Find Me Funders
Financing a restaurant build-out you do not own
You are borrowing to install assets that will belong to your landlord. Lenders know it, price it, and structure around it — and so should you.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
Every dollar you put into a leased restaurant space buys an improvement that will outlive your control of it. The hood, the ductwork, the grease interceptor, the electrical service upgrade, the floor: these are fixtures. In most commercial leases, fixtures belong to the landlord at the end of the term, and in some leases you are obliged to remove them at your own cost, which is worse.
That is the whole difficulty. A lender advancing against a build-out is advancing against something it cannot repossess, sitting inside premises it does not control, for a business whose right to be there expires.
Separate the spend into three buckets before you ask anyone for money
Price each bucket separately and match each to a product with the right term. A five-year note against a ten-year improvement is a strain; a ten-year note against a three-year fryer is worse.
Why the lease term drives the loan term
A lender will not amortise past your right to occupy. If you hold three firm years plus two five-year options, some lenders count only the firm term and some will count exercised or exercisable options, usually if the option is yours alone to exercise and is not conditional on the landlord's consent or on renegotiated rent.
Read your option clause with that in mind. An option that says "at then-prevailing market rent as determined by landlord" is not the same asset as an option at a stated rent. If your build-out plan needs long money, negotiating the option language is part of the financing work, and it is cheaper to do before you sign the lease than after.
Read those two lines as a rent question rather than a finance question. The five-year structure saves $98,876 of interest and costs an extra $2,400 a month in the eighteen months that decide whether the restaurant exists. If the only thing standing between the two is three words in an option clause, the option clause is worth negotiating hard.
What SBA-backed lending changes here
An SBA 7(a) loan is the common route for leasehold improvements because the guaranty lets a participating lender extend a term against collateral it could not otherwise justify, and because leasehold improvements carry a longer permitted amortisation than general working capital. Programme rules, including collateral, occupancy and lease requirements, are set out by the SBA and each lender adds its own credit overlay. Expect a personal guarantee, a lien on business assets, and often a lien on the equity in your home where you have it. Expect the lender to want a landlord subordination or waiver.
What you should not expect is speed. Build a construction timeline that assumes documentation, and do not sign a lease with a hard rent commencement date on the assumption that funding closes on schedule.
The equipment half is easier, so do it separately
Do not fold the equipment into a single blended request if you can help it. Equipment financing prices against an asset with a resale market and a known useful life, and it does not care that your landlord owns the ductwork. Financing the ovens and refrigeration on their own often costs less than financing them inside a general facility, and it preserves your ability to borrow against the rest.
Two structural points to hold onto. First, whether the paper is a loan, a capital lease or a true lease changes who owns the asset at the end and what your tax treatment looks like; get that in writing rather than in a sales conversation. Second, the equipment lender will want a landlord waiver, and landlords negotiate those. Raise it early.
What to have ready
- The signed lease with all amendments, and the option clauses highlighted
- A contractor's bid broken down by trade, not a single lump number
- A separate equipment schedule with makes, models and quoted prices
- A permit timeline from the jurisdiction, including health and fire sign-off
- A pre-opening cash budget that runs three months past opening day
- Your own equity contribution, stated and sourced
- Personal financial statements and returns for every guarantor
What to ask, and what to refuse
Ask the lender how it treats lease options in setting the term, and get the answer before you pay an application fee. Ask whether disbursement is a lump sum or draws against invoices, and who inspects. Ask what happens to the loan if you assign the lease when you sell the business.
Refuse to fund permanent improvements with short-term revenue-linked money. It is available, it is fast, and it puts a daily obligation against a business that is not yet trading. Refuse a construction budget with no contingency line; the walls of an old building tell you what they contain after they are opened. And refuse to start work before the lease and the funding both close, because a half-built kitchen is the weakest negotiating position in the trade.
Where this applies
Related questions
What does this guide cover?
You are borrowing to install assets that will belong to your landlord. Lenders know it, price it, and structure around it — and so should you.
Which funding products does this apply to?
Working Capital, Term Loan, SBA Loan, Equipment Financing. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.
Is this specific to restaurants?
It is written around how a restaurant business actually generates and collects cash, which is what makes its funding problem different. The mechanics transfer; the arithmetic may not.
Who writes this?
The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.
How do I know a figure here is right?
Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.
Are the examples real deals?
No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.
Why do you never say what a typical rate is?
Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.
Is this financial or legal advice?
No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.
Can I reuse this content?
Quote a paragraph with a link back. Do not republish whole articles.