Restaurant Loans For Good & Bad Credit
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Restaurant Financing Options
What are restaurant loans?
Restaurant loans can provide new or existing restaurants with cash for business or personal expenses. Before evaluating the type of loan that’s right for you, you’ll want to consider what you need the loan for. Restaurant owners can access business loans, business line of credit, personal loans, and more. Restaurant owners that need access to cash with few spending restrictions can benefit from a personal loan. Let’s review three restaurant loan options to help you determine the right fit.
- Business loan: Business loans can require collateral and usually specify they are only to be used for business purposes. Most business loans can be funded as a lump sum of cash that is to be repaid in installments over a set period of time. The structure of the loan is similar to a personal loan, however the requirements to qualify can be more strict.
- Business line of credit: A business line of credit is often secured by collateral and offers restaurants access to a line of credit as needed. Restaurant owners can draw from the line of credit as needed, up to the credit limit. Only the amount drawn is to be repaid with interest. A line of credit can help restaurants manage cash flow.
- Personal loan: Similar to business loans, personal loans can be funded as a lump sum that’s repaid in fixed installments with interest over a set period of time. However, most personal loans are unsecured meaning they don’t require collateral or a down payment. Personal loans are based on the creditworthiness of the applicant, and therefore, are separate from the interest of the business. This can be helpful for new restaurants, or those that are still in the infant stages of being opened.
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Frequently Asked Questions
Can I get a personal loan for my restaurant?
Personal loans can help entrepreneurs fund their dreams of being a successful restaurant owner. Personal loans are a type of installment loan based on the creditworthiness of the applicant(s). They come with few spending restrictions and can be funded as a lump sum, offering plenty of flexibility for borrowers. Requirements such as credit score, credit history, income, debt-to-income, and so forth can be used to determine eligibility.
How can I use a restaurant loan?
The uses for a restaurant loan can vary depending on the type of loan and restrictions it comes with. If you plan to use an installment loan, one that’s funded as a lump sum and repaid in installments, most have few spending restrictions. Loans specified for business use should only be used for business-related expenses. Personal loans on the other hand can be used for a wider range of activities. For example, as a restaurant owner you may need a loan to cover living expenses or medical expenses during slow seasons, or you may just need access to cash to manage cash flow. Here are some of the uses for a restaurant loan.
- Equipment financing
- Furniture financing
- Lease deposit
- Inventory
- Restaurant repairs
- Renovations
- Payroll
- Consulting fees
How much can I borrow with a restaurant loan?
The amount you can borrow with a restaurant loan can depend on the following factors.
- Type of loan: Restaurant loans can be secured (backed by collateral) or unsecured (not backed by collateral). Secured loans may be available in larger loan amounts. Unsecured personal loans can be offered up to $100,000, depending on credit score.
- Qualifications of the borrower: Lenders can evaluate a series of requirements to determine how much they can low a borrower, and at what APR and repayment period. Requirements can include credit score, credit history, income or business revenue, and so forth.
- The lender: Lenders can offer various lending products with minimum and maximum loan amounts. These parameters can set what the lender can offer and what applicants can apply for.
What is the interest rate on a restaurant loan?
Interest rates for restaurant loans can vary depending on several factors, including the type of loan, lender, and what you qualify for. Loans that are not backed by collateral may have higher interest rates, but can carry less risk for the borrower. While lenders may advertise rates, it’s best to get pre-qualified or check real offers to determine a real rate based on your qualifications. This applies regardless of the type of loan you’re pursuing.
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Can I get a restaurant loan if I have bad credit?
Bad credit can impact available options for restaurant loans. This stands true for any type of loan that considers the credit score of the applicant. There are many reasons why your credit score may be low. Investing the time to evaluate what’s bringing your score down can help you take action to boost your score. Boosting your credit score or applying with a co-signer with good credit are two ways to increase your chance of approval. If you choose to pursue a restaurant loan with bad credit, finding the right lender can play a key role in your success. Some lenders may have less strict requirements than others with the intent to give more borrowers a second chance.
What if my restaurant is a startup—can I still qualify for a loan?
New restaurant owners may need a little help to get momentum going. To get your startup doors open, chances are you already used some forms of financing or peer-to-peer financing. The likelihood that you’ll qualify for a loan with a startup can depend on factors such as the development of the startup. For example, startups that don’t have doors open for business yet, and are not generating revenue, may have a harder time qualifying for a loan. Personal loans are based on personal information, and therefore may be a viable option for entrepreneurs with a startup.
How long does it take to get approved for a restaurant loan?
While approval times can vary for restaurant loans, unsecured restaurant loans can take as little as 1-2 business days or up to a week or more. Before getting to the stage of approval, most loans will require you to first get pre-qualified. To help you understand the timeline and process for obtaining a restaurant loan, we’ve provided an overview of the stages below.
- Pre-qualification: The loan process often starts with getting pre-qualified or receiving a pre-qualifed offer. In some cases a lender may solicit you with an offer, but in most cases you’ll need to apply. Pre-qualified offers are based on your information, but can be subject to approval.
- Underwriting: If you accept an offer, the lender can proceed with verifying your information. During this phase, the lender may ask for supporting documentation such as proof of income. If needed, the lender may also perform a hard credit pull.
- Approval: Once your information has been verified successfully, the lender can extend a final approval. Approved loans can be funded in as little as 1-2 business days, although funding times may vary.
Why choose Acorn Finance for restaurant loans?
Acorn Finance can help entrepreneurs check personal loan offers for restaurants. Personal loans are a flexible funding option that don’t require collateral or a down payment. With access to a lump sum of cash with few spending restrictions, you can make your dream of a successful restaurant a reality. To check rates with no credit score impact, submit some personal information through our secure platform. Our network of top national lending partners can put their best offer forward in hopes of earning your business. From right where you are, you can compare offers side-by-side to choose the one that’s best for you.
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