Can You Get Restaurant Loans with Bad Credit?

The answer to “can you get restaurant loans with bad credit?” depends on who you ask. Banks will say no, because it’s risky for them. But banks have slapped the “risk” label on many of National Business Capital & Service’s most successful restaurants that they fund. So, National doesn’t equate bad credit with “risk.”

National sees funding small businesses with low FICO as providing an opportunity for restaurant owners that wouldn’t have gotten the financing they needed to grow otherwise. So go ahead, discover what happens when a restaurant business owner with anything less than a perfect credit score asks a bank for restaurant business loans, vs. a small business financing company:

Ask a Bank:

The answer is more often than not simply “no.” Banks are reluctant to approve business loans for restaurants in the first place, given how volatile the industry can be (e.g. complex supply chain, high overhead, tenuous profit margins), and also because they make more money by going upstream and serving large enterprises.

If you do qualify, it can take several months to go through the application and underwriting process before actually receiving your money. Since restaurants are “high risk” in the eyes of banks, you’re likely to be required to provide more detailed financial documentation than business owners in industries seen as stable.

When you’re looking to grow or need funding to cover expenses in an emergency, you don’t have months to wait. By the time a bank loan comes through, you could be left behind as business opportunities pass you by or find yourself running in the red and facing the possibility of closing your doors. 

Alternative lenders like National don’t make you jump through hoops or gather huge piles of financial paperwork to qualify for a loan, even if you have bad credit. Starting the application process only takes a couple of minutes, and funding is available in days, not months. In some cases, you could get your loan in as little as 24 hours. 

Ask a Small Business Financing Company:

If you ask an alternative small business financing like National if you can get restaurant loans with bad credit, the answer is categorically different: yes you can.

What’s more, you can get approved your restaurant for financing even if you have a past discharged bankruptcy (either personal or associated with your business), or an active tax lien!

Of course, given that restaurant owners are savvy — which means they possess a healthy dose of skepticism — this begs the question:

“Why does National offer restaurant loans for borrowers with bad credit, when banks often won’t even review an application if personal and business credit scores don’t meet a high threshold?”

In other words: “Isn’t National taking a risk?” The short answer is, “no!” Here’s why:

3 Reasons National Offers Restaurant Loans for Bad Credit Borrowers

  1. Every loan — regardless of to whom it is offered, and whether they have stellar credit, good credit, impaired credit, or outright bad credit — is a risk; and it should be. Lenders who aren’t comfortable with risks have no business being in the industry. Frankly, if it weren’t for certain subsidized advantages, most banks subject to the same “free market dynamics” as restaurants would have been out of business decades ago.
  2. Like an overwhelming number of business experts — i.e. people who actually know how to start and run successful businesses, and not bank loan officers who may have never even launched a lemonade stand — we don’t believe that credit scores are indicative of a borrower’s total credit worthiness. Yes, it is a factor; but it is certainly not the only one. Believing otherwise isn’t just unfair, but it’s also unjustified. The evidence simply doesn’t back up the position. Borrowers with outstanding credit default on loans all the time, while those with bad credit (and very bad credit!) fulfill 100 percent of their loan obligations; sometimes even paying their obligation off early.There are plenty of other factors (besides credit score) affecting the financial standing of a business, which can be used to determine loan eligibility, such as:
      • Length of time in business
      • Monthly and annual revenue numbers
      • Credit card sales volume (for cash advances)
      • Available collateral (for secured loans)
      • Perceived “risk level” of your industry
      • Debt-to-income ratio
      • Reliable payment history
      • Overall financial history
  3. Most importantly: National is much more interested in what a restaurant owner is doing now, than what they might have done in the past. We are building lending partnerships that unfold and come to fruition in the FUTURE — not in the PAST. (But then again, banks have always been anachronistic and past-oriented, so their stance here is hardly surprising.)

Top Restaurant Financing Options

If you’re looking for a bad credit loan for your restaurant, consider these options:

  • Equipment financing – Cover the cost of equipment purchases up to $5 million to update your restaurant and streamline customer service, using the equipment as collateral.
  • Business line of credit – Gain access to a revolving credit line to increase working capital and provide a cash buffer for emergencies. You only have to make payments on the money you draw out, and terms are more flexible than traditional loans.
  • Merchant cash advance – Get funding now by borrowing against future credit card sales, and pay back using a percentage of each transaction.

Get Your Restaurant Business Loan Today

If you are in the market for restaurant loans with bad credit,  fill out our 1-minute application. Or, call (877) 482-3008 to speak with an expert business financing advisor, and ask which restaurant loan for bad credit borrowers is right for you! 

Not only is it quick and easy to complete, but you will receive a funding decision within 24 hours! At National, we have supported restaurant owners across the country, and would be honored to play a role in your success story.

Fill out National’s 1-minute application, or call (877) 482-3008 to speak with an expert Business Financing Advisor and ask which small business loan for bad credit borrowers is right for you! 

Download a Free eBook on the 10 Pitfalls You Must Avoid in Business Financing

If you’re starting to consider Alternative Financing, this eBook is a must read. Business funding doesn’t have to be risky and complex. Learn how to avoid the same financing traps most business owners fall into with tips that will help you get the best deal:

National Business Capital & Services is the #1 FinTech marketplace offering small business financing and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time.
For every deal we fund, we donate 10 meals to Feeding America!

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About the Author, Matt Carrigan
Matt Carrigan is the Content Writer at National Business Capital & Services. He loves spending every day creating content to educate business owners across every industry about business growth strategies, and how they can access the funding they need!