Larkpine Lending Group, an Iowa City, IA small-business funding service, explains restaurant funding: equipment financing for kitchens, term loans for renovations and commercial kitchen remodels, working capital for payroll and food costs, and where merchant cash advances fit. Johnson County restaurant counts come from Census County Business Patterns 2023.
| Full-service restaurants, Johnson County, IA (2023) | 161 |
|---|---|
| Limited-service restaurants | 120 |
| Full-service under 5 employees | 27.3% |
| Full- plus limited-service paid employees (2023, our sum) | 5,943 |
| Structures to compare | Equipment loans plus working capital |
How to get a business loan for a restaurant: purpose first
Start with the purpose, because partners treat a kitchen remodel, a replacement walk-in cooler and a payroll gap very differently. Then gather what they read first: several months of bank and card-processing statements, the lease, and quotes or bids for anything you are buying. How to get a small business loan for a restaurant comes down to showing steady card deposits and a clear repayment source.
New restaurants find funding harder than established ones; partners want sales history. Equipment financing, secured by the equipment, is one structure a newer place can ask about.
How to finance a restaurant renovation or a commercial kitchen remodel in Iowa City, IA
Split the project. Equipment (ranges, hoods, refrigeration, dish machines) can usually be financed on its own, secured by the items. Construction, plumbing, electrical and finishes go into a term loan. Keep working capital aside for the weeks the dining room or kitchen is closed.
Before you commit, check permits and zoning for the space; the Iowa City zoning and building code guide lists the steps. The commercial kitchen equipment list groups kitchen equipment by the job each item does.
Food costs, payroll and card deposits
A restaurant may pay suppliers on short terms, run payroll weekly or biweekly, and receive card settlements after the sale. When sales dip for a few weeks, payroll and food invoices do not. A working capital loan or a line of credit covers that stretch; a card-heavy restaurant may also be offered a merchant cash advance, which is not a loan; compare its total dollar cost.
Illustrative arithmetic (not an offer)
A 60-seat restaurant with $95,000 in monthly sales runs food at 30% ($28,500) and labor at 33% ($31,350). If sales fall 15% for six weeks during a road closure, revenue drops about $20,000 over the period while most labor and rent stay fixed. A working capital loan sized to that gap and an advance taking a share of every card sale can be compared on total dollar cost.
Restaurants and merchant cash advances
Kitchens with mostly card sales may be offered a merchant cash advance. Because remittances come out of daily card sales, a slow week does not stop them under a fixed-debit agreement. Add up every remittance, and compare with a term loan or line, before signing.
Local option sales tax and restaurant cash
Sales tax collected on meals is held for the state and remitted on a schedule. Spending it on payroll and paying it back later is a common cash-flow trap. The Johnson County local option sales tax checklist shows how to keep it separate.
Johnson County, IA restaurants in Census figures
| Type (NAICS 2017) | Establishments | Paid employees | Under 5 employees |
|---|---|---|---|
| Full-service restaurants (722511) | 161 | 3,550 | 27.3% |
| Limited-service restaurants (722513) | 120 | 2,393 | 16.7% |
| Snack and nonalcoholic beverage bars (722515) | 50 | 718 | 16.0% |
| Bars and drinking places (7224) | 36 | 586 | 19.4% |
Source: U.S. Census Bureau, County Business Patterns 2023. Full-service restaurants paid about $80.6 million in annual payroll and limited-service restaurants about $44.1 million. Nonemployer Statistics 2024 counted 28 full-service and 18 limited-service restaurants with no paid employees (NAICS 2022 codes 722511 and 722513). Further Johnson County, IA numbers sit on the Iowa City, IA page.
What a partner reads in a restaurant file
- Recent months of card-processor and bank statements
- The lease: remaining term and renewal options
- Equipment quotes, for new or used items
- Existing advances or loans and their remittances
- Food and labor costs as a share of sales
Opening, buying or remodeling: three different requests
Opening a new restaurant is the hardest of the three to fund because there is no sales history; partners lean on the owner's experience, the lease and the equipment. Buying an existing restaurant is a purchase: the seller's card statements, lease and equipment condition carry the review. Remodeling an existing restaurant is the easiest to read, because the partner can see how the place performs today.
Say which of the three you are doing in the first call; it changes what partners ask for.
By Larkpine Lending Group · Updated