Merchant Cash Advances vs Bank Loans
Traditionally, the first stop for most restaurants looking for capital has been a business loan from a traditional bank. But what do you do if restaurant loans aren’t feasible for your circumstances? Some financing companies won’t work with newer businesses, and not every form of funding can be used for every purpose
What is a merchant cash advance?
A merchant cash advance is not a loan, and is a better choice for some businesses. It’s a flexible form of cash for restaurants looking for options that accommodate the ebb and flow of business.
Merchant cash advance provides the cash you need through a purchase of your business’s future credit card receivables. We agree to pay you upfront in a lump sum for a percentage of sales you will make over time. Loans are generally fixed and not based on your actual sales. Our merchant cash advance product is based entirely on the volume of your future credit card and deposit receivables.
Businesses that choose merchant cash advance as a method of restaurant financing don’t pay back a debt the way they do when taking out a loan. When your future credit card sales are sold to the company offering the merchant cash advance, you aren’t repaying; you’re delivering on a purchase already made.
And you are only selling future receivables in exchange for cash when, and to the extent that, they actually occur. With restaurant loans, your business must repay the principal and interest amount borrowed no matter what the ebb and flow of your business looks like.
What can I use a merchant cash advance for?
The limitations on how a borrower can use a small business loan can also make that avenue of restaurant financing less than desirable. Merchant cash advance programs are much more flexible in what you can use them to fund, including:
Front of house improvements
- Purchasing new plates, silverware, or glassware
- Updating floors, tables, chairs, and décor
- Revising table layout for efficiency
- Remodeling to expand seating or add an outdoor patio
- Expanding your staff
- Investing in a new product with upfront costs
Back of house expenses
- Upgrading to high efficiency machines like dishwashers, refrigerators, and water heaters
- Replacing equipment in poor condition, such as ovens, deep fryers, refrigerators, and walk-ins
- Improving storage areas for maximum efficiency
- Purchasing small wares
- Upgrading safety conditions for your staff
- Modernizing your POS system with EMV-chip readers and more reliable ticketing
- Integrating your kitchen ordering system with your front of house
- Refreshing your website or making it mobile-friendly
- Creating a customer app
- Upgrading your inventory or bookkeeping systems
Day to day operations
- Getting a financial boost during slow periods
- Reprinting menus and wine lists
- Replacing worn check presenters, menu covers, and table tents
- Purchasing new staff uniforms
- Participating in community events that promote your restaurant
- Offering special tasting dinners or engaging in a local Restaurant Week
Do I qualify?
Business owners that would like to benefit from the restaurant financing option offered must:
- Be a sole proprietor, LLC corporation, or partnership.
- Regularly accept credit cards for check payment.
- Provide three months of business results.
- Be located in the United States.
We works with all restaurant types — casual, upscale casual, fast casual, fine dining, family, or quick serve — as well as bars and clubs. We’ve funded over $2 billion dollars to restaurants and businesses of all shapes and sizes looking for cash-flow friendly financing options that can be approved in as little as 24 hours.
Our application process is simply. We require that you complete a one page application, and send us copies of your bank account statements and credit card processing statement. Our underwriting team will then crunch the numbers and return with a decision. Once approved, the contract and terms are sent out for you to review. Once signed and returned, the money is wired to your account. No collateral required. Bad Credit OK. All we ask is for you to be in business for 6+ months and the numbers prove to us that your business qualifies or not.
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