Guide · Remodels and build-outs · October 2026
How to Finance a Remodel of Your Business Location: Options, Costs and Timing
A remodel is one of the easiest expenses to justify and one of the hardest to finance well: the money goes out all at once, the location produces less while the work is going on, and the payoff arrives afterward. This guide explains which products finance a remodel of a restaurant, store, salon or practice, what each costs on a real amount, how to size the loan so you do not run short mid-project, and what lenders ask for when the use of funds is an improvement to the space.
What Finances a Remodel?
A term loan of two to five years for the construction, labor, permits and design if the business has 12 months or more in operation; equipment financing for the part that is equipment (kitchen, chairs, lifts, refrigeration, fixtures), which is usually the cheapest money because the equipment is the collateral; a business line of credit for the overruns every job has; and an SBA 7(a) loan if you can wait 30 to 90 days and the remodel is above $150,000. Revenue-based financing covers a small, urgent improvement, but it is the most expensive product and fits best when the improvement raises sales immediately. The right amount is the contractor’s bid plus a 10% to 15% reserve.
The Options, Compared
| Product | Typical amount | Term | Cost | Time to funding | Which part of the job |
|---|---|---|---|---|---|
| Term loan | $25,000 to $500,000+ | 2 to 5 years | 9% to 30% APR by credit and time in business | 2 to 7 days | Construction, labor, permits, design |
| Equipment financing | $10,000 to $2,000,000 | 2 to 7 years | 7% to 15% APR; the equipment is the collateral | 2 to 5 days | Kitchen, refrigeration, chairs, lifts, fixtures, signage |
| Line of credit | $20,000 to $250,000 | Revolving | Prime + 1% to 10%, interest only on what is drawn | 2 to 5 days | Overruns, scope changes, the slow month during the work |
| SBA 7(a) | Up to $5,000,000 | Up to 10 years (25 with real estate) | Prime + 2.25% to 3% (9.25% to 10.00% in October 2026) | 30 to 90 days | Large remodels, buying the building, expansion |
| Revenue-based financing | 50% to 150% of one month’s sales | 3 to 18 months | Factor rate from 1.08 | 24 to 48 hours | Small, urgent improvements that raise sales right away |
The most common structure in the network: equipment financed separately (cheaper, longer), the construction on a term loan, and a line of credit opened before work starts for what the budget missed. Splitting the equipment out usually lowers the total cost of a remodel by 20% to 30%.
How Much to Borrow: the Bid Plus a Reserve
The common mistake is not borrowing too much but borrowing exactly. Commercial build-outs run over with regularity: a permit that takes longer, plumbing behind a wall, a fire-code change. Borrow the contractor’s bid plus a 10% to 15% reserve, and if the work forces you to close or cut hours, add the sales you will not have during those weeks. Returning money you did not use is better than reapplying mid-job, when the statements already show a closed location.
| Line item | How to estimate it |
|---|---|
| Construction and labor | Signed contractor bid, broken out by phase |
| Equipment and fixtures | Vendor quotes; financed separately |
| Permits, plans, design | 5% to 10% of the construction cost in most Florida cities |
| Contingency reserve | 10% to 15% of the total |
| Lost sales during the work | Weeks closed × average weekly sales, less the cost of goods you will not buy |
What Lenders Ask for When the Use Is a Remodel
- Three months of business bank statements; six if you are asking for more than $150,000
- The contractor’s bid or contract, because the funder sizes to the use
- For equipment: the vendor quote or pro forma invoice
- For SBA and larger term loans: two years of tax returns and a lease with more term remaining than the loan
- Twelve months or more in business for term loans and lines; six months for revenue-based financing
- $20,000 or more a month in deposits; for remodels of $100,000 or more, usually $50,000 or more
The lease matters more than people expect. A lender financing a five-year remodel in a space with two years left on the lease is financing an improvement the owner will not get to enjoy. Renew or extend the lease before applying; it is often the difference between an approval and a decline.
What It Costs on a Real Amount
An $80,000 remodel (construction $55,000, equipment $25,000) at October 2026 market ranges with standard amortization. Illustrative; your file sets the rate.
| Structure | Monthly payment | Total cost of borrowing |
|---|---|---|
| Everything on a 3-year term loan at 15% | $2,773 | $19,836 |
| Construction ($55,000) on a 3-year term loan at 15% + equipment ($25,000) over 5 years at 9% | $2,426 for the first 3 years | $19,775 |
| Everything on SBA 7(a) over 10 years at 10.00% | $1,057 | $46,865 |
| Everything on revenue-based financing, 1.25 factor over 12 months | About $1,923 a week | $20,000 |
Splitting the equipment out lowers both the payment and the total; the SBA loan has the lowest payment and the highest total because it runs ten years; and revenue-based financing costs more than a term loan and is repaid in a year, so it only makes sense when the remodel raises sales from the first month (a second register, more tables, one more chair).
By Type of Business
| Business | What gets financed most often | Guide |
|---|---|---|
| Restaurant | Kitchen, hoods, refrigeration, dining room, patio | Restaurant business loans |
| Salon or spa | Chairs, shampoo stations, treatment rooms, lighting, reception | Salon and spa business loans |
| Medical or dental practice | Operatories, diagnostic equipment, ADA compliance | Medical practice loans |
| Auto shop | Lifts, paint booth, compressors, one more bay | Auto repair shop loans |
| Retail | Shelving, lighting, point of sale, storefront and signage | Retail business loans |
How to Apply
- Complete the online application in about five minutes. One soft credit pull; it does not affect your score.
- Upload three months of business bank statements and a voided check.
- A funding specialist reviews the file the same business day and presents it to the funders in the network that fit.
- Compare the offers side by side, with the total cost of each, and sign only the one you understand.
RAN Funding is a business financing broker, not a lender. The funder that approves you sets the terms and sends the money, and pays RAN Funding when the deal closes.
Common Questions
Can I finance a remodel when the lease is in the landlord’s building?
The loan is in the name of the operating business with the owner’s personal guarantee. The lender will ask for the lease and will prefer that the remaining term is longer than the loan.
Can the landlord pay part of the remodel?
Sometimes. Many commercial leases include a tenant improvement allowance negotiable at signing or renewal. Ask for it before financing the rest.
How long does the money take?
Equipment and online term loans: 2 to 7 days. Revenue-based financing: 24 to 48 hours. SBA: 30 to 90 days. Apply before you sign with the contractor, not after.
What if the job runs over budget?
That is what the line of credit opened before the work is for. Reapplying mid-job, with the location closed and sales down, is the worst position to borrow from.
Do I need good credit?
For term loans and SBA, 650 or better helps. Equipment financing accepts lower scores because the equipment is the collateral. Revenue-based financing accepts scores from the mid-500s.
Does applying affect my credit?
No. Seeing offers through RAN Funding is a soft pull. A hard pull happens only when you accept a specific offer, and only from that funder.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. One application goes to the funders in our network that fit your file; the funder makes the credit decision, sets the terms and funds the deal, and pays RAN Funding when it closes.
Sources
- RAN Funding internal application records, October 2024 to October 2026 — RAN Funding
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks, 2026
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist reads your statements the same day and tells you which products fit, what each costs and how fast it funds.
More on Financing Improvements