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Restaurant Financing 101: The Merchant Cash Advance

Restaurants take advantage of merchant cash advance (MCA) financing more than any other business, according to leading MCA providers. Its not difficult to see why: food service businesses are particularly well positioned to take advantage of the MCA product. Restaurant owners rely on quick access to working capital to respond quickly to market shifts and invest in the growth of their business.

Restaurant Financing On Time

Restaurants are on the frontlines of the service sector, subject to the changing tides of consumer demand. Survival in the volatile food service industry depends on agility. The ability to seize opportunities and evolve with the times distinguishes the perennial dining favorite from the fleeting hot spot. Merchant cash advances help restaurant owners keep pace with the marketplace by anticipating emerging trends and tastes.

Instant access to working capital enables restaurateurs to:

  • Invest in new equipment, from kitchen appliances to computer systems and beyond
  • Update restaurant decor or design
  • Take advantage of limited-time offers and volume discounts from suppliers
  • Establish a new location
  • Ramp up capacity in response to an upswing in demand
  • Host a promotional event
  • Marketing and advertising campaigns
  • Ride out a slow period

Fast financing enables restaurant owners to stay on their toes and keep their tables filled to capacity.

Why the Merchant Cash Advance Works for Restaurants

Merchant cash advance companies offer restaurants quick and easy access to the business funding they need to stay competitive. The CEO of a leading MCA company sums up the value of this type of restaurant financing: "merchant cash advances are an especially great option for restaurant merchants, not only because these types of businesses can hardly be funded by the traditional bank, but also because of the immediate liquidity and simple process."

  • Low bar to entry. MCAs are more likely than banks to accept restaurant financing applicants. Banks generally consider food service a "high-risk" industry. To qualify for a commercial loan, restaurant owners may have to provide collateral or demonstrate strong credit. Newer restaurants typically have trouble meeting commercial lender credit qualifications. Merchant cash advances offer financing without collateral or credit requirements. Applications are evaluated based on past credit card receipts and a minimum time in business (often under a year).
  • Quick turnaround. Traditional small business bank loans can take several months to clear, if the applicant qualifies at all. Merchant cash advances typically take two weeks to clear.
  • Easy application process. Few restaurant proprietors have the time or financial expertise to negotiate lengthy business loan applications. A merchant cash advance features a straightforward application process. MCA companies typically ask for a report of previous months credit card receipts.
  • Revenue-based repayment. Restaurants are subject to a continual ebb and flow of business volume, based on seasonal shifts, trends, and many other factors. While small business loans require a fixed interest and repayment schedule, the merchant cash advance payment is calculated as a portion of credit card sales. The MCA company effectively buys a monthly percentage of future credit card receipts. If the restaurant has a slow month, the MCA payment amount decreases proportionately.

Small businesses competing in a volatile market need immediate access to working capital. Restaurants rely on merchant cash advance financing to anticipate market shifts and act on opportunities as they arise.

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