Buying a Restaurant with Unsecured Lending: What Lenders Really Look For

Buying a restaurant is an exciting step toward business ownership, but it often starts with the biggest question of all: how will I pay for it? Many buyers are surprised to discover that unsecured lending—loans that don’t require collateral—can be a fast and flexible way to fund their purchase.

At We Sell Restaurants, we work with buyers every day who use unsecured lending to buy franchise resales, coffee shops, sandwich shops, and other restaurant opportunities. Explore restaurant financing options with our trusted unsecured lending partners. But here’s what we also see: too many buyers underestimate what lenders look at when approving these loans.

Just because the loan is “unsecured” doesn’t mean it’s “no questions asked.” Lenders still look at credit history, income, and your overall ability to repay. If you aren’t ready, you risk unnecessary credit inquiries that could make future approvals harder.

This article will walk you through what unsecured lending really means, what lenders review, and how to set yourself up for success—even if your credit isn’t perfect today.

What Is Unsecured Lending?

Unsecured lending simply means that you don’t have to pledge collateral like real estate, equipment, or personal property to get approved. Instead, the lender looks at your creditworthiness and cash flow to make a decision.

Here’s why buyers like it:

• Fast approvals: Sometimes within 48–72 hours
• No collateral risk: Your home or car isn’t tied to the loan
• Flexible use of funds: Cover purchase price, working capital, or marketing

But unsecured loans also carry slightly higher interest rates and shorter repayment terms than SBA loans. That’s why lenders take a very close look at you as the borrower.

Credit Requirements Still Matter

Lenders typically require:

• Credit Scores: 680 or higher across all three bureaus (Experian, Equifax, TransUnion)
• Clean History: No recent bankruptcies, foreclosures, or major delinquencies
• Debt, to, Income Ratio: Must be able to show that your income (and the restaurant’s projected income) can comfortably cover the new payment

If you don’t meet these benchmarks, many lenders will decline the application—and too many inquiries on your report can hurt your scores further. Check your eligibility with our unsecured lending partners today.

Real Lender Feedback: Why Buyers Get Declined

Here’s an actual set of lender feedback we recently received for a client:

• Revolving utilization: 58% (needs to be below 30%)
• Credit Scores: 678, 702, 676 (needs to be above 680 across all 3 bureaus)
• Reported Income: , $29,810 (banks need to see positive proof of repayment ability)
• Delinquencies: 7 accounts with serious delinquency reported several times

This type of report is exactly why we encourage buyers to check their credit before applying.

A lender will see:

• High utilization: You are using more than half of your available credit, which signals risk.
• Mixed scores: One bureau is below the minimum threshold, which can lead to automatic rejection.
• Negative income: This suggests you cannot service new debt today.
• Delinquency history: Multiple late payments raise red flags about repayment behavior.

The lender’s response in this case was cautious. They specifically said:

“The last thing we would want to do is move a client forward and get them declined with unnecessary additional inquiries on their credit report. If you have a credit partner—spouse, business partner, family member, or friend—we can review their credit to see what we can do. If they have scores in the 700s, we can offer 0% business cards that report only to the business side. If they are above 680 and earn at least $50,000 annually, we can do a term loan as well.”

This advice highlights an important point: lenders want to help you succeed—but they will not risk an approval if you aren’t ready.

Val’s Story: Character Counts

Let’s put this into perspective with Val, a first, time buyer. Val is eager to buy a quick, service restaurant, but before applying for financing, she takes a hard look at her credit.

Val’s situation:

• Her revolving credit utilization is 58%—she pays down credit cards until she is under 30%.
• Her credit scores range from 676–702—she works with a credit coach to dispute errors and raise all three scores above 680.
• Her reported income was negative last year—she documents new employment income and projects positive cash flow post, acquisition.
• She has two accounts with delinquencies—she resolves them and shows 12 months of on, time payments before reapplying.

By taking these steps, Val improves her overall financial picture and gives lenders the confidence they need to approve her unsecured loan.

Options for Buyers Who Aren’t Ready

If your credit isn’t where it needs to be, don’t lose hope. There are several steps you can take:

1. Work on Credit Repair: Pay down balances, dispute errors, and make on, time payments.
2. Delay the Purchase: Waiting 6–12 months can dramatically improve approval odds if you focus on credit cleanup.
3. Use a Credit Partner: If a spouse, partner, or family member has stronger credit, they can co, sign or be the primary borrower.
4. Explore Business Credit Options: If a partner has scores in the 700s, consider 0% business credit cards that don’t report to personal credit.

Benefits and Risks of Unsecured Lending

Benefits

• Fast approvals: Beat other buyers to the closing table.
• No collateral required: Your home or car isn’t at risk.
• Flexible funding: Cover purchase price and working capital needs.

Risks

• Higher interest rates: Typically 1–3 points higher than SBA rates.
• Shorter repayment periods: Larger monthly payments require careful cash flow planning.
• Impact on credit: Missed payments can damage personal credit.

Expert Tips for Success

• Check Your Credit Early: Know where you stand before you start shopping for a restaurant.
• Keep Utilization Low: Under 30% is ideal—under 10% is even better.
• Document Income: Show at least $50,000 of verifiable income if you want a term loan.
• Avoid New Inquiries: Don’t apply for multiple loans or credit cards before your restaurant purchase.
• Work with Experts: Certified Restaurant Brokers can connect you with lenders who specialize in restaurant transactions. Get connected with our approved unsecured lending partners today by contacting a Certified Restaurant Broker.

Conclusion: Get Ready Before You Apply

Unsecured lending can be a great tool for buying a restaurant—if you are financially ready. Your credit score, payment history, and income all matter.

As the lender in our example said, the last thing you want is a decline that adds unnecessary inquiries to your report. Take the time to get prepared, just like Val did, so when the right restaurant comes along, you’re ready to act confidently.

At We Sell Restaurants, we can connect you with trusted financing partners and help you evaluate whether you’re “credit ready.” When you combine strong preparation with the right restaurant listing, you’re setting yourself up for ownership success.