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Restaurants can be a tricky business. With enormous costs to keep a kitchen operating, the decor from falling apart, and enough staff on payroll, restaurants need constant operating funds to keep moving forward. Considering all of that as well as the razor-thin margins in the industry, many of these establishments are starved for capital.
If your restaurant is in need of cash and has already been denied a loan with a traditional bank, this doesn’t have to be the end of the journey.
During the past several years, as banks have become less friendly to small businesses seeking loans, new forms of financing have appeared, thanks to alternative lenders. These lenders offer products including small business loans, merchant cash advances, and accounts receivable factoring.
Nowadays, the question for small businesses is not whether they can get capital, but what type of financing is right for them. Typically, restaurants will be choosing between a small business loan or a merchant cash advance.
A small business loan is often a great choice. Alternative lenders can usually offer up to $1 million in financing with a term anywhere between 6 months and 10 years, depending on your needs. The interest rate fluctuates between 8% and 25%, depending on your credit score, collateral, business plan, experience, and additional factors.
Merchant cash advance loans are another helpful option that some restaurants might want to use. MCAs can often give your restaurant access to cash faster than would other loan options. With an MCA, the borrowing restaurant agrees to pay a fixed amount of its credit card revenues each day until the debt has been paid off. If you need cash now, then MCAs are worth a look.
Either of these options could easily help a restaurant that needs to repair equipment, redecorate, hire more staff, or anything else that might be holding it back from reaching greatness. And the good news is that restaurants can qualify for these even with less-than-stellar credit, and the turnaround for getting that cash is typically less than a week.