Getting a Restaurant Loan With Bad Credit

If you are a restaurant owner planning to apply for a loan, you may be convinced that bad credit will prevent you from getting the funds you need. Fortunately, with lenders like Iruka Capital, you can still boost your cash flow with specially designed loan options.

Lenders offer innovative solutions and unique products, such as the merchant cash advance, private term loan and business line of credit.


As a restaurant and small business owner, it can be difficult to maintain high growth throughout the year. Seasonal variations are unpredictable and you need to secure the funds to cover all the unexpected expenses.

Iruka Capital’s merchant cash advance for restaurants and business loan solutions allow you to make the most of your venture. You can use the capital to organize training for your staff, invest in quality equipment or expand your services to meet customer demands. Whatever your goals, Iruka understands that it is not always easy to secure a loan from the bank.

Why is it difficult to get a restaurant loan with a bad credit history?

Imagine that you have owned a business for three years and that it achieved optimal growth every year since its launch. Now you want to open a new restaurant in another location to boost your income and compete with prominent players in the industry. Naturally, you will approach financial institutions and discuss your specific needs with a representative.

You may be given an opportunity to apply for a term loan to raise the funds needed to open the new branch. However, if your credit score is below a certain threshold, the loan officer will most likely decline the application. Oftentimes, major financial institutions and smaller lenders focus on your credit record to determine eligibility for a business loan. The overall success of your business in the restaurant industry and sales figures will not matter if your credit rating is too low.

Easy access to business loan products

At Iruka Capital, our priority is to help your restaurant reach its full potential, even when looking for a loan to buy a restaurant. You can get a pre-authorization quickly, thus allowing you to focus on running your business. Our online application form simplifies the process; you are required to answer a few questions regarding the nature of your business and sales figures.

Once we have determined the amount your business is eligible for, you can receive the funds in two to five business days. This approach eliminates the typical complications associated with loan applications at the big financial institutions.

When it comes to innovative business lending, establishments in the restaurant industry will find it is easier to meet the eligibility criteria. You can use the loan products to restore your credit rating over time. By improving your record, you will eventually gain access to an expanded selection of financing options and take advantage of lower interest rates.

All businesses need money in one way or another and you should not allow bad credit to stop your business from growing. If you need money to expand a business, purchase equipment or simply retain control during a slack period, you should consider applying for a merchant cash advance, a term loan and the business line of credit, which is based on on the value of your restaurant.

Loan options for restaurant owners with poor credit rating

When the bank turns down your loan application, all hope is not lost. A number of private lenders, including Iruka Capital can assist you with the capital you need regardless of your credit rating. You can leverage the benefits of three key loan options designed for restaurants with a bad credit history.

Merchant cash advance

This type of loan offers a wide variety of benefits, including easy access, fast approval process and not fixed monthly repayments. The eligibility criteria are based on the number of months or years the entity has been operating and your monthly card sales rather than your personal credit rating. This makes cash advance a viable option thanks to the flexibility. Loan fees are payable only once and there is no interest on the loan. The lenders take a pre-determined percentage of your daily sales.

Term loan

This type of financing is a good alternative to bank loans (which are almost entirely based on credit history). With the term loan, you get the same benefits but you are required to repay in fixed installments. The approach limits the risk for the lender, thus your credit rating does not form part of the eligibility criteria.

Business line of credit

A business line of credit is another product that is available to restaurant owners even if the business does not have a good credit history. This option is well suited to establishments with several valuable assets. However, the solution can be risky because it involves committing a large part of your business assets as collateral. Most of the large banks that offer these loans or lines of credit require that you give up to 75 percent of your business as collateral.

On the upside, it provides a practical funding solution if your credit history is poor. You can get a quick response for loans of up to $300,000 or more depending on the lender.

Additional considerations

A secured loan allows you to give an initial guarantee to borrow funds. If you make your payments on time, the goods offered as collateral are safe. However, if you do not make payments, the lender can sue you and take possession of the assets.

Loans and lines of credit based on the value of your business have several advantages and most restaurant owners with bad credit choose them because interest rates are low even with a poor credit rating. On the other hand, secured term loans have several advantages, including a longer repayment schedule, smaller payments, lower interest rates and more relaxed eligibility criteria than unsecured loans.

Secured loans are not suitable for everyone but can provide a convenient option in various situations. For instance, if your business is successful and you want to open another branch, you could use the first location as collateral. The risk is low if your business generates sufficient revenue for you to repay the loan.

Leave a Reply

Your email address will not be published.