It has become imperative for business owners to have a source of business funding to provide extra cash to the organization whenever required. Luckily, if you are a merchant, you can leverage merchant funding which is one of the alternative lending options for businesses. In this type of business finance, owners can easily secure a loan or advance in exchange of their future credit card sales.

The concept of merchant funding is indeed complicated. You can find multiple financial products that are designed to help businesses cover their financial needs. Thus, business owners are confused as to which merchant financing option is best suited for them. Securing a business funding is easier said than done. Your first step should be to devise a plan and determine your financial needs. It is essential to categorize them – for instance, whether you require funding to increase working capital, purchase equipment, payroll, and more. No matter what the intent of the need is, it has to be made clear to the lender beforehand.

If we talk about merchant funding options available three to four years ago, they were only limited to traditional bank and financial institutes. Recent technological advancements have changed the way people solve their problem – whether it is financial or anything else. The internet has changed the perception of business owners to conduct business operations. This has also impacted the way owners look for business funding.

Alternative lending options have made it easier for businesses to obtain financing even if they have a bad credit history. With merchant funding, it has become easier than ever for companies with less than perfect credit score to get the required funding to conduct business efficiently. Loans and advances are available to business owners through online lenders in secured and unsecured forms.

As a business owner, you must understand the significance of merchant financing to help you survive a financial crunch. Whether you are a startup, small business or an established business – a steady cash flow is necessary to maintain at all times.

Read More: All You Need to Know About Unsecured Business Funding

The need for merchant funding for restauranteurs

It goes without saying that cash flow is necessary for every business that wants to succeed. Thus, the need to obtain merchant funding is more than ever whether a business gets it through traditional or non-traditional means. It is a well-known fact that banks and financial institutions have stopped facilitating applications of those companies that do not have a perfect credit score. This is where alternative lending options come into play that has gained immense popularity among all types of businesses such as restaurants.

Despite being a riskier industry, restaurant owners have been using the business funding to ensure increased productivity and efficiency levels. There are several reasons why restaurant owners opt for financing – one of them is known as remodeling. Majority of restaurants are not completely satisfied with the look of their place or brand. With sufficient funding, they plan to remodel to increase profitability. For such owners, merchant financing is an ideal solution to obtain the required capital.

One of the primary things clients look for in a restaurant is the ambiance it offers. Whether your restaurant is Japanese, American, Thai or Indian – the decor, lightings, and furnishings play an extremely important role in the sort of mood you wish to achieve amongst your patrons.

Such considerations are extremely important if you wish to revamp your brand’s image. By opting for a renovation, you can gain the interest of people encouraging them to try your restaurant.

It needs to be understood that changing the look of your restaurant drastically can be extremely disconcerting for some clients, but opting for small yet significant changes can breathe in a new look to your overall brand. Even those brands who have been in the industry for a long time have benefited from remodeling.

As a restauranteur, you can do the same for your business. For instance, you can acquire business capital from a merchant funding provider which will help you in giving a modern touch to your business, resulting in an increase in the influx of customer.

Therefore, if you are looking to change the look of your restaurant or the overall brand, you would need the help of a merchant funding provider. There are numerous lenders available in the market and you will have to carefully choose the one that fits your needs. You can look for a company that offers the most advantages including flexible repayment terms, quick approval, easy application process, and more.

In one of the most common types of merchant financing known as merchant cash advance, you will be transferred your required capital in a matter of days. It has become that quick and efficient! Merchant cash advance has grown to become one of the most leveraged financing options in recent years that do not only have minimal requirements but is proved to be beneficial for startups and small businesses. In addition to this, businesses do not require a collateral to secure funding.

What can you do with merchant funding?

According to sources, it is believed that there are nearly 750,000 restaurant owners in the United States. Thus, whether they are established or newly started, obtaining funds to efficiently run their businesses has become a challenge. Depending on the type of business, there will come a time when you would need to make investments to offer a better experience to users. For instance, if you are running a fancy fine dining restaurant with a packed reservation list, there will be a need to purchase new kitchen equipment to replace the old ones. Small restaurants might require capital to grow and expand, or create a steady cash flow.

With access to merchant funding, you will have the ability to respond to unexpected expenses or take full benefit of the opportunities that come your way. Here, we have shortlisted a few ways you can utilize the funding obtained:

  •    Expand your existing restaurant to meet increased demand
  •    Grow your business
  •    Expand franchise territory
  •    Remodel your restaurant
  •    Purchase new kitchen equipment
  •    Manage payroll and other expected/unexpected business expenses

Qualification criteria for merchant funding

If you are looking to opt for a MCA for your restaurant business, here are some basic qualifications that you must meet:

  •    You should be in business for at least six months
  •    Your business should accept credit and debit card payments
  •    You should have a reasonable credit score

In a majority of cases, you can initiate a merchant funding application online by visiting the lender’s website. Once your application is approved, the provider will list all the terms of repayment and other related things in an agreement. When you finalize it, the lender will deposit the money directly in your account.

It is said that the availability of MCAs is totally dependent on the strength and performance of a business. As a restauranteur, you should at least accept credit and debit card payments and be easily generating $5,000 or more in sales on a monthly basis. The eligibility and approval criteria are easier when compared to conventional bank loans.

Read More: The Best Unsecured Business Loans of 2018

Merchant cash advance – ideal solution for restaurant owners

As a restaurant owner, you will have multiple options to choose from to obtain financing to cover the financial needs of your business. However, a major issue with getting access to merchant funding as a restauranteur is that it gets difficult to obtain financing due to being in a risky business. Research has shown that the industry has a relatively high failure rate which forced banks to limit their funding options to restaurants.

This is where alternative lending options come into play as they become the only important source of financing for this industry. So far, restaurant owners are satisfied with the offerings of merchant cash advance. MCA lenders can easily provide funding of up to $250,000 in a matter of days.

Let’s be clear, a merchant cash advance is not considered a loan. It is an agreement between the borrower and lender where a business (borrower) receiving an upfront cash payment from the lender in exchange for their future credit card sales.

Another benefit to businesses is that repayment terms are flexible. Whatever sales a business makes on a daily or weekly basis, a percentage amount agreed between both parties will be automatically deducted to repay the borrowed amount. Regardless of the repayment terms, the amount has to be paid in full within one to two years.

As the repayment terms are set on the basis of daily or weekly credit card sales you make, the repayment amount will vary accordingly. When your business is performing well, you will repay more; while when business is not doing so well, you will repay less. In this type of merchant funding, you do not have to worry about making fixed monthly payments. This makes a merchant cash advance a lucrative option for restaurants that experience seasonal fluctuations.