CSC-Blog-Subprime Restaurant Loans_092021

Subprime Business Loans for Restaurants

It’s no secret that one of the hardest hit industries during the pandemic was the restaurant industry. Many eateries have closed their doors since mid-2019 and others are barely hanging on, trying to make ends meet until things go back to “normal” again.

Traditional lenders have long been wary about lending to restaurant owners given the tough odds of success even in the best of times, which certainly doesn’t describe right now. Compound that with the fact that many owners’ personal or business credit scores have taken a hit—and you might think there’s no chance of getting a business loan to help keep your restaurant afloat.

Think again. A subprime business loan may be your ticket to the funds you need to keep serving your delicious food to customers. But wait, isn’t there a stigma attached to the subprime concept? Misused, a subprime loan can be detrimental to a borrower, but as long as you understand the costs and terms won’t be as favorable as a traditional business loan, and you don’t overextend yourself, it may be your only option to infuse cash into your restaurant.

What is a subprime business loan?

Quite simply, a subprime business loan is one extended to an owner whose personal and/or business credit score is impaired to the point that they’re unable to get approved for a conventional loan. Used properly, they play an important role in providing businesses with access to capital—since even owners with poor credit scores need working capital.

What is subprime credit?

Subprime credit means your credit history is at the low end of the scale, from fair to poor. And it’s not just your FICO score that reflects your personal credit, but an overall description of your credit history.

What are common uses for subprime business loans?

There are any number of reasons why a restaurant owner would need access to capital from a subprime loan, including:

  • Working capital to improve cash flow
  • Purchasing food or other supplies
  • Marketing/advertising
  • Purchasing new equipment
  • Making renovations
  • Making emergency repairs

How do you choose the right lender for a subprime business loan?

Most importantly, you must work with a reputable lender who can help advise you on things like length of repayment, payment frequency and product flexibility—to ensure you’re not getting in over your head. At Clear Skies Capital, we’ve worked with many restaurant owners who had less than stellar credit, helping them get through a down time with a well-designed subprime business loan such as a merchant cash advance or business line of credit. As an alternative lender, we enter into every relationship with a mindset to say “yes,” unlike traditional lenders like banks.

The Takeaway

Subprime business loans can be an excellent financing alternative if you need funds to help your restaurant survive, and even thrive, despite the ongoing issues caused by the pandemic—but your personal or business credit isn’t the best. If this sounds like an attractive option to you, we invite you to contact us to discuss your situation and see how much you qualify for. You’re under no obligation.

Want to discuss subprime business loans with experts who’ve helped countless owners over the years? Contact Clear Skies Capital at 1-800-230-9822 or visit us online to learn more.