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Compare · 2026

Term Loan vs Line of Credit for Restaurants

A build-out or a buffer for slow weeks? Here's which fits a fast-moving restaurant.

$25K–$5Mfunding range
24 hrstypical funding
500+credit scores OK
Restaurantsany POS
No collateralfor working capital

See how much your restaurant qualifies for

$25K to $5M on any POS — approved on your revenue, funded in as little as 24 hours. Higher limits than processor-tied lenders.

  • ✓ 500+ credit
  • ✓ 6+ months open
  • ✓ $10K+/mo revenue
1-Minute Application

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🔒 Soft credit pull · will not affect your credit score

Short answer: A term loan suits a one-time restaurant investment — a remodel, a new location, a big equipment order — with fixed payments you can budget around. A line of credit is better for the day-to-day swings of a quick-service or cafe operation: cover a slow week, buy inventory, then reuse it as you repay. Many operators keep a line for cash flow and use term loans to expand.

Reviewed by the Toast Funding Funding Team · Updated July 2026

How funding works, step by step

From application to funding in four steps — most contractors complete it within a day.

1

Apply in 5 minutes

Complete a short online application. It uses a soft credit pull that does not affect your score.

2

We review your deposits

Approval is based on your last 3 months of business bank statements — not tax returns or the contract.

3

Get your offer

Review your amount and terms up front, with any fees disclosed before you accept. No obligation.

4

Get funded

Sign and receive funds by ACH, often within 24 hours of approval.

Term loan vs line of credit

How the two compare for a restaurant.

CriteriaTerm LoanLine of Credit
StructureLump sum, onceRevolving, reusable
Best forRemodel, new locationSlow weeks, inventory
PaymentsFixedOn what you draw
ReusableNoYes
Typical range$25K – $2M$10K – $500K

Why restaurants fund with us

  • Underwritten on your sales and deposits, not tax returns
  • FICO 500+ accepted; approval on revenue
  • Funds in as little as 24 hours
  • Repay as fixed amounts or a share of daily sales
  • Built for quick-service, cafes, and fast-casual
  • No obligation — a soft credit pull to see options

What you need to apply

  • US-based restaurant or food business
  • 6+ months in operation
  • ~$30,000+ in monthly revenue or card sales
  • Last 3 months of bank statements
  • Valid EIN and business bank account

Frequently asked questions

Which is better for a restaurant?
A line of credit fits the weekly swings of food service; a term loan is better for a one-time build-out or expansion.
Can I use a line of credit for payroll?
Yes — draw to cover payroll or inventory in a slow week and repay when sales pick back up.
How fast can a restaurant get funded?
Most restaurants fund within 24 hours of approval; smaller amounts can be same-day. The application takes about 5 minutes with a soft credit pull.
Can I qualify with bad credit?
Yes — FICO 500+ can qualify because approval leans on your sales and deposit history, not just credit score.
Is this a business loan or a cash advance?
Both are available. The right structure depends on your revenue, credit, and how you prefer to repay — fixed payments or a share of your deposits. We show you the options you qualify for before you commit.
What can I use the funds for?
Any legitimate business purpose — payroll, materials, equipment, mobilization, covering the gap between draws, or growth. There are no restrictions on how you deploy working capital.
Are there any upfront fees to apply?
No. Applying and getting a decision is free, and any fees are disclosed in your offer before you accept — so there are no surprises.

Sources & further reading

Figures on this page are typical 2026 industry ranges provided for general information; your actual terms are set at application.

See which fits your restaurant

Apply in 5 minutes with a soft credit pull.

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Comparisons reflect typical 2026 industry structures for general information and vary by lender and underwriting; your actual terms are set at application. Product and company names referenced are the property of their respective owners.

Get funded in 24 hours

Approved on your revenue, not just your credit. Start your 1-minute application.

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Why restaurants choose Toast Funding

Independent and POS-agnostic — a faster, higher-limit alternative to processor-tied offers. We are not Toast, Inc.

🍽️

Any POS, no lock-in

Toast, Square, Clover, Aloha, TouchBistro — keep or switch processors without losing your funding.

⚡

Funded in 24 hours

Decision in as little as 4 hours, money wired in 24–48. Same-day for clean files.

📊

Higher limits, approved on revenue

Up to $5M vs a processor cap. 500+ FICO accepted, underwritten on your deposits and sales.

Ready to get funded?

Approved on your deposits, not just your score. Funded in as little as 24 hours.

START MY 1-MINUTE APPLICATION →
Apply Now — Funded in 24 Hours →
Before you go

See how much your restaurant qualifies for

$25K–$5M · funded in 24 hours · 500+ credit OK. A soft credit pull that will not affect your score.

START MY 1-MINUTE APPLICATION →

No obligation · takes about a minute