Is Merchant Cash Advance The Best Way To Finance Restaurants?
Unlike other establishments, restaurants are normally classified as high risk businesses. This means that the owner can find it hard to finance restaurant both at start up and when upgrading the establishments. Many restaurant owners have found themselves waiting for weeks or even months before their request can elicit any action from financial institutions which can cause the business to fail. This is why there is a need for different options such as a merchant cash advance to fill this void.
The merchant cash advance is not offered on the same terms as a normal loan. It is basically an advance based on your credit card receipts. This means that the provider will take a look at the monthly credit card processing statements then find an average. The amount you receive will therefore be a percentage of the average figure.
The percentage can therefore be 100%, 120% or even higher depending on the turnover of your restaurant. The issuers also consider the bank statements to find out if there are any issues such as bounced checks. If present, it indicates that the cash flow rate is very low leading to failure to meet the business obligations.
The good thing about merchant cash advance is that the issuers also consider whether you have taken steps to rectify all the problems. If so, they will not penalize you for the issues. The other requirements for application are also flexible and include your business license, a copy of the lease agreement and a credit score above 525.
What about repayment? This form of financing is offered on the principle that you will hand over a certain portion of your expected credit card revenues. This means that in the even of a bad month, you do not have to take extreme measures to meet the payment amount. However, you are supposed to stick to the contact terms. Otherwise you can be held accountable.
The advance is also processed quickly which makes it great especially when you are upgrading to meet a certain requirement. After approval the processing takes around ten days or even less. Remember, no collateral is required as product is based on transactions set to happen in future.
So, if you want to finance restaurant business, one of the best ways to access finance is through a merchant cash advance. Remember, most restaurants and especially those that have been in business less than a year will find it hard to meet the requirements set by most banks.