as the long-term impact on your ownership and cash flow can be significant.
Please note: It’s highly recommended to consult with an experienced financial advisor before and during the investment process.
Community investors
Community investors include local angel investors, hospitality-focused investment groups, and community development funds. Networks like SCORE and local Small Business Development Centers are good starting points for finding them.
Friends and family
Friends and family funding is relationship-driven and often comes with flexible terms, but it carries real personal risk if the business struggles. Always put the arrangement in writing, including repayment terms or equity stakes.
SBA Loans
The Small Business Administration backs two loan types that work well for restaurants: SBA 7(a), which offers up to $5 million with flexible use of funds, and SBA 504, a fixed-rate option designed for real estate and major equipment that typically requires around 10 percent down.
Both suit operators with credit scores in the mid-600s or higher, and because the SBA guarantees a portion of the loan, participating lenders can offer terms that are harder to find through conventional financing.
Traditional Bank Loans
Traditional bank loans typically range from around $50,000 to $500,000 or more, with fixed or variable rates, and most banks require at least two years in business and a personal credit score of 680 or higher. This option suits established operators with a documented track record of revenue and profitability.
Online Lenders and Alternative Financing
Online lenders offer faster decisions than traditional banks, often within 24 to 72 hours, with underwriting that increasingly weighs digital sales data alongside traditional financial documents. The trade-off is higher interest rates and shorter repayment terms.
For restaurants already selling on DoorDash Marketplace, DoorDash Capital offers pre-approved merchant cash advances based on Marketplace performance, repaid as a percentage of ongoing sales rather than on a fixed monthly schedule.
Restaurant Grants
Grants from federal, state, local, and identity-based programs provide funding that does not require repayment and doesn’t dilute ownership, but they are competitive and best used as a supplement to other capital.
A few specific programs and databases to know:
Hello Alice: A free platform that aggregates small business grants, including food and restaurant-specific opportunities, with filters by business type and owner identity
NRAEF (National Restaurant Association Educational Foundation): Offers grants and scholarships for restaurant operators and foodservice professionals
SBA.gov: Lists federal grant programs and links to state-specific small business resources
Grants.gov: The federal government's central database for all federally funded grant opportunities
Your state's small business development office: Many states run identity-specific grant programs for minority-owned, women-owned, and veteran-owned businesses that are not listed on federal databases
Eligibility requirements vary widely by program, so check each directly for current funding cycles and application deadlines.
Crowdfunding
Crowdfunding lets you raise capital directly from your community, either through reward-based platforms or equity crowdfunding, where supporters receive a small ownership stake. Restaurants with a clear concept and a local following tend to perform best, and a strong campaign works as a community-building effort alongside a financing strategy.
Start Small and Build a Track Record
Food trucks, pop-ups, and ghost kitchens give operators a lower-cost way to enter the market and generate real revenue history before pursuing larger capital. That operational history becomes a concrete asset when you're ready to apply for a loan or pitch investors on expansion.
9. Leverage Your Online Sales Data
Lenders are increasingly willing to accept digital sales records as proof of revenue, particularly for newer businesses without years of traditional financial statements. When applying for funding, pull sales reports directly from your ordering platform and present them alongside your tax returns, bank statements, and profit and loss statements.
What lenders look for in digital revenue records is the same thing they look for in traditional documents: consistent volume, stable or growing revenue trends, and predictable cash flow over time.
A strong three to six months of documented online sales can possibly push your application forward, especially when traditional financial history is limited.
Selling on DoorDash Marketplace generates a documented record of online sales that operators can present as part of a funding application. For eligible merchants, that same sales history may unlock pre-approved DoorDash Capital merchant cash advance offers in the Merchant Portal.
What Restaurant Business Loans Are Available?
Restaurant financing comes in a few common structures, each with different trade-offs. Here's a quick-reference overview of what each covers and which operators it suits best.
Term loans
A term loan provides a lump sum repaid over a fixed period, best suited to large one-time investments like a full buildout or major equipment purchase, where the cost and timeline are predictable.
SBA loans
SBA loans are issued by approved banks and lenders, with a portion guaranteed by the Small Business Administration, which allows lenders to offer lower rates and longer repayment terms than most conventional options. They suit operators with strong credit who want more favorable terms than a standard bank loan typically offers.
Business lines of credit
A business line of credit is a revolving facility where you draw funds as needed and pay interest only on what you use. It suits restaurants managing seasonal cash flow gaps or covering operating costs during slower periods.
Equipment financing
Equipment financing covers the purchase or lease of kitchen gear and major equipment, with the equipment itself serving as collateral. With a loan, you own the equipment at the end of the term; with a lease, you return or replace it. It suits operators upgrading a kitchen or outfitting a new space without tying up working capital.
Merchant cash advances
A merchant cash advance provides upfront capital repaid automatically as a percentage of future card sales. The cost is typically higher than a traditional loan, but the structure suits restaurants that need quick capital with repayment that scales with revenue. You may be eligible to get funding with DoorDash Capital through merchant cash advances, with pre-approved offers visible in the Merchant Portal.
Can You Start a Restaurant Without Funding?
Starting a restaurant with minimal outside capital is possible, but it requires a realistic format choice and patience. This path usually means starting smaller and growing over time, not opening a full-service space on day one. The lower the overhead, the more viable the path.
Start with a ghost kitchen or virtual restaurant
Ghost kitchens operate delivery-only with no dining room, no front-of-house staff, and no retail lease. Industry estimates put startup costs as low as around $10,000, depending on the market and setup, though costs vary based on location and equipment needs. DoorDash Marketplace can serve as a key discovery channel for ghost kitchens and virtual restaurants, connecting them to customers without requiring a physical storefront.
