Restaurant Financing: Thawing Credit, Frozen Hiring, and How the MCA Can Get Everything in Synch

On the restaurant financing scene, mixed signals have some stalwart eateries calling it quits while a new generation of lean up-starts jumps in the mix. It finally appears credit is thawing at a slow-but-sure rate. However, it’s the hiring belt that’s freezing-up this time. Perhaps MCAs can get everyone in line.

Credit Drips Slowly Back to Its Former Self
A couple of recent developments have positively affected restaurant financing. According to QSR Magazine’s Operations expert blogger Nick Diulio, the American Recovery and Reinvestment Act includes more than $630 million in funding to improve and strengthen SBA loan programs. Also, the Federal Government is expected to purchase up to $15 billion of loans from the SBA 7(a) and 504 lending program to encourage new small-business lending.

Hiring-timid Owners Stall Initial Progress
But it seems that all of the restaurant loan news isn’t always on the up-and-up. Restaurant News Resource reports that a general aversion to hiring new staff members as the recession slowly recedes is hampering the growth progress. In fact The NPD Group, a leading market research company, all segments of the U.S. restaurant industry experienced traffic declines in the first half of 2009.

Merchant Cash Advance Might Satisfy Everybody
Vendorseek, one of the fastest growing business resources online, reveals that the merchant cash advance financing is still ideal for organizations that depend on receipts--such as restaurants. No APRs and repayment based on monthly volume is an attractive arrangement for these businesses. Plus, immediate access to funds is another critical benefit.

Merchant Cash Advance Potpourri: Why It Beats Traditional Lending, the Downside, and How to Choose

The merchant cash advance has gained notoriety as of late, particularly in these challenging economic times. While the requirements to obtain an MCA are tightening, this financing vehicle still holds the edge over the traditional loan.

Increasing Criterion Make MCAs More Challenging to Get
Small and mid-sized business looking for financing via merchant cash advance will be met with additional hassles. According to a report from Access My Library, merchants experiencing the difficulties of inflation and available credit are passing them on to potential customers. However, merchant cash advances still hold all of the benefits that made them popular in the first place: no APRs, no down payments and no collateral.

MCAs Still Trump the Traditional Financing Options
Francisco J. Acosta, Executive Vice President of Internal Business Consulting, emphasizes the power of the MCA over traditional lending. Acosta reveals the following big bank policies that make borrowing difficult:

• Banks loan money based largely on FICO score; anything under 680 usually results in a decline, a rate that is up to 98%
• Banks demand repayment on a fixed schedule; miss a payment and interest rates will go through the roof
• Banks typically will not lend you any more money during a repayment period

How to Choose a Reputable MCA Lender
Los Angeles Times blogger Karen E. Klein advises several tactics for choosing the right merchant cash advance vendor. Her top suggestions for picking correctly include choosing a strong franchise brand and reject any offers that require an application fee of any kind.

You can get more management advice, including financing support and direction, from AllBusiness. "Managing in the new millennium: managing in an economic downturn" discusses the challenges facing CEOs and why a merchant cash advance may be one piece of the puzzle.

Unsecured Business Loