Business Loans for Bake Shops: Financing Options for Bakeries

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Choosing the Best Bake Shop Business Loan Program

According to the American Bakers Association*, the baking industry generates more than $154 billion in economic activity annually and employs almost 800,000 highly skilled people. Who doesn’t like baked goods or pastries? But, it’s no secret that bakery owners have had difficulty getting business loans for their bakery over the years. Whether you are a member of a credit union or national bank, it is tough to get many types of bakery funding or any bank loans, for that matter. But these are new times, and from that, new alternative lending sources. The bakery industry has more access than ever before to get small business funding.

Traditional lenders see bakeries as a risky business, which means qualifying for loans is a serious burden. These lenders won’t give loans out to just anyone. They’ll likely require an excellent credit score, a robust business plan, and a significant amount of assets in your business. Some could even ask you about your relevant hospitality experiences as well. That’s where AdvancePoint Capital can help.

AdvancePoint Capital’s goal is to help small business owners. We have lots of experience providing bakery loans for bakeries for years and can allow you access to the best alternative business lending products. We understand the difficulties of operating a bakery and the need for business loans to support it. Our job is to effectively provide the best business funding products to you, the small business owner, so you can effectively operate your business. Whether you’re looking to add customers, purchase equipment, improve counter service, need some working capital, or plan on expanding operations — we have the best funding solutions you can rely on for your bakery.

Types of Bakeries That Can Acquire Business Loans

• Commercial/Wholesale Baked Goods
• Retail Bakeries
• Bakery Cafes
• Pastries and Baked Goods Shops
• Home Bakeries
• Bakery Schools

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The 7 Best Bakery Small Business Loan Options for Bakeries

Long-Term Small Business Loans for Bakeries

Long-term loans are always the most desirable as they offer the longest time to repay, typically from 2 to 7 years. Long-term loans are a lump sum provided upfront with an interest rate that starts around 7% with monthly payments over a fixed period to repay. These loans require high credit standards for established businesses with at least two years in business and a significant amount of paperwork for approval.


  • Low interest rates, starting at 7%
  • Term loans from 2 to 7 years to repay
  • Accommodates a larger loan amount
  • Monthly payments

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Short-Term Small Business Loans for Bakeries

Short-term loans provide a fixed amount of money that is repaid over time of 6 to 18 months. When approved, you get a set amount for a fixed amount you have to pay back. The difference between is the cost, with a fixed payment auto-deducted from your bank account monthly, bi-weekly, weekly, or in some cases daily out of the bank account. Limited paperwork is required, with only a 1-page application and bank statements. The credit requirements for a short-term loan are more lenient than that of banks, traditional term loans, or other funding due to the reduced risk. Great working capital funding solution.


  • Bad to excellent credit considered
  • A business loan amount as little as $10,000 up to $500,000
  • Term loans for 6 to 18 months to repay
  • Lower monthly or annual revenue requirements than those of traditional loans
  • Reduced documentation-requires bank statements but not financial statements
  • Fast and simple application process with the same day to next day funding

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Business Line of Credit for Bakeries

A business line of credit is a small business financing option that offers a flexible feature that a short-term loan does not. It works like a credit card in that it is a revolving credit line and allows you to draw money out and then repay at any time with you only paying principal and interest on your outstanding balance. Lines of credit have a credit limit that you cannot exceed and is set at the time of consummation. This funding is not considered a term loan.

Highlights of a Line of Credit:

  • Ability to draw cash at any time from lines of credit (best for flexibility)
  • Allows borrowers to spend the money, repay it, and spend it again
  • Principal and interest rates starting at 5% for lines of credit
  • Lower costs and fees than most other financing products

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Business Lines of Credit

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Equipment Loans for Bakeries

Bakery equipment is an essential part of the business. The equipment can be quite expensive and costly. Equipment funding usually comes in the form of leasing or a term loan. The equipment is used as collateral, and decisions are also made based on the personal credit of the bakery store owner(s) and the health of the business’s financials.

Benefits of Equipment Financing:

  • Simple 1-page application
  • Limited financial paperwork
  • Repayment time from 1 to 5 years
  • Term loan or lease
  • Monthly payments
  • Funding available same day

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Equipment Financing

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Small Business Administration (SBA) Loans for Bakeries

SBA loans are administered by the Small Business Administration and set the guidelines that must be followed to ensure the loan for participating approved SBA lenders. The SBA works with approved lenders to provide loans to small businesses and does not lend directly. An SBA funding is generally a term loan with fixed interest rate financing at attractive interest rates and terms. Although popular, the process is a lengthy process with extensive paperwork, may require collateral and high credit score standards.


  • Interest rates from 4% to 7%
  • Term loans from 3 to 25 years to repay
  • A variety of acceptable uses of funds

Updated SBA Paycheck Protection Loan Program (PPP) -The Small Business Administration (SBA) has established the SBA Paycheck Protection Loan in response to COVID-19. This small business funding option is one of SBA’s relief options that provides loans to small businesses affected by the Coronavirus (COVID-19) crisis and needs financial help. Please contact AdvancePoint Capital about PPP if you need help reaching an SBA-approved lender.

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Merchant Cash Advance for Bakeries

Merchant cash advance (also now as Future Receivables Purchase and Sale Agreements) provide an upfront lump sum to the business in exchange for a fixed percentage of the businesses’ future sales. Repayment is typically made daily or weekly. Either ACH payments auto deducted from a business’s bank account, or the percentage is taken out of future credit card sales until the payback obligation is met. Terms are expressed as a future sale, so you are given a fixed amount and then responsible for paying back a more significant amount through a fixed percentage of future sales.

The difference between the amount given and the amount paid back to complete the agreement is your fixed cost. The estimated time to repay is typically 6 to 18 months, but there are no term limits as the repayment is based on future sales. This funding is popular with bakery shops due to high credit card sales. This financing option is a considered small business funding and not a small business loan.

Benefits of Merchant Cash Advance:

  • Flexible repayment terms attached to future sales
  • Excellent to bad credit score considered
  • Provides funds to owners with sub-prime credit
  • Payments fluctuate to future sales controlling the margin of profit
  • Requires bank statements but not financial statements

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Merchant Cash Advances

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Business Credit Cards for Bakeries

Business credit cards are revolving credit lines with a limit and minimum monthly payment requirement typically lower than that of a small business loan. You are issued a plastic business credit card with an account number that can be used online and in person for any purchases. You only pay interest based on the current principal. This business funding option is not considered a business loan but a revolving credit line.


  • Can be used 24 hours a day, seven days a week
  • No limitations on the use of funds
  • Flexible monthly payments payments
  • Principal & Interest rates


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Invoice Financing for Wholesale Bakeries

Invoice factoring/financing is a financial transaction type of debtor finance. This product allows your bakery to get an advance on their receivable invoices from their clients (or other bakeries). Invoice factoring enables the bakery to leverage outstanding invoices and receive advances off those invoices ahead of the “net” term of 30, 60 days the invoices typically take to get paid.

Invoice financing is a sale of receivables (invoices) to a third party, otherwise known as a factoring company. This product can be a great option if your bakery business struggles with getting receivables from outstanding invoices. This financing alternative is considered invoice funding and not a loan.


  • Super-fast access to capital, simple financing
  • Lender credit requirements based on your customer, not your business
  • Low fees, typically 1 to 2% of the invoice
  • No monthly payments, no long term debt obligations, no account receivable to collect
  • Simple application process
  • Great for working capital needs
  • Business owners with bad credit are okay

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Invoice Financing

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Benefits of Bakery Loans

Working Capital

Operating small businesses in the bakery industry is a complicated venture with many moving parts to it. Various issues can impact the company’s cash flow, like seasonality, holidays, location, changes in food trends, and competition. Small business funding is necessary when meeting payroll is not an option as the people who work at the bakery are usually essential. Also, it’s critical to have bakery loans in place to control the ups and downs of the business and stabilize cash flow. From working capital to seasonal needs, bakery loans are a sound working capital funding option.


Business Facility Expansion/Renovations

Bakery shops may need upgrades or repairs to the facility, spruce up the interior décor or exterior appearance to maintain or attract customers, and maintain a competitive edge to grow your business and increase market share. Perhaps you’re adding a new location. With so many financing options available, growing your bakery can come in many forms. These bakery loans can be used to purchase additional inventory, lease more space, expand marketing efforts, buy new equipment, or even open up another operation.


What owner doesn’t want more customers and an increased customer base? Internet marketing and social media are not a trend but something customers demand. Focusing on the internet has become a must for retail bakeries looking to grow, but it has added additional costs to the bakery operation. That’s why bakery loans for marketing campaigns and social media are so popular. Having a presence online with Google, Yelp, and Trip Advisor, plus maintaining a social media presence on Facebook and Instagram, is very important for success and meets customers’ demands. Your bakery website and work on search engine optimization help keep your small business on the top of google search and grow your business by adding customers.

