While owning a restaurant seems cool and trendy, the reality is restaurant business is tough. Fierce competition, strict regulations and constant change in consumer’s behaviors create a huge challenge for restaurateurs to sustain in the business.
To be able to survive for a long-term in the restaurant business requires steady cash flow to ensure things keep running even when the market slows down. As a restaurateur, you need to have enough fund ready at all times in the bank to cover expenses from the regular ones such as payrolls, up to overhead. If you’re not one of those business owners who was born with a golden spoon, this is where merchant cash advance loans would be beneficial for your business.
Here we put together a guide for merchant cash advances for you to help you make the right decision for your restaurant business.
What is a merchant cash advance?
Merchant cash advance is a non-traditional lending institution which offers loan in the form of an advance on your future credit/debit card sales. The amount of loan you get depends on how much you need, and the payment will be taken daily from your credit card sales. Merchant cash advance is popular to small to medium sized business because it offers easy approval, minimum paperwork, no collateral, and quick funding, usually within 5 days after you apply.
Can restaurants use merchant cash advances?
Merchant cash advances would be ideal for restaurateurs due to its flexibility in using the fund. You can use the loan to upgrade your kitchen equipment, or expanding your restaurant, or hiring a prominent chef to increase your restaurant reputation and quality, the choice is up to you as the restaurant owner. As long as you maintain your daily sales volume performance, merchant cash advance providers will not bother you with reporting requirements.
Is merchant cash advance similar to business loan?
A business loan requires you to have strong revenues and cash flows, and good personal credit score which would be difficult for you if you’re not any of those. Whereas merchant cash advance doesn’t need any of those to qualify for the loan. Also, merchant cash advance gives your restaurant business a higher funding amount while business loan set their loans based on your current financial statements. The repayment terms flexibility also one of the advantages you can enjoy from merchant cash advance because there are no payment dates to worry about and you literally paying it off yourself from your credit card sales volume every day.
What do I do if I have trouble repaying the merchant cash advance due to business slowdown?
One of the main reasons why merchant cash advance is popular among small-sized business is due to its flexibility to adjust to your business conditions. When you experience a downturn in your sales or you are facing repayment issues, you can talk with your merchant cash advance provider and request a review of your account. A good merchant cash advance provider will be able to get you back on track with adjusted payment terms, as long as you maintain a steady credit card sales in the meantime.