Getting A Business Loan With Bad Credit For Your Restaurant In 3 Steps
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The nation’s economy has improved a great deal since the Great Recession. By now, your restaurant may be flourishing again. A small business loan could be just what you need to keep growing.

But like many small businesses, you are still haunted by the economic downturn. According to business credit expert Marco CarbajoToday, restaurant owners can’t get the business loans they need due to bad credit they incurred from the past.” He says, other contributing factors can be “excessive debt, lack of collateral, and an arduous approval process.”

But I want to talk about your bad credit. Because you can get a small business loan – just not from a bank.


Things go wrong, and you need to fix them now or you’ll be out of business. For example, the thermostat on your walk-in goes on the fritz. Or things go right, and you need to capitalize. You just landed a big holiday party, but you need to order extra supplies right now.

Or your business is going so well, you want to expand to maintain your momentum. You’d like to add physical space. Or a new related service, such as catering or delivery.

But you may not have the cash flow to handle these spending needs. If not, a small business loan is probably your only option. You can borrow the working capital you need to remodel or build a second location. You can use the money to purchase new equipment and furniture. And F&B inventory. You’ll also need marketing to promote your new-or-improved restaurant. Or that new catering service.

And you’ll need more people, too. In fact, if you’re busy enough right now, you may want to add more people before you expand – for the front and/or back of the house. That way you won’t risk a dip in customer service.


That’s great news, because having bad credit should not bring your restaurant to a standstill. So take heart and get ready to move forward. Here are some steps you can take to get a small business loan for your restaurant. Even with bad credit.


Push past the myths you’ve heard. And the well-meaning but wrong advice you’ve heard. Make a plan to repair your bad credit, starting right now. And learn what banks expect from “credit-perfect” small businesses. Use this information to set business finance and credit goals for the future. The closer you get to them, the easier it will be to get a small business loan next time. You’ll have more options. And you can negotiate better terms.

In the meantime, choosing the right small business loan can help improve your credit history. You just have to repay on time, as agreed. (That’s why it is so important to understand which types of loans are most affordable and appropriate for your restaurant now.)


I quoted Marco Carbajo earlier. He notes, “Getting the loan you need when it comes time to expand, employ new personnel or purchase equipment is vital, yet getting a business loan with bad credit is nearly impossible when dealing with a bank.” That said, bank loans are nearly impossible for small businesses with good credit. You’ll have to look elsewhere.

Fortunately, there are other financing options available for small businesses. And bad credit won’t keep you from being approved. That’s because these alternatives are based on factors other than credit score. Alternative lenders want to know one thing: can your restaurant repay their loan? So they look at your current income, not your past history. For your restaurant, they might consider:

  • Your bank deposit history. If your restaurant consistently deposits enough money, you may be able to borrow against that. This is called a revenue-based small business loan. Typically you can borrow about 10% of your annual gross deposits. And you can take up to 18 months to repay.
  • Credit card sales. You can borrow against your future credit card transactions, too. This is called merchant cash advance. It is very popular with restaurant owners. After all, you do a lot of credit card business, don’t you?

Alternative small business loans offer other benefits.

  • They are fast. Here at UCS, online application is simple (and free). You can be approved within 24 hours. And get your money in just a few days.
  • They are flexible. We give our clients five repayment choices – daily, weekly, bi-weekly, monthly, or via credit card transactions. We want what is best for you.
  • You can borrow from $5,000 to $5 million. Even with bad credit.

If you need inventory or equipment, you may be able to find specialized financing for that. I say “may,” because whether you qualify will depend on how bad your credit really is. But these loans may be a viable possibility. It helps that there is build-in collateral – the inventory or equipment you’re financing.

For equipment, you may want to look at leasing instead. That way you aren’t borrowing money. But you are adding another positive experience to your credit history. And you can still purchase the equipment when the lease expires, if you want to. At that point, you’ll have to borrow a lot less.


Do this right away. Even if you don’t need to borrow just yet. Naturally, I recommend United Capital Source. I may be biased about that. But when it comes to helping your restaurant find the best-match financing program, our people are absolutely unbiased. Your best interest is our only interest, because we’re bullish on small business. We want to see you grow. So with UCS, you get a long-term lending advisor. Besides, who doesn’t appreciate a great restaurant?

Access to capital is critical to grow your restaurant. Knowing how to get a small business loan with bad credit can add the spice you need for a tastier future.

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