As a restaurant owner, your business needs financing to keep it afloat. As a financing company, we know that’s not always easy. Many restaurants can find cash flow management to be a challenge. However, there’s a solution.
Merchant cash advances are an alternative to a loan that provides your restaurant with flexible financing in the event of an unforeseen emergency or sales slump. Think of it like a short-term financial reboot. Here’s how a merchant cash advance can bridge the gap between now and your restaurant’s next big break.
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What Is a Merchant Cash Advance?
A merchant cash advance (MCA) is a type of short-term funding that is especially valuable to small businesses. Many small businesses turn to merchant cash advances when looking for an alternative financing solution that can provide them with flexible working capital when they need it most.
Funding for merchant cash advances works by giving businesses upfront access to a lump sum of cash in return for a percentage of their future credit card sales at a discounted price. This allows payments to be tailored to the flow of business sales. This is a beneficial option for small businesses with high credit card sales, such as restaurants.
Merchant cash advances are beneficial because they allow your business greater flexibility in how your small business allocates its funding. Unlike traditional small business financing, merchant cash advances are a purchase and sale transaction. This allows your business to use an MCA for almost any business expense.
There are many ways your restaurant could benefit from a merchant cash advance. We’ve compiled a list of some of the main advantages your restaurant can gain from seeking funding through an MCA and provide guidance on how your restaurant can attain one.
5 Ways Restaurants Can Use a Merchant Cash Advance
1. Update Kitchen Equipment
Outdated or broken kitchen equipment can take a big hit on cash flow. Are there any pieces of equipment that are costing your business? A small oven could limit your production, or a malfunctioning fridge could cost your business wasted inventory. An MCA can provide your business with the funds it needs to replace kitchenware items like these.
On top of just improving or upgrading existing equipment, your business could use a merchant cash advance to add to its kitchen. Maybe you’re considering an espresso machine to start serving hand-crafted coffee drinks. Whatever the project, an MCA can help.
2. Bridge Cash Flow Gaps
Seasonal factors can have a massive impact on the restaurant industry. If your cash flow fluctuates throughout the year, an MCA can help. This type of financing covers a shortfall in funds so your business can keep running.
If your business has a slow period that causes it to operate with limited working capital, a merchant cash advance could help improve cash flow and allow your restaurant some room to breathe.
3. Use Funds for an Emergency
While your business may not have immediate needs for a merchant cash advance, your business can’t predict the future. An MCA provides your business with fast, flexible funding in the event of an emergency.
Natural disasters such as floods, hurricanes, or tornadoes can cause colossal destruction to your business. If an emergency like this occurs, your business may receive property and equipment damage. Your business could even experience a loss in customers and staff due to that damage.
A merchant cash advance can be helpful in these cases by providing a safety net to help navigate unexpected emergencies, including property damage, equipment malfunctions, fires, and more.
4. Grow Your Business
A merchant cash advance allows you to invest in areas of your business that need to be enhanced. This could include renovations, expansion, and more to help grow your business.
While many small business loans come with lending restrictions that can determine how restaurants utilize their funds, an MCA is not a loan, so it may be more flexible, meaning your business is free to spend the funds to fit its unique business needs.
Rapid Finance created a free small business guide for bars and restaurants to help you determine the best way to grow your business.
5. Hire Employees
The restaurant industry can have a high employee turnover rate. Staying on top of hiring can be rough, especially during busy seasons, and your restaurant may need to add to your team quickly. A merchant cash advance can provide funds to help keep your restaurant fully staffed, hopefully leading to faster service and higher profits.
Applying for a Merchant Cash Advance
Obtaining a Merchant Cash Advance from Rapid Finance is simple.
Your Restaurant Only Needs 4 Things to Apply
- A valid form of identification
- Business bank account number and routing number for deposit
- Last three months of business bank statements
- Your business’s last three credit card processing statements
Experience fast and flexible funding with a merchant cash advance from Rapid Finance. Our merchant cash advance gives small businesses, like restaurants, quick access to working capital to supplement cash-flow gaps and facilitate short-term needs.
Merchant Cash Advance with Rapid Finance
- Our merchant cash advance amounts start at $5k and range up to $500k
- Payments are calculated based on a percentage of the business’s credit card sales or other revenue receivables.
Estimated Completion Date
- Payments are based on the business’s receivables, so there is no fixed payment term.
Complete the application through our online portal in just a few minutes.
Click APPLY to be directed to our online portal.
Our team of trusted business advisors will carefully review your business application.
If approved, we’ll send the funds to the business bank account you provided.
As a restaurant owner, it’s crucial to understand your business’s cash flow needs. A merchant cash advance can provide a fast funding solution to your restaurant with quick access to the working capital your business needs to facilitate short-term requirements.
A merchant cash advance could be ideal for your restaurant if you need funds to help grow your business, update equipment, hire new employees, or prepare for emergencies.
If you decide that an MCA is the best small business financing solution for your restaurant, use this article to help navigate your financing journey.