Business Line of Credit for Restaurants
A business line of credit gives a restaurant a set limit it can draw on when it needs to and repay as sales come in, with cost only on what's drawn. It's the cheapest way to cover food orders, payroll timing and slow weeks, but it's harder to qualify for than an advance and needs steadier books.
What a line of credit covers well at a restaurant
Timing gaps
Payroll every other Friday, a big produce order on Monday and card batches that settle a day late all create short gaps. A draw on Thursday that's repaid by the next week keeps the cost small.
A slow season you can see coming
If January is always thin after the holidays, a line that's already open lets you draw for rent and payroll that month and repay through spring, instead of taking a new advance each time.
What a line isn't for
A line is short-term money. A walk-in cooler or a hood system is better paid with equipment financing, and a build-out needs longer-term funding. Using the line for them leaves nothing for the next slow week.
Covering a slow month with the line
A restaurant banking $90,000 a month holds a $40,000 limit priced at 1.5% monthly. A slow month needs $18,900, repaid over three months.
| Step | Balance on the line | Cost that month at 1.5% |
|---|---|---|
| Draw in the slow month | $18,900 | $283.50 |
| After one repayment | $12,600 | $189 |
| After two repayments | $6,300 | $94.50 |
| Paid back | $0 | $0 |
All in, about $570, and the limit reopens once it's repaid. BLS headcount for restaurants and other eating places (NAICS 7225) moves just 5.4 points over the year, so use your own thinnest month here.
What funders want for a restaurant line
- Time in business, usually more than for an advance.
- Steady deposits with few negative days and no heavy stack of daily debits.
- Clean books, often including a profit and loss statement or tax return.
- A credit score that meets the funder's floor.
Funders set the limit from your deposits and history, so a new restaurant usually starts with a small line and grows it.
Keeping the line healthy
Draw only what the gap needs, repay it as soon as sales allow and keep a record of each draw. A line that's always maxed out looks the same to a funder as a stack of advances, and it gets reduced or closed at the next review.
Quick answers
Can a restaurant get a business line of credit?
Yes, but it asks more of the file than an advance. Funders usually want more time in business, steady deposits with few overdrafts, a credit score above their floor and clean books. A restaurant with a heavy stack of daily debits usually needs to pay some down first.
Is a line of credit cheaper than an MCA for a restaurant?
Usually, yes. You pay only on what you draw, and only for as long as it's out. An advance charges a fixed cost on the full amount no matter how fast you repay. The catch is qualifying: lines need a stronger file, so many restaurants use an advance until they qualify.
What should a restaurant use a line of credit for?
Short gaps that repay themselves: payroll before weekend sales settle, a large food order, a slow month you plan for. Big purchases like kitchen equipment or a remodel fit other funding better. Keeping the line for short gaps means it's open when the next slow week arrives.
Want to see what fits a restaurant like yours?
Tell us your slow months and your open advances, and we'll shop the file with funders whose programs fit. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.