Reviewed by
Americans drink coffee more than any other beverage, even water. According to the National Coffee Association, about two-thirds of adults in the U.S. have it every day. I learned first-hand just how high the demand for coffee here in the States is when I helped an expert barista open a cafe a couple of years ago.
This client was truly a pro. She knew everything about bean varieties, extraction techniques, and top-notch commercial equipment. What she needed from me and my team at Clarify was guidance on how she could secure about $320,000 in financing so she could really do the new opening right, from a build-out to getting high-end equipment and hiring skilled staffers.
The restaurant industry is competitive, and opening a cafe requires a lot of capital up front. It can be tough to convince lenders of how you'll stand out and be successful. That can mean the opening phase will lean on borrowing options friendly to newer businesses, while the faster working-capital funding options become more accessible a little further down the road, once the cafe is operating smoothly.
At Clarify Capital, my team and I were able to help my client understand which loans worked best for her specific situation, connect with several top lenders, and ultimately secure an SBA-backed loan for renovations and equipment financing for her espresso machines. I'll show you the most common uses for financing in the coffee shop industry, which options I recommend depending on your borrowing needs, and how to apply when you're ready.
| Best for | Typical amount | Typical term | Rate / estimated cost | Speed to funding | |
|---|---|---|---|---|---|
| SBA 7(a) loan | The full opening package (build-out plus equipment) is what you want when you want the longest term and lowest rate, and can show experience and an equity injection | Up to $5 million | Up to 10 years (working capital, acquisition) or 25 years (real estate) | About 9.75% to 13.25% APR (SBA caps the rate at the prime rate plus 3.0% to 6.5%; prime is 6.75% as of August 2026) | As quickly as two weeks (but typically 30 to 90 days), the slowest option in this list |
| SBA Microloans | Smaller purchases or cash gaps like working capital, inventory, supplies, small furniture/fixtures | $50,000 (average about $13,000) | Up to 7 years | Typically between 8% and 13% APR | As quickly as two weeks, but typically 30 to 90 days |
| Term loan (short or long-term) | One-time, defined costs like a build-out or renovation phase | $10K to $5M | Can do short-term loans or long-term loans | APR from 6% | As fast as same day |
| Equipment financing | Buying espresso machines, grinders, brewers, and refrigeration | Up to 100% of equipment cost | 12 to 72 months | APR from 6% and up; equipment = collateral | As fast as 1 to 5 days |
| Business line of credit | For smooth seasonal swings and restock inventory once you're operating (draw, repay, repeat system) | $5K to $5M revolving | 6 to 36 months; payments weekly or monthly | APR starting at 6%; only pay interest on what you draw | As fast as same day once approved |
| Merchant cash advance (MCA) | Covering a smaller cash gap once you have steady card sales | Advance up to $5,000,000 | No fixed term, estimated repayment length based on monthly sales; often repaid daily, weekly, or monthly | Uses factor rates instead of APRs; typically 1.08% to 1.45%, but varies by risk and sales volume; usually one of the most expensive financing options | Can be as quickly as same day |
Five Things You Need To Open a Cafe
Opening a coffee shop is uniquely capital-intensive compared to other types of small businesses. From paying for renovations to investing in marketing and buying the equipment you need to serve the highest-quality coffee, these are five areas where cafe owners can make use of financing, along with the funding type I recommend for each one.
Build-Out or Renovations
Build-outs and/or renovations will, in most cases, be the most costly part of opening a cafe. Renovating an existing restaurant or café space is often less expensive than building from scratch, although the savings depend on the condition of the property and the amount of work required. But even that will still be costly, running about $100 to $500 per square foot depending on your concept, finishes, and location.
My financing recommendation: an SBA 7(a) loan or a term loan
An SBA 7(a) loan is a flexible and partially government-guaranteed loan. They can go up to as much as $5 million and typically require you to put about 10% down. They're known for their great rates and long repayment terms, and are typically quite accessible in terms of qualifying.
A term loan is a loan that's given as a lump sum of money to be paid back over a specific repayment period (whether it's a short-term or long-term loan will determine this) at a set interest rate. Short-term loans are often more costly due to shorter terms and faster access, while long-term loans tend to offer lower interest rates but require a greater commitment.
Espresso Machines and Other Coffee Equipment
There's no coffee shop without coffee machines and equipment. And as you might imagine, industrial-size espresso machines that can handle running all day, every day, and still last for many years aren't cheap. A commercial espresso machine runs anywhere from $5,000 to $25,000 for really high-quality ones. A full equipment package (machine, grinders, brewers, refrigeration) can reach $20,000 to $80,000.
My financing recommendation: equipment financing
Equipment financing is a type of small business loan designed specifically for buying all types of equipment, machinery, or vehicles. You get it as a lump sum, then pay it each month over a fixed term. There's usually no down payment, and qualifying is also fairly accessible because the equipment itself acts as collateral.
Inventory
Before you open and make your very first sale, you need to have a lot of items on hand and ready to use, like a variety of milks, to-go cups, coffee beans, retail bags, and more. For cafes, ingredients tend to run up to 40% of sales once you're open. That means paying up front, which can tie up some cash.
My financing recommendation: an SBA Microloan, a business line of credit, or a merchant cash advance once you're more established
An SBA Microloan is a small loan for up to $50,000 (the average loan amount is about $13,000). They're usually distributed through nonprofit intermediary lenders and geared towards newer businesses. They're flexible in use and partially government-guaranteed.
A business line of credit (LOC) is designed for borrowing cash. It gives you access to a pool of funds which you can draw from as needed, pay back, and then re-draw from continuously. You only pay interest on that borrowed portion, not on the unused credit. Instead of relying on a personal credit card for expenses, a business line of credit keeps your business and personal finances separate.
A merchant cash advance is a form of business financing in which an MCA provider gives you a lump sum in exchange for a percentage of your future sales. Most often, this includes a portion of your future credit card sales or other receivables, collected automatically through card holdbacks or withdrawals from your business bank account.
Point-of-Sale (POS) Technology
In the restaurant industry, and especially for cafes, a point-of-sale (POS) system is a must. It's how you take in-person orders, accept online or mobile orders, process payments, and manage sales. Modern POS systems typically combine hardware and software, like a tablet-based register, credit card reader, and ticket and receipt printer. A point-of-sale system runs about $1,000 to $3,000 in hardware, plus the costs of software and apps for online ordering.
My financing recommendation: equipment financing or fold into a term loan
Staffing, Marketing, Working Capital
Finding experienced baristas to serve customers the high-quality products you want won't necessarily be easy or cheap. You'll probably also want to train your staff ahead of opening day, which means paying them.
Pre-launch marketing is another investment that can really make or break your community's awareness of your shop. But even with it, the first few weeks after opening are slow for many restaurants until they get into a rhythm. All of these things are costs you should expect to have to cover before making any profit or sales.
My financing recommendation: an SBA Microloan, a term loan, or a business line of credit, once you're more established
How Much It Actually Costs To Open a Cafe
When you decide to open a business, especially a restaurant, it's often hard to anticipate how much it will really cost you until the money is spent.
The build-out (or renovations, depending on what you're doing) is usually the biggest expense. Equipment adds anywhere from $20,000 to $80,000, and your point-of-sale system, opening inventory needs, marketing spend, and staff hiring go on top of that. A full-service cafe with seating runs about $100,000 to $350,000 (with a drive-thru, it can go up to $400,000+). Indeed, the client I talked about in the intro was looking to finance about $320,000.
Why Coffee Shop Owners Work With Clarify
Clarify Capital's 5.0 Trustpilot rating is the highest in the industry, and we've placed more than $1 billion across 50,000+ small to midsize businesses (SMBs).
Clarify matches you across 75+ vetted lenders and can get you a written offer in as quickly as 24 hours. Every applicant works with a U.S.-based lending advisor (not a chatbot or a call center) from application through financing.
Minimum Qualifications
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
Ready To Apply for Financing? Here's How
Step 1: | Step 2: | Step 3: |
|---|---|---|
| It takes about two minutes. You'll need your business's legal name, EIN, time in business, monthly revenue (or projected revenue), requested loan amount, owner contact information, and a credit authorization. Apply here. | A U.S.-based Clarify Capital lending advisor reviews the application, runs a soft credit pull (no impact to your score), and requests 3 to 4 months of recent business bank statements. For acquisition financing, expect a deeper request: trailing 12 months profit and loss statement (P&L), balance sheet, tax returns, and the target company's financials. | Clarify works with 75+ vetted lenders and matches your profile to the lender most likely to approve you at the best terms. Approved files often get a written offer the same day. You can sign electronically, complete the ACH setup, and the funds will hit the business bank account as soon as that day for revenue-based options (SBA loans take longer). |
Get the Financing Your Coffee Shop Needs To Thrive
If you need fast access to working capital, my team and I at Clarify can help you explore the best options. Get started and apply today.
Frequently Asked Questions About Coffee Shops and Cafe Business Loans
Here are answers to questions I often get about financing for the restaurant industry, and specifically, cafes.
Can I Get a Loan To Open a Coffee Shop?
Yes. If you're a brand new cafe and a first-time owner, opening-phase options are likely to be limited to SBA Microloans, SBA 7(a) loans, and equipment financing. After you've been open and operating for six months or more, other financing options will start to open up.
How Much Does It Cost To Open a Coffee Shop?
In the United States, a full-service cafe with seating will typically cost anywhere from $100,000 to $350,000, depending on where it is, how large the space is, and whether you're building or renovating. The build-out phase is often the highest cost, and coffee equipment will usually add about $20,000 to $80,000 to that.
Can You Finance an Espresso Machine and Coffee Equipment?
Absolutely. Equipment financing will usually be your best bet here, because this is exactly what it's meant for. You can use it for grinders, brewers, roasters, refrigeration, and the equipment itself will act as the collateral.
How Much Is a Monthly Payment on a $100,000 Business Loan?
It depends. A shorter term means a higher monthly payment but less total interest. For example, let's say you borrowed the $100,000 at a 10% APR and a five-year repayment term. That would equal out to be about $2,125 a month. A 6% APR for the same amount paid over a 10-year term would be $1,110 a month.
Do You Have To Put 20% Down on a Commercial Loan?
Not always. Conventional commercial loans, which are traditional loans offered by banks and credit unions, often require borrowers to put 20% to 30% down. An SBA 7(a) loan, though, often requires a smaller equity injection of around 10%. The trade-off for putting money down is usually that it gets you a better rate.
How Hard Is It To Get a $1 Million Business Loan?
If this is your first time owning a business, it's going to be pretty hard. A loan of that size usually requires you to be quite established or a multi-location operation. Expect to show strong financials, bank history, time in business, and a clear plan for the funds you're asking for.
Bryan Gerson
Co-founder, Clarify
Bryan has personally arranged over $900 million in funding for businesses across trucking, restaurants, retail, construction, and healthcare. Since graduating from the University of Arizona in 2011, Bryan has spent his entire career in alternative finance, helping business owners secure capital when traditional banks turn them away. He specializes in bad credit funding, no doc lending, invoice factoring, and working capital solutions. More about the Clarify team →
Related Posts