Begin as a home or pop-up restaurant
Home and pop-up restaurants let you build a following and generate early revenue before committing to a permanent space. Before launching, check your local cottage food laws carefully, as regulations vary widely by state and municipality, and some jurisdictions prohibit home-based food businesses entirely.
Bootstrap by starting small and reinvesting revenue
Bootstrapping means funding growth entirely from the revenue your business generates, with no debt taken on and no equity given up. The path is slower and works best for lower-cost formats like food trucks, pop-ups and ghost kitchens. For higher-overhead concepts like full-service restaurants, some level of external funding is typically necessary to cover buildout, staffing, and working capital before revenue stabilizes.
How to Choose the Right Funding for Your Restaurant
The right restaurant funding mix depends on your stage, your credit profile, and how much ownership you're willing to share. The table below maps each option to the operators it suits best.
Funding Type | Best For | Key Watch-out |
|---|---|---|
Self-funding | First-time operators with personal savings | Depletes personal reserves |
Investor capital | Concepts willing to share ownership in exchange for capital | Dilution and loss of control |
SBA loans | Operators with credit scores in the mid-600s or higher and a solid plan | Longer approval timelines |
Traditional bank loans | Established restaurants with 2+ years of revenue | High credit and documentation bar |
Online lenders | Operators needing fast capital | Higher rates and shorter terms |
DoorDash Capital | Eligible Marketplace merchants | Merchant cash advances, not loans, and typically higher cost than traditional financing |
Grants | Operators who qualify by identity or location | Competitive and time-consuming |
Crowdfunding | Community-driven concepts with a local following | Requires strong storytelling and marketing effort |
Starting small | First-time operators testing demand | Slower path to scale |
Online sales data | Newer businesses building a revenue record to support future funding applications | Requires consistent sales volume |
Most successful operators combine two or three of these financing options rather than relying on one. Before applying for anything, know your credit score and have at least three to six months of bank statements ready. Those two steps alone can help you quickly rule out options you are unlikely to qualify for and focus your applications where they are most likely to succeed.
How to Prepare Before You Apply for Restaurant Funding
The application process begins before you ever fill out a form, and requires you to have the right documents, credit profile, and business narrative already in place.
Build a strong business plan
Lenders and investors want to see more than a restaurant concept. They want evidence of market demand, a clear operational plan, and realistic financial projections that show a credible path to profitability.
A well-built business plan helps you pressure-test your assumptions before someone else does. If you haven't started one yet, resources on creating a restaurant website and restaurant marketing strategies can help you build the supporting materials lenders expect to see alongside your financials.
Establish or improve your credit profile
Personal and business credit are evaluated separately, and both can affect your application. Many SBA 7(a) lenders typically look for a personal credit score of around 600 to 650 or higher. Traditional banks typically require 680 or above. If your score falls short, focus on these three steps before you apply:
Pay down existing debt where possible
Correct any errors on your credit report
Avoid new hard inquiries from unrelated credit applications
Prepare your financial documents
Lenders typically ask for up to two or three years of tax returns, recent bank statements, a profit and loss statement, and a balance sheet. Newer operators without a full financial history can supplement traditional records with digital sales reports from ordering platforms, which can strengthen restaurant funding applications for newer concepts where traditional documentation is limited.
How to Improve Your Chances of Getting Approved
Preparing the right documents is only part of the equation. Lenders and investors also look at your experience, your revenue consistency, and how much skin you have in the game, because each factor reduces their perception of risk.
Highlight industry experience
Lenders favor applicants with direct foodservice experience because it signals lower operational risk. If you're entering the industry without that background, consider partnering with someone who has hands-on experience in restaurant operations.
Demonstrate consistent sales and cash flow
Steady monthly revenue is one of the strongest signals you can send to a lender. Operators with documented, consistent order volume are better positioned to qualify for a wide range of funding options.
Action item: If you sell on DoorDash Marketplace, export your sales reports directly from the Merchant Portal. These reports show consistent order volume and revenue over time, and lenders will accept them as supplemental documentation alongside your bank statements and tax returns — giving you a concrete way to demonstrate cash flow stability beyond traditional financial records.
Offer collateral or a personal guarantee
Most lenders require some form of collateral or a personal guarantee, particularly for newer businesses without an established track record. For SBA loans, equity requirements typically run about 10–20% for established restaurants and 20–30% for startups. Understanding what you can offer as security before you apply helps you approach the right lenders with realistic expectations.
Action item: Before you apply, make a list of what you can offer: equipment, real estate, inventory or a personal guarantee, so you're not caught off guard when a lender asks.
Know your credit score before you apply
Applying without knowing your credit score risks wasting time on lenders you are unlikely to qualify for. It can also trigger unnecessary hard inquiries that lower your score before you reach the right application. Match your score to the lender's typical requirements before you submit anything, and hold off where you fall short of the threshold.
Action item: You can check your personal credit score for free through sites like AnnualCreditReport.com without triggering a hard inquiry.
Ready to Start Building Revenue?
Lenders want to see sales before they commit capital. One of the most concrete steps you can take before applying for restaurant funding is building a documented record of consistent order volume. DoorDash Marketplace gives restaurants a way to reach new customers, generate online sales, and create the kind of revenue history that supports funding applications.
As your Marketplace sales grow, eligible merchants may see pre-approved DoorDash Capital merchant cash advance offers appear directly in the Merchant Portal, with repayment that scales with your sales rather than following a fixed monthly schedule.
