SBA loans for sit-down restaurants

What lenders check

Each lender sets its own checklist. SBA sets the basic eligibility tests.

A lender reviewing a loan to sit-down restaurants looks at the business's numbers and these items for the trade:

• Food and labor costs against sales, taken from the point-of-sale system and tax returns, and how the owner tracks them each week
• A lease that covers the loan term with renewal options, since the kitchen build-out and hood stay with the landlord if the restaurant closes
• Depth of restaurant management experience, which lenders must address in their credit write-up, especially for a first sit-down concept

Common uses of the money

Businesses like these use SBA loans for:

• Kitchen hood and ventilation, ranges, walk-in cooler and dish station
• Dining room remodel, patio or bar expansion
• Buying an existing restaurant with its lease and liquor license, or opening a second location

Collateral

Kitchen equipment, furniture and leasehold improvements resell for little, so lenders often add a lien on the owners' real estate.

How much they borrow

70% of these loans were $500,000 or less, the range where SBA Express is available.

The median loan was $250,500, larger than the $150,300 median for all SBA 7(a) loans. Half of the loans fell between $80,000 and $641,200. The most common size band was $50,000 or less.

By business age, 47% had operated for more than 2 years and 16.5% for 2 years or less. 23% were startups opening with the loan, and 13% paid for a change of ownership.

How the money comes

29% of the loans went through SBA Express and 19% were lines of credit. The median term was 10 years.

Across all industries, 36% of loans went through SBA Express and 28% were lines of credit. Express counts here include Export Express.

The median term was 10 years (120 months). For working capital, SBA's maximum term is 10 years. For equipment, it is 10 years, or up to 15 years if the IRS asset class useful life supports it. Source: SOP 50 10 8.1: App. 17, Para. A.1 (p. 390); App. 17, Para. A.2 (p. 390).

Where the loans are

California had the most loans, 997 of 7,484 (13%).

Location is the state of the business, not of the lender.

These states have their own page for this industry, with at least 50 loans from October 1, 2019 to June 30, 2026.

• Ohio790 loans
• Michigan584 loans
• Georgia580 loans
• Pennsylvania546 loans
• Washington543 loans
• Massachusetts424 loans
• North Carolina364 loans
• Wisconsin296 loans
• Missouri264 loans
• Virginia263 loans
• Maryland244 loans
• Arizona217 loans
• Oregon203 loans
• Connecticut193 loans
• South Carolina187 loans
• Puerto Rico177 loans
• Nevada165 loans
• Tennessee165 loans
• Iowa139 loans
• New Hampshire132 loans
• Oklahoma123 loans
• Kentucky117 loans
• Alabama115 loans
• Maine99 loans

Compare every state on SBA loans by state.

How often these loans went bad

3.6% of 5,270 seasoned loans were charged off, close to the 3.6% rate for all SBA 7(a) loans.

191 of the 5,270 loans approved October 1, 2019 to September 30, 2022 were charged offcharged offThe lender wrote the loan off as a loss because it was not being repaid. by June 30, 2026. By dollars, 0.9% of the approved amount was charged off.

SBA size standard

NAICS 722511 has its own size standard.

For NAICS 722511, SBA's size standard is $11.5 million in average annual receipts. A business at or under the standard is small for SBA's purposes. To qualify, a business must fit the size standard for the applicant's primary industry in 13 CFR 121.201, measured in annual receipts or employees. SBA measures size on the date the application is accepted for SBA processing, or for delegated loans the date the lender approves the loan.

A business over the standard can still qualify under the alternative standard: tangible net worth of $20 million or less and average net income after federal income taxes of $6.5 million or less over the prior two fiscal years. Source: SOP 50 10 8.1: Sec. A, Ch. 1, Para. D.1 (p. 14); Sec. A, Ch. 1, Para. D.2 (p. 14); 13 CFR § 121.301(b)(2).