It is known that people who own and run eateries have struggled enough to obtain finances to smoothly operate their restaurants. Thus, the primary reason why most of the startups and new restaurant businesses fail is that of a lack of sufficient working capital and funding to carry day to day activities. Therefore, it is essential to make restaurant business loans easier and accessible for such business owners.
Initially, businesses made use of conventional loan options such as bank loans to get access to working capital. Typically, every business requires an extra infusion of cash to take care of their financial needs, which is why there are more alternative lenders financing small businesses and startups.
Entering the eatery business is a popular choice. However, it is a significant expense. The cost to open a startup restaurant varies from the type of eatery and the audience you are targeting. But, the costs vary from tens of thousands to millions of dollars.
It is believed that most of the small business owners who are looking to enter the restaurant market do not have sufficient funds available to carry forward with their plans. They require some sort of restaurant business loans to help them become forthcoming restaurant owners. Even if you do not have the desired total sum of cash available at that moment, do not lose hope. Potential restaurant owners have been leveraging multiple lending options to pursue their dreams.
It is important to understand that today the need of having a steady funding source is more than ever. In addition to this, it is essential for a restaurateur to know that the cost of essential items required daily is growing. Whether you need inventory, fresh supplies, wages, and more all needs finances. One of the funding options that these restaurant owners are using is merchant cash advance option due to the convenience and flexibility it offers.
In recent times, more people are preferring to go cashless than carrying money. Thus, such audience prefers transactions to be happening through credit and/or debit cards only. Whether it is shopping, dining out, or any other transaction, they are willing to pay through cards rather than cash. This is the primary reason Merchant Cash Advance has took over the payment, transaction, and lending world by storm.
Why is there a need for restaurant business loans?
A restaurateur may require restaurant business loans for the following reasons:
If you own a restaurant or planning to open a startup eatery place, you know how expensive it is to acquire equipment. Equipment such as stovetops or industrial ovens are a significant expenditure, and if you do not have large pockets, it might not be possible to make the purchase.
In case you do not have sufficient funds available right away to purchase new equipment or are unable to upgrade it on your own, it does not mean you cannot do it anyways. Conventional or alternative lenders can provide you with the funding to either purchase or upgrade your equipment.
Restaurant business loans are essential to get quick access to working capital that can help you meet daily financial needs of your restaurant. When we talk about working capital, it means you are looking for a short-term loan that will cover your day to day expenses while your business is functioning optimally.
As a restaurateur, it is essential to keep purchasing, maintaining, and updating your inventory. This is one of the most common challenges for business owners involved in an eatery business. With the extra infusion of cash, you do not have to worry about covering food costs.
Types of Restaurant Business Loans
The different types of loans for your restaurant business are as follows:
An alternative loan is an ideal option for those restaurant owners who have been in business for quite some time, but they do not qualify for an SBA loan due to lower credit score or revenue. This type of loan is well suited for those who are looking for short-term funding to carry out essential operations such as purchasing supplies and more.
Equipment financing enables restaurant owners to purchase appliances, chair, furniture, fixture, tables, and other equipment. It is designed and dedicated especially to finance equipment purchases and can span to roughly one to five years tenure.
Other Options for Restaurant Business Loans
The two options mentioned above are the most common and used to access restaurant business loans. However, these options might not be well suited for several restaurant businesses due to their individual needs.
Credit cards are one way to take care of smaller purchases that may include buying ingredients and more. But, when it comes to purchasing or acquiring something that requires larger capital, you would want to look for the alternative lending options.
In recent times, merchant cash advance or MCA has gained immense popularity among startups and small businesses who are operational for six months or more. Whether you are a bad credit score or lower revenues, an MCA lender will facilitate your request and provide you with lump sum advances of cash in return for your future credit card sales. Thus, MCA becomes the only option through which you can get quick restaurant business loans.
Why Merchant Cash Advance for Restaurant Business Loans?
As a business owner of a startup restaurant, you might be concerned about why you should choose a MCA over other lending options or conventional loans. Before beginning, it is essential to understand that merchant cash advances are viable options whether you require funds to finance equipment purchase or working capital. The reason why MCA is a better solution is that it provides a higher funding amount than other options. As a restaurateur, your goal is to get quick access to the maximum funds you need to get the job done. With merchant cash advances, you do not have to worry about the amount of funding you will receive.
In addition to this, the process to get access to fast cash is simpler and involves less paperwork making it more preferable for small businesses and startups. It is believed that businesses are eligible for the funding amount that is 1.5 times higher than their credit sales over a certain time.
If we compare repayment terms with alternative and conventional funding options, restaurateurs have flexibility as the lender will be directly connected with the business’ merchant processor. Thus, a specific percentage will be deducted depending on the sales made on a daily, weekly, or monthly basis.
Benefits of Choosing MCA as Your Preferred Restaurant Business Loans
According to MCA providers, it is believed that the restaurant industry leverages merchant cash advances the most than any other industry. The primary reason is that the conditions set by MCA are well suited for restaurants to take utmost benefit of MCA product.
Here are the benefits of choosing MCA as your preferred restaurant business loans:
- Convenient Application Process: It is understood that most business owners get tired of filling paperwork after paperwork to get approval for a loan. However, in most cases, it is nearly impossible to get restaurant business loans if you do not have a perfect credit score. When you choose MCA, the application process is simpler and easier. There is no tedious process involved, and you do not have to worry about providing any collaterals. Apart from this, MCA providers do not require detailed financial statements to approve an application. They only require monthly credit card returns, the time period you have been in business, and future credit card sales.
- Higher Approval Rate: Merchant cash advances are best known for higher approval rate as they do not make decisions by credit history. Business evaluation grants you restaurant business loans, and you can easily get 1.5 times funding than conventional lenders provide.
- Revenue Based Repayment: MCA offers revenue based repayment terms which means you do not have to worry about making monthly payments of a fixed amount. There comes a time where your business is not operating at its peak – and during slower seasons, you may not generate as many sales as you would like. Thus, the amount you repay to MCA lender depends on the sales you make on a daily, weekly, or monthly basis.