Traditional banks are less eager to give loan for restaurant business due to the high-risk nature of the industry. This situation makes it difficult or almost impossible for most restaurateurs to get a loan to grow their businesses.
Fortunately, there are still options for restaurateurs to securing a loan for their businesses. Merchant cash advance is one of the funding alternatives where you can get financed without going through the long and frustrating process of applying for bank loans. Merchant cash advance is not a loan, it’s technically a cash advance given by the merchant cash advance provider through the purchase of your restaurant’s future credit card sales transactions volume. You basically pay it off yourself by maintaining your sales volume every day.
Here are a few advantages you will get when you apply for merchant cash advance for your restaurant:
1. Easy and Quick Qualification Process
Applying for a bank loan comes with a lengthy qualification process. You must have excellent credit history, collateral, and tons of paperwork to send. The review process will take weeks or even months until the bank informs you with the approval decision.
The beauty of merchant cash advance is in its quick application, where you only need to fill out a form of your business information such as business size, bank statement or sales volume. You don’t need to have a credit history or give collateral when applying for merchant cash advance. Loan approval will be given within 48 hours after you applied.
2. Higher Approval Rate
Since restaurant industry is considered as high-risk, the approval rate for restaurant loans usually is very low. Merchant cash advance is a different story, because with this type of funding, instead of giving you a loan, the lender is technically buying a percentage of your future sales transaction. So as long as you can offer valid sales transaction history, your chance of approval is higher than traditional banks.
3. Affordable Repayments
Interest rates and monthly payments are part of the responsibilities that come with bank loans. The downside of these payment terms is when your business is having tough months and you lack the money to make the monthly payment, the bank will not adjust the amount of payment you have to pay and will charge a penalty fee if you failed to pay the same amount.
With merchant cash advance, your repayments are solely based on your sales transaction volume purchased by the provider. So if you’re dealing with slow months, you can adjust your repayments to your current financial condition. When your business bounces back, you can make larger payments and pay off your loan faster.
4) Flexibility in Utilizing Loan
Traditional banks usually require you to provide a thorough business plan on how the loan will be used. They will analyze and calculate the plan and in the end, give you with a lesser amount of fund from what you requested in the beginning.
Merchant cash advance gives you the flexibility in using the loan. You basically can use the loan to do whatever you can in terms of growing your restaurant business. You can use it to expand your restaurant, or upgrade your kitchen, or even hire more staffs to support your business. It’s your decision and merchant cash advance provider will not interfere with your decision.