By Kitchens Finance Editorial · Published June 18, 2026
Restaurant Acquisition Loan: Buying an Existing Restaurant
How a restaurant acquisition loan works when buying an existing restaurant: typical rates, terms, down payment, SBA options, and how to qualify in 2026.
A restaurant acquisition loan is financing used to buy an existing restaurant, most often a 10-year SBA 7(a) loan up to $5 million with as little as 10% down. Lenders underwrite the target's historical cash flow plus your experience, value the business at roughly 1.5x-3x of earnings, and commonly blend bank debt with seller financing.
Buying an established restaurant is a fundamentally different financing problem than opening one. A startup is a forecast; an acquisition has books, a customer base, an existing lease, and equipment already installed. That operating history is exactly what makes acquisitions financeable—lenders can underwrite real numbers instead of a pro forma. The catch is that restaurants carry thin margins and a reputation for failure, so the structure of your deal matters as much as the rate.
What is a restaurant acquisition loan?
It's a business loan whose proceeds go toward purchasing an existing restaurant—the goodwill, the equipment, the leasehold improvements, the inventory, and sometimes the real estate. Unlike equipment financing, which buys a single asset, an acquisition loan funds the whole operating business as a going concern.
Three sources usually combine in one deal:
- SBA 7(a) loan — the workhorse for restaurant acquisitions under $5 million. Government-guaranteed, long terms, low down payment.
- Conventional bank or term loan — faster and less paperwork, but higher equity requirements and shorter terms.
- Seller financing — the seller carries a note for part of the price, which signals confidence and can count toward your SBA equity injection.
Why acquisitions beat startups for financing
A restaurant with two-plus years of tax returns and steady sales is far easier to fund than a build-out. The seller's cash flow becomes the lender's repayment evidence, which is why SBA 7(a) approval rates on acquisitions outperform ground-up restaurant startups.
What rates and terms should I expect in 2026?
Pricing depends on the loan type, your credit, your industry experience, and the target's cash flow. SBA 7(a) rates are tied to the prime rate plus a lender spread the SBA caps. The ranges below are typical for restaurant acquisition deals—your actual offer will vary by lender.
| Source | Loan size | Term | Down payment | Est. APR |
|---|---|---|---|---|
| SBA 7(a) | $150K-$5M | 10 yrs (no real estate) | 10% minimum | 10.5%-14% |
| SBA 7(a) w/ real estate | Up to $5M | Up to 25 yrs | 10%-15% | 10.5%-13.5% |
| Conventional term loan | $100K-$2M | 3-7 yrs | 20%-30% | 9%-18% |
| Seller financing | 10%-50% of price | 3-7 yrs | Negotiated | 6%-10% |
The longer SBA term is the quiet advantage: stretching repayment to 10 years keeps the monthly payment low enough for the acquired restaurant's own cash flow to service the debt. Run your target's numbers through the payment calculator before you sign a letter of intent.
Estimate your monthly payment
A representative estimate at 10.5%–14% APR. Actual rates and terms vary by business and product.
How much down payment and what does it cover?
The SBA requires a minimum 10% equity injection on a business acquisition. Up to half of that 10% can come from a seller note on full standby (no payments for at least the first two years), so a motivated seller can effectively cut your cash out of pocket to 5%. SBA sets these guidelines and individual lenders add overlays—many want the full 10% in verifiable cash, especially for a first-time owner.
Loan proceeds typically cover:
Goodwill and going-concern value
The premium above hard assets—the brand, recipes, trained staff, and existing customers. This is usually the largest piece of an acquisition price and is exactly what conventional lenders are nervous to fund but SBA will.
Furniture, fixtures, and equipment (FF&E)
The hoods, walk-ins, ranges, and POS already in place. A third-party valuation separates this from goodwill.
Leasehold and working capital
Assignment of the existing lease plus a cushion for payroll, inventory, and the transition. Padding working capital into the loan is smart—new ownership always hits surprises.
SBA vs. conventional: which fits buying a restaurant?
Pros
- SBA 7(a): 10% down vs. 20-30% conventional
- SBA terms run 10 years, easing monthly cash flow
- SBA funds goodwill that banks shy away from
- Conventional closes faster—weeks, not 2-3 months
Cons
- SBA paperwork is heavy: appraisal, business valuation, personal guarantee, lien on assets
- SBA requires a personal guarantee from anyone owning 20%+
- Conventional demands far more cash down and shorter payback
- Both require strong personal credit (usually 680+) and relevant experience
Use seller financing as a bridge
A seller note that sits behind the bank loan does two things: it lowers your cash injection and keeps the seller financially invested in a smooth handoff. Buyers who structure 10-20% as a standby seller note often clear SBA underwriting more easily than all-cash-down buyers.
How do I qualify for a restaurant acquisition loan?
Lenders underwrite both you and the target. Have these ready before you approach a lender:
- The target's financials — 3 years of business tax returns, P&Ls, and bank statements. Clean books with reported cash sales are critical; under-reported income kills financeability.
- Your background — personal credit (680+ is the comfortable zone), restaurant or management experience, and a resume that explains why you can run this kitchen.
- A debt-service-coverage story — lenders want the restaurant's cash flow to cover the new loan payment by roughly 1.15x-1.25x after a market-rate owner's salary.
- Your equity injection — sourced and seasoned cash, documented.
Watch the valuation gap
If the seller's asking price exceeds the appraised value, the SBA will only lend against the appraisal. The difference becomes a gap you must fill with extra cash or a seller note. Order or insist on a business valuation early so you don't lose your deposit chasing an over-priced listing.
What about ongoing cash needs after closing?
Acquisition debt covers the purchase, not the months of turbulence that follow a change of ownership—vendor terms reset, some regulars test the new operator, and you may want to refresh the menu. Many owners pair the term loan with a business line of credit for flexible, revolving access to cash so a slow week never threatens payroll. Set it up while your financials are fresh from the acquisition underwriting.
The bottom line
For most buyers, an SBA 7(a) loan with 10% down, a 10-year term, and a standby seller note is the cleanest way to buy an existing restaurant. Underwrite the target's real cash flow, mind the valuation gap, and pad in working capital so day one of ownership isn't a scramble.
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