Restaurant Financing: Merchant Resources Bring Food to the Table

In the midst of a credit crunch, there are ways that restaurants can obtain financing. Forget the traditional routes and focus on a merchant cash advance.

The Recession Formula: Capital Minus Control
QSR Magazine characterizes the difficult position that restaurateurs can find themselves in while searching for start-up or expansion capital in the midst of a recession. It all comes down to control. As traditional lenders work to reduce their level of risk, the process often leads to numerous restrictions placed on how the owner can run his or her own business. With requests ranging $500,000 to $1.5 million, for example, owners will find banks want to dictate many of the daily operations based on typical returns on that investment.

How the Merchant Cash Advance Comes into Play
An MCA can be the smartest capital-raising move an owner can make simply because the credit issue is taken out of the equation. According to Vendorseek, merchant cash vendors appropriate their advances based on expected sales receipts. This is good news for those owners with questionable credit histories. Of course, the flip side is that the restaurant should have a history of strong sales. Franchises often benefit the most from this arrangement. But what about start-ups?

Start-ups are Still Eligible for Financing
A press release form PRLog offers hope for restaurant start-ups without a history of strong sales. Rejections aside (because there will be those, also), many MCAs offer programs expressly customized for restaurateurs looking to get a venture off the ground. Requirements vary according to the MCA, but the bottom line is that it is possible to take advantage of this nontraditional form of financing.