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Finance

Restaurant Financing With a Merchant Cash Advance

April 6, 2022 · 3 min read

As a restaurant owner, you know that cash is king. When you first start(ed) your business, expenses such as equipment, marketing, and hiring employees to mean that you have to spend without making sales. Even once you get going, it can take a while before you break even. Finding restaurant financing isn’t easy because they are viewed as risky businesses. Fortunately, a merchant cash advance may help.

What Is a Merchant Cash Advance?

If you accept credit cards, which you almost certainly do, getting a cash advance on your merchant account may be an option. This form of financing gives your money now that you pay back (along with fees) with a portion of your credit card sales. Whether you take Visa, MasterCard, American Express or anything else, you can take advantage of this to get fast and flexible funding.

Technically, an MCA is not a loan. Instead, you are selling a portion of your future sales. Typically, this is a set amount that is taken daily or weekly from your merchant account. Repayments are usually automatic.

What Are the Benefits of Using an MCA?

There are many great reasons to consider taking a merchant cash advance. These are just a few of the most significant:

  • You can likely qualify if you have established sales. Many businesses that could not get a normal loan can qualify for an MCA.

  • You can use the money for any purpose including working capital, equipment purchases, payroll and more.

  • You get a chance to invest in your business’s success without worrying about using up all your available cash.

What Are the Rates and Fees?

Merchant cash advances do not accrue interest. Instead, they are typically charged a factor rate. This is a percentage (typically between 110% and 150%) of the advanced amount that you will need to pay back. If your factor rate is 1.2 (or 120%) on an advance of $10,000, you would need to pay back $12,000.

Additionally, there may be some fees such as an origination fee. However, some lenders do not charge any fees beyond the factor rate (excluding late fees and other penalties – all lenders charge these).

Learn More

Could a merchant cash advance be your answer to restaurant financing? This could be a way to get your restaurant business on the path to success. Beyond friends and family, this is one of the most popular ways to raise capital to cover initial restaurant expenses. Contact us today.

By Rexford Commercial Capital

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