Point of Sale Systems, Software, and Technology Upgrades

The point of sale systems is continuously improving and providing efficiencies for bakery operations. It’s a foregone conclusion that financing will be needed as the cost can get quite absorbent. Bakery business loans can be used to update systems and create more efficient processes within your operation. Bakery businesses are always looking for new ways to keep their tables and cafes full. Improving the customer experience with easier processes and systems for staff can make a significant impact.

Maintenance and Repair of Bakery Equipment

Equipment financing allows bakery shop owners to repair and/or replace essential equipment at the core of the bakery business. Equipment can be an expensive investment. A bakery business loan that allows the bakery owner to improve kitchen equipment and costly parts is often a lifesaver.

Purchase of New Bakery Shop Equipment

The bakery industry relies on high-quality equipment for operations. New equipment can be expensive. Bakery loans might be essential when repairs are not an option due to the high costs of replacement for the business.

3 Questions to Ask Yourself When Getting Small Business Funding:

1. How long has your bakery been in business?

Time in business is a standard requirement for bakery financing — or any type of loan you plan on obtaining as a business owner. A young shop is far riskier than a seasoned one. This information shouldn’t be news to any bakery owner reading this, but it’s vital for bakery shop owners everywhere to understand.

Due to the high risk of the restaurant and baking industries, lenders must know if you’ve been around for a substantial amount of time. Time in business shows lenders that you can overcome obstacles and tackle challenges that come with time in the industry. If so, you’re in much better shape to obtain financing for your bake shop.

2. How does your bakery business handle cashflow?

There are some documents that many lenders will require so that they can assess a loan under your circumstances. A bakery owner planning on getting small business funding should always make sure to offer up documentation like business bank statements, personal and business tax returns, profit and loss, and perhaps, even more, depending on the small business funding option. This information proves any revenue and profit — which is frequently a big player in whether or not you’ll qualify for loans. Now, what paperwork you’ll need ultimately depends on the small business funding product. A business cash advance may require one thing, but a term loan is likely to have much harsher requirements. However, all of these documents we mentioned are relatively typical when attempting to obtain funding for bakeries.

3. What are your borrowing habits?

While many funding options have varying credit score requirements, all of them will require some sort of personal and business credit score and overall credit history. Bakery owners need to show lenders how well they manage loans. It’s all about trust and sound investments when it comes to bake shop loans.

So, a credit score is important to show banks that your borrowing habits are fruitful for the lender. Now, even if you have less than stellar credit, there are still bakery loans that you can seek. However, the interest or term will be more costly due to bad credit. You won’t see bank loans or credit unions offer loans to poor credit borrowers.

That being said, alternative business finance companies still provide financing opportunities that business owners can take advantage of for working capital or any other need. Make sure you are constantly working to improve your personal credit.

How Do You Get a Small Business Loan for a Bakery Shop?

There are many options to consider, and with such a wide range of lenders and financing options available, it can be challenging to get started with the application process. Lenders will want some pertinent information, regardless if they’re an online lender or from a traditional financing institution. This information mainly serves to confirm your small business’s financial history and legitimacy — and the bakery owner should be informed about what information they should have on hand before applying for bakery loans.

For years, we’ve empowered small business owners around the United States with the best financing opportunities and loan options that people like you can use to fund your operation.

Depending on the bakery loans you’re looking at, each will have different requirements. However, there are some standard questions that you can expect to run across during your search for loan options.

Why AdvancePoint Capital?

Experience with Bakery Owners – We have been funding bake shops and cafes for years.
Trust – Excellent reviews and feedback from bakery small business owners
Loan Specialists – Experiences Business funding specialists who know the bakery industry.
No Obligation – No cost, no commitment quotes
Products – A variety of business loan products for professional bakeries. We don’t just offer what we have; we supply what’s available in the marketplace.

Frequently Asked Questions

Again, this depends on which foodservice loans you’re considering. Different bakery loan options will have additional application requirements — so there’s no one size fits all solution to this question. However, there are some typical avenues that many business owners take to open up a bakery or cake shop. Make sure you have a sound bakery business plan, projected financial statements, ownership and affiliation documents, business certificates or licensure, loan application history, income tax returns, and a resume available. All of this information could play a vital role in opening up a new bake shop. Depending on your lender, you may need to offer up a down payment or real estate as collateral for your bakery loan.

Did you know that professional bakeries don’t have to be profitable to get financing? It helps if they do, but some bakery loans do not require owners to provide tax returns.

Bakery loans are not difficult as long as you have good cash flow and significant sales. There are many different products with different credit grade requirements and terms. The better your credit, time in business, cash flow, and profit & loss, the more options are available for approval.

The fast, convenient, and straightforward way to get the money you need for your small business – now!

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