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How to Get a Restaurant Business Loan Even if You Have Bad Credit


Got bad credit? If so, you wouldn’t be alone. 

According to a recent study, a majority of Americans — 56% to be exact —  have subprime credit scores. This means that more than half of U.S. adults are unable to take advantage of favorable credit cards or take out loans with reasonable interest rates from traditional banking institutions. 

Beyond that, when their credit scores are less than optimal, business owners — including those in the restaurant industry — can forget about securing loans for their companies through traditional means. This shouldn’t come as much of a surprise for a number of reasons.

For starters, banks are approving fewer loans in general in the aftermath of the financial crisis. In fact, according to the Small Business Administration, of the business owners who applied for loans, a mere 27% were approved. When given the choice, banks will almost always lend to business owners that have solid credit. That’s because it’s simply riskier to lend to business owners with low credit scores.


Obviously, these statistics aren’t encouraging for many restaurant owners who regularly run into cash flow problems. Though they may have poor credit scores, they still need money to help cover their operating expenses and grow their businesses.The good news is that there are a number of different ways restaurateurs — even those with subprime credit scores — can receive outside funding, including:

  • Invoice financing. If you have a stack of unpaid invoices piling up — let’s say you’ve recently catered a bunch of events and your clients are late with payments — you can use an invoice financing service to advance payments on those unpaid bills. You’ll then have to repay the advances, plus whatever fees the invoice financing company tacks on. In the process of securing cash this way, you’ll have to expose your restaurant’s data to the invoice financing company you choose.
  • Invoice factoring. Instead of taking advances on unpaid invoices, you can also decide to sell your accounts receivables to third-party factoring companies. They’ll of course take a significant slice of those receivables, but you’ll get money up front that you won’t have to repay. Factoring companies also get between you and your customers, meaning they collect payments directly from your clients. So in addition to having to sacrifice a good chunk of your revenue, you’ll also have to deal with the fact that your clients will know your financial situation requires you to use a factoring service.
  • Merchant cash advances. Restaurant owners can also decide to sell a portion of their future credit card receipts to companies that offer merchant cash advances. Since you’re selling future receipts and losing out on associated revenue, this financial vehicle is technically not a loan. But like factoring, merchant cash advances are often known to carry hefty fees.
  • Alternative loans. Just because traditional banks might hesitate to lend to you doesn’t mean you’re completely unable to get a loan. There are a number of alternative lenders that offer restaurant business loans to owners of all backgrounds — even those with poor credit scores. Unlike traditional loans, alternative loans are unsecured, which means that you won’t have to put up any collateral to receive funding. So in the event you’re unable to repay your loan, you don’t have to worry about losing any of your property. It’s worth noting that, because nonbank lenders are willing to extend financing to riskier customers without them having to put up collateral, alternative loans justifiably have higher interest rates.

Because most restaurant owners are unlikely to have stockpiles of unpaid invoices — a majority of their customers, if not all of them, settle their bills before they head home — loans available through alternative lenders are likely your best option. Who wants to forego a significant portion of their future credit card receipts anyway?


In addition to the fact that alternative lenders are more likely to approve restaurant business loans, you stand to benefit tremendously from this form of funding. Here’s how:

  • The application process is lightning-fast. Instead of going through a drawn-out process that takes weeks, you can apply for a restaurant business loan in 15 minutes. This gives you more time to focus on growing your business.
  • You’ll get a decision within 24 hours. Banks can take up to 90 days to sign off on a loan. With alternative lenders, you’ll get a decision within a business day — allowing you to put your money to work right away.
  • If approved, you can use the money however you’d like. Unlike other kinds of funding that only allow you to spend money in certain ways, you can spend your restaurant business loan any way you want.

Apply for a restaurant business loan today and get an approval tomorrow. It’s really that easy. So what are you waiting for?

Does your small business have poor credit?