Last Updated on November 28, 2019

Business loans for restaurants, cafes and bars: Start your hospitality business on the right foot

The food service industry is booming in Australia, with year on year growth over the last five years. You can see why it’s tempting to want a slice of the action.

But running a restaurant, cafe or bar is expensive, so issues with funding can halt your progress in getting your venture off the ground, or to the next level.

Whether you’re dreaming of launching a quirky food truck or want to expand your established home-style cooking restaurant, one of your most important tasks will be securing adequate financing.

If you’re ready to compare business loans, our free service lets you compare loans from over 70 lenders—both big and small. You can get approval in as little as 24 hours, apply for any amount between 5K and 20M, and receive funds straight into your account once approved.

Here’s a quick overview of suitable loan options for those looking to delve into the cafe/restaurant industry. We’re here to help you decide on the finance solution that gives your business fast access to cash, without leaving you struggling to meet repayments due to unsuitable and unrelenting terms.

What can a business loan do for me?

Excellent service, quality food, and nailing the right atmosphere can really set a food establishment apart from the rest. But there are lots of businesses to compete with, so a business loan can help a restaurant, bar or cafe stand out in the following ways:

Lease new premises for expansion

If you’ve been trading for 6+ months, have an ABN and a turnover of more than 10,000 per month, a business loan can help with rental costs of a new, or bigger, premises.

The location of your establishment can make or break the business, but always ensure your budget can accommodate the larger loan repayments.

Upgrade premises

Providing the right setting and ambience for your customers can go a long way. Peeling paintwork, wonky tables and ovens that take an age to heat can really put a strain on things. But refurbishing can be very expensive, and a business loan is often required to make it happen.

Recruit and train staff

A competent and happy team is key to the successful running of any business. A business loan can allow you to fully train staff to match the needs of the business and compensate them appropriately for their time. If you own a cafe, having a top class barista can set you apart in the eyes of Australians and their coffee.

Run marketing campaigns

Marketing is essential to bring in new customers. Investing time and money into social and print media can create a buzz around your business that you can’t get through word of mouth alone.

Purchase or upgrade equipment

Restaurants, cafes and bars all need unique equipment to operate. If you’re looking to purchase or upgrade expensive kitchen equipment or maybe install new till systems, our guide on equipment financing may help.

Pay general overheads

In any hospitality business, expenses add up quickly! From purchasing coffee beans to paying utility bills and renewing alcohol licenses, a business loan can help manage day-to-day operations.

Types of business loans

There’s a wide range of business loans available, some which will suit your needs better than others. These include:

How do I know which business loan is right for me?

When choosing a business loan, the top three things to consider are:

  1. The needs of your business
  2. How much you can realistically afford to repay
  3. Extra costs associated with the loan

Compare business loans by looking at:

  • Flexibility: Let’s say you decide to pay off your loan earlier than expected or apply for more money. Some lenders may charge additional fees for you to do so. If flexibility is important to you, consider choosing a business loan that waives these charges.
  • Interest rates: Decide on whether you want a fixed or variable interest rate. A fixed-rate business loan gives you a more accurate repayment schedule. A variable interest rate will change according to the market conditions.
  • Cost of repayments: Calculate how much you can afford to pay each month and never stray outside your budget, no matter how favourable the terms seem.
  • Loan terms: Establish how long you need the loan for and when you will be able to pay it off.
  • Associated fees: You may have to pay an application fee, exit fee or ongoing fees.

What costs are associated with running a cafe or restaurant?

If you’re a small business owner, you may already have an idea of the costs involved in running a cafe, bar or restaurant. But for hospitality businesses just starting out, here are some key considerations:


Know the minimum wage for the food services industry. As of July 1st, 2019 minimum wage is $19.49 per hour, with a 25% loading for casual employees. You can get an idea of what others are paying by looking through related job ads.


Research commercial rent prices and property values in your desired area.

Costs of goods

Contact wholesale suppliers to ask about the prices of food, drink and other supplies needed to run a cafe or restaurant.

Equipment and maintenance

Research equipment prices and any ongoing maintenance costs.


Compare business energy plans online. Try to calculate what you will use in a busy month.


Contact your local council to find out what licenses you need and what costs you’re obliged to pay. This is especially important if you’re looking to serve alcohol.

Is my business eligible for a small business loan?

Eligibility criteria varies from lender to lender, but here are some common factors they look out for:

  • Your restaurant must be a business registered in Australia.Age of business: Some lenders have a minimum period that the business needs to have been
  • operating for before they agree to lend (typically 6+ months). This is because established businesses are less of a risk for them to loan to.
  • Turnover: You may have to prove a minimum turnover to be eligible for a loan. But the amount and whether it’s calculated monthly or annually varies from lender to lender.
  • Business financials: Lenders will request other financial information including details of existing bank accounts and loans, profit statements, tax returns and financial projections.
  • Credit profile: Your business’s credit history will be taken into account as well as the credit profiles of all directors involved in the business.

Factors that will influence your loan approval

Unfortunately, hospitality businesses have high failure rates and lenders are aware of this. To put yourself in the best possible position, consider the following:

Applying for a secured loan rather than unsecured

Having an asset to secure a loan is a big plus to lenders. If you don’t have much in the way of assets to use as collateral yourself, consider asking a family member to be a guarantor or to use their home equity.

A secured loan is less of a risk to lenders as they have the legal right to sell the asset if you default on the loan. This means they typically have higher approval rates and larger loan amounts are offered.

Updating your skills and qualifications

Having a qualification related to the food industry can show the lender you have what it takes to make it in the business. A barista course or hospitality diploma can go a long way in showing your commitment.

How much experience you have in the food industry

If you’re looking to run a cafe but have no related experience, it’s unlikely you will be approved for finance. The lender wants to see evidence you’re committed and competent in the field you’ve chosen.

Writing a thorough and well-researched business plan

A well-researched and developed business plan can improve your chance of obtaining finance. This is not only true for new businesses, but established businesses should also regularly review and update their business plan to provide direction for growth.

Arguably, developing a successful business plan is the most important step in applying for a small business loan. This step helps you (and therefore lenders) understand how much money you need and how quickly you can repay your loan.

If you’re ready to take the next step and apply for a business loan, Biz Loan Comparison allows you to compare small business loans to make sure you’re getting a quality loan that delivers as it should.

Still have questions? Let’s talk

Confused? Not sure if this applies to your situation? Phone us on 1300 190 429 for some free, no obligation advice.

Or want to compare business loans now?

About the Author

Eleanor Baxter
Eleanor Baxter

Eleanor Baxter has extensive experience writing for the Australian financial and healthcare sectors. Her portfolio includes guides that cover all aspects of both physical and financial health and wellbeing. Coming from a background in communications, fitness, and psychology, she has found a passion for demystifying personal and business finance for the everyday reader. When not at her writing desk, you’ll find Ellie walking her two dogs or practising an asana.

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