How Restaurants Can Benefit From Merchant Cash Advance Options

Business Guides

Jacques Famy Jr
Review By Todd Millman

As a restaurant owner, you need financial options to keep operations afloat. While having enough cash-on-hand to sustain day-to-day operations and grow is the ultimate goal, it’s unfortunately a pipe dream for many to get a traditional loan. You need flexible and reliable funding opportunities when a business loan is not an option. Restaurant cash advance provides the opportunity for working capital, purchase equipment, and effectively navigate the ebb and flow of restaurant ownership.

If you’re small business is looking to get funding from traditional bank loan, you may be swimming upstream. Restaurants and the dining industry as a whole is an incredibly risky business venture, something you know all too well. Even if your profits are sound and you’re not having any major issues — you may find traditional loans or funding options limited. Alternative financing options like merchant cash advances provide a reliable and fast route to cash flow that you can take advantage of right away.

We’re going to show you how your restaurant business can succeed through merchant cash advance funding. Here’s a quick breakdown of what we’ll discuss:

  • A merchant cash advance is a fast way to get the restaurant financing you need
  • You can use funds from a merchant cash advance however you need
  • The application for a merchant cash advance is quick and painless
  • Even if you have poor credit, you can get approved for an MCA
  • Repayment is flexible and easy with MCA financing
  • A merchant cash advance is the perfect financing solution for emergency spending, that a loan can perform as quickly.

How Does a Restaurant Merchant Cash Advance Work?

Merchant cash advances (also known as future receivables purchase and sale agreements) provide an upfront lump sum of money to businesses in exchange for a fixed percentage of the businesses’ future sales. Repayment for the restaurant industry is typically made daily or weekly. Either an ACH payment is auto deducted from a business’s bank account, or the percentage is taken out of future revenue until the payback obligation is met. Terms are expressed as a future sale, so you are given a fixed amount and then responsible for paying back a greater amount through a fixed percentage of sales. The difference between the amount given and the amount paid back to complete the agreement is your flat cost of money. The estimated time to repay is typically 6 to 18 months, but there are no term limits as the repayment is based on sales, unlike a loan . A merchant cash advance is not a loan, but an advance against future receivables of the business.

Benefits of Merchant Cash Advances:

  • Flexible repayment terms attached to future restaurant's revenue
  • Excellent to poor credit score considered. No minimum credit score.
  • Provides funds to owners with sub-prime credit
  • Payments fluctuate to future income controlling the margin of profit

Why You Should Get Restaurant Cash Advances

Quick Funding & Easy Access to Funds

One of the primary reasons why so many restaurant owners rely on merchant cash advance options is the accessibility of fast funding. Whether you’re having a slow month or you’re in an “off-season” — there will be times where immediate spending is necessary. This spending could come in the form of a repair, inventory upkeep, menu redesigns — you name it. Regardless, you’re in a position to get ahead of day-to-day needs and prepare for the incoming high-season. The application process for a restaurant cash advance allows the business owner to get fast funding and the additional working capital needed in 24 hours so that you can work on immediate needs and get the money now!

Spend How You Want

While many bank loans and business loans come with lending restrictions that determine how restaurants can utilize funds, a merchant cash advance doesn’t come with strings attached. If restaurant owners need to use restaurant cash advances for new restaurant machinery, that’s great. If you need to work on marketing materials, cash flow, or general working capital, that’s fine too. The use of funds is completely in your hands with no lending restrictions.

Headache-Free Application Process

Another reason why merchant cash advances can benefit your restaurant operation is through a quick and easy application process. This restaurant business world never slows down, which means you’re constantly moving at break-neck speeds to keep up. Bank loans and other bank financing will leave your head spinning with tedious and time-consuming loan applications. A traditional loan from the bank can take anywhere between 30-90 days after an application is submitted. From there, you’ll need to supply mountains of documentation, undergo review processes, sign complex agreements, and deal with a possibly drawn out back-and-forth with the lending institution.

Bad Credit, No Problem

Unlike most business loans and traditional funding products, a merchant cash advance doesn’t require a high credit score for approval. Additionally, you won’t need to risk your credit score by borrowing capital. Many small business owners in the restaurant industry struggle to find funding due to a less than stellar credit history. When times get tough and you need cash on hand to purchase food, upgrade POS systems, dining equipment, and other restaurant needs — a merchant cash advance offers a way to leverage the restaurants credit card sales for instant money.

Flexible Repayment Based on Credit Card Sales

If we were to line up all of the funding options you have available, a merchant cash advance would certainly win the award for being most limber. It’s a flexible solution that allows you to repay the advance while maintaining day-to-day operations.

A business owner can choose between the following payment plan:

  • Fixed daily payments from bank account (Business Cash Advance)
  • Fixed weekly payments from bank account (Business Cash Advance)
  • Percentage of daily credit card sales from merchant processing (Merchant Cash Advance)

Most restaurants live and breathe with credit card sales, which means you can take full advantage of ongoing business operations to fulfill your funding needs. This credit card split allows you to easily navigate cash flow projections and maintain operations to grow effectively.

Fund Restaurant Emergencies

If there’s one industry that requires emergency spending, it’s the restaurant industry. Unpredictable seasons, malfunctioning equipment, inventory management, changing trends, and sometimes high turnover rate are just a few of the many reasons why emergency capital is needed. However, this cash can also go into expanding or improving operations. You need peace of mind through reliable and fast access to cash when you need it most.

As we’ve mentioned, other business loans lack the key advantages that a merchant cash advance offers. Primarily: speed, ease, and flexibility.

Frequently Asked Questions

Is merchant a cash advance debt?

A merchant cash advance (MCA) is a debt, but not a loan, because it only repaid by a percentage of future sales of the business, unlike a loan.

How do you explain merchant cash advance?

A merchant cash advance (MCA) isn't a loan, but rather a sale of future revenue based upon the sales deposited in a business' merchant account. A lump sum of money is provided upfront in exchange of a specified amount of future revenue .

How can I get out of a merchant cash advance?

If the restaurant business entity has no current or future revenue than the business owner or restaurant is not obligated to repay any remaining balance.

Merchant Cash Advances For Your Restaurant

If you’re looking for reliable and fast merchant cash advance options for your restaurant, AdvancePoint Capital can help. We offer straightforward and quick access to the cash you need for your restaurant. Whether you’ve been denied for a loan, you’re tired of looking for a loan, or you know you won’t qualify for a loan — there’s always other options. With AdvancePoint Capital, you will get approved in minutes and be well on your way to the cash flow you need.

Many business owners have turned to advancepoint for there finance needs. Check out our excellent reviews. We provide a variety of options including a business loan and other business funding products. Contact us today or get a quote through our easy quote-finder. We’ll get you approved and put your restaurant in a position to succeed. We also offer a wide range of business loans for restaurants to help with other ventures or avenues for funding, including equipment loan options.

Jacques Famy Jr
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Jacques Famy Jr

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