Most restaurant buyers aren't paying cash — they're financing through an SBA 7(a) loan, the most common vehicle for buying an existing small business. It can fund up to 90% of the purchase price, but it comes with real underwriting, not a rubber stamp.
What a lender is actually checking
- Debt service coverage. The business's cash flow needs to comfortably cover the new loan payment plus your draw — lenders typically want at least 1.25x coverage.
- Your experience. Prior restaurant or hospitality management experience meaningfully strengthens an application; it doesn't have to be ownership experience.
- Seller's financials. Two to three years of tax returns and a clean P&L, reconciled to each other. Numbers that don't match between the two are the single most common reason approvals stall.
- Collateral and equity. Expect to bring 10%–15% of the purchase price yourself; the SBA guarantee reduces the lender's risk, it doesn't remove your own.
Realistic timeline
From a signed letter of intent to funded close, budget 60–90 days: loan package assembly, lender underwriting, SBA processing, and — for restaurants specifically — landlord lease assignment or a new lease, which often becomes the actual bottleneck rather than the loan itself.
What kills deals
Almost never the concept. It's financials that don't reconcile, a lease that can't be assigned on workable terms, or a buyer who starts the loan conversation after already signing a purchase agreement with a tight closing date. Talk to a lender before you make an offer, not after.