Even though you may have a bad credit score, you will still need some funds to help in covering the daily operating expenses and expand your business. As a restaurant owner, having a poor credit score should not worry you since there are various ways you can acquire funds for your restaurant. Here are some of the ways.
Perhaps you might have a stack invoices piling up that are yet to be paid. The good news is that you can use an invoice financing service to get an advance payment using the unpaid bills as collateral. You will be needed to pay back the advances, plus whatever charges the invoice financing firm takes on. When obtaining cash using this alternative, you will be needed to expose your restaurant data to the invoice financing company you select.
Rather than taking advances on unpaid invoices, you can as well decide to sell your account receivable to third-thirty factoring companies. Note that they will deduct some amount of the receivables, but you will receive the fund upfront that you will not be required to pay back. Factoring firms also act as middlemen between you and your clients. This means that they directly collect payments from your customers.
Merchant cash advance
Restaurant merchants can as well decide to sell a percentage of their future credit card receipts to firms that provide merchant cash advances. Given that you are selling your future receipts and losing out on associated income, this financial aid is technically not a loan. Just like invoice factoring, this alternative is widely known to carry hefty charges.
Just because financial institutions might delay in lending some cash does not mean you are completely unable to secure a loan. Various alternative creditors provide restaurant business loans to entrepreneurs of all backgrounds, even the ones with bad credit score. Different from traditional loans, alternative loans are usually unsecured, meaning that you won’t need any collateral to get the funds. Thus, in the event you are unable to pay back your loan, you will not have to anxiety over losing any of your property. Note that since non-bank lenders are ready to give out loans to riskier clients without them putting up collateral, alternative loans are characterized by high-interest rates.
On top of the fact that alternative lenders tend to be less strict when approving restaurant business loans, you stand to benefit enormously from this type of financing. Here is how:
Fast and quick application process
Rather than going through a lengthy and drawn-out procedure that usually takes several weeks, you can apply for a restaurant business loan in just 15 minutes. This will give you adequate time to concentrate on developing your business.
You will get a response within 24 hours
Note that financial institutions can take up to 3 months to approve your loan. Alternatively, if you opt for alternative lenders, you will get their response within a business day. This is beneficial since it will allow you put your funds into operation immediately.