Restaurant Loan: Eligibility, Interest Rates, Benefits & Apply Online

Are you planning how to get a loan to open a restaurant in India’s booming hospitality sector? While it is an excellent business idea, the 2026 market demands significant capital for technology integration, kitchen automation, and interior aesthetics. A restaurant loan from a regulated Non-Banking Financial Company (NBFC) like Hero FinCorp can provide the necessary restaurant financing for setup, maintenance, and expansion.

A restaurant business loan is essential for scaling operations, provided you meet the professional criteria. You can utilize the funds for restaurant financing needs such as purchasing raw materials, hiring skilled staff, or investing in high-grade equipment. Furthermore, restaurant loans can assist in settling statutory dues like property taxes or obtaining mandatory Food Safety and Standards Authority of India (FSSAI) and health licenses.

About Restaurant Loans

Restaurant loans are specialized credit facilities designed for the food and beverage industry. These loans for restaurant business allow owners to set up an eatery, purchase industrial kitchen gear, or manage digital marketing costs. Unlike term loans, modern restaurant financing offers competitive interest rates and flexible repayment terms tailored to the seasonal cash flow of the F&B industry.

Types of Restaurant Financing Options

To get a loan for restaurant needs, you must choose the structure that fits your capital requirement:

• Asset-Based (Equipment) Loans: Specifically meant for acquiring high-value machinery. In many cases, the equipment itself serves as hypothecated collateral under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest.
• Term Loans: These restaurant loans offer substantial amounts for long-term growth. At regulated NBFCs like Hero FinCorp, you can access up to ₹50 Lakh with a tenure of up to 48 months.
• Working Capital Loans: Ideal for managing short-term liquidity gaps, such as paying staff salaries or utility bills during the off-season.
• Government Schemes: The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) offers collateral-free credit to MSMEs, including those in the food sector, with guarantee coverage limits now reaching up to ₹10 Crore as per 2025 revised guidelines.

Also Read: Top 10 Profitable Food Business Ideas in India

Restaurant Loan Eligibility Criteria

To qualify for restaurant financing, lenders evaluate your "Character, Capacity, and Collateral" (the 3 Cs of lending).

• Guarantor Requirement: While many loans for restaurant business are unsecured, a guarantor may be required for new startups with less than 3 years of operational vintage.
• Collateral: Regulated NBFCs like Hero FinCorp provide unsecured restaurant loans, meaning no physical asset is required as security for eligible borrowers meeting internal credit parameters.
• Credit Score: A CIBIL score of 725 or above is generally preferred to secure competitive interest rates.
• Business Vintage: Most institutional lenders require a minimum of 3 years of operational history in the food industry to establish cash flow stability.

Interest Rates and Charges

As per the latest RBI Fair Practices Code and Scale-Based Regulations (SBR), interest rates are risk-based and must be disclosed via a mandatory Key Fact Statement (KFS). Below is the indicative schedule for restaurant loans at Hero FinCorp:

How to Apply for a Restaurant Business Loan?

Securing restaurant financing is now a completely digital process:

1. Digital Application: Visit the official website of a regulated NBFC like Hero FinCorp.
2. Product Selection: Navigate to the Business Loan section and fill out the digital application form.
3. Upload KYC and Financials: Provide PAN, Aadhaar, and last 6–12 months’ bank statements. For loans above ₹5 Lakh, Udyam Registration is mandatory for MSME benefits.
4. Verification: A credit officer will review the restaurant business loan application using automated underwriting tools.
5. Disbursal: Upon approval and e-Mandate/e-NACH setup, funds are credited to your business account within 48 to 72 hours.

Also Read: What Is An E Mandate - Meaning and How It Works

Conclusion

Whether you are exploring how to get a loan to open a restaurant or need capital for a second outlet, a structured loan for restaurant business operations is the most efficient path. By partnering with a regulated NBFC, you ensure transparency and compliance with all RBI lending norms, including the 2026 transparency mandates regarding the Annual Percentage Rate (APR).

Frequently Asked Questions (FAQs)

Can I get a restaurant business loan without providing collateral?

Yes. Most regulated NBFCs, including Hero FinCorp, offer unsecured restaurant business loans based on the financial health and cash flow of your business. Additionally, under the CGTMSE scheme, micro and small enterprises can access collateral-free credit guarantees for loans up to ₹10 Crore.

What is the minimum CIBIL score required for a restaurant loan?

While requirements vary, a CIBIL score of 725 or above is typically preferred. A higher score not only increases your chances of approval but also helps you negotiate more competitive interest rates and better Annual Percentage Rates (APR).

How can I use the funds from a restaurant loan?

Restaurant financing is highly flexible. You can use the funds to:

• Purchase industrial kitchen automation and equipment.
• Renovate interiors or expand seating capacity.
• Manage working capital for inventory and staff salaries.
• Pay for mandatory licenses like FSSAI, liquor, or health trade licenses.

What is a Key Fact Statement (KFS), and why is it important?

As per the RBI’s Fair Practices Code, every lender must provide you with a Key Fact Statement (KFS) before you sign the loan agreement. It is a one-page summary that clearly lists the actual interest rate, all-inclusive fees, and the Annual Percentage Rate (APR), ensuring complete transparency in your borrowing costs.

Is there a prepayment penalty on restaurant loans?

According to latest RBI guidelines, there are zero foreclosure/prepayment charges on floating-rate business loans provided to Micro and Small Enterprises (MSEs). For fixed-rate loans, a nominal fee may apply as per the terms disclosed in your KFS.

How long does the disbursal process take for an online restaurant loan?

The digital application process at regulated NBFCs is designed for speed. Once your KYC, bank statements, and business vintage proofs are verified, the loan is typically disbursed within 48 to 72 hours.

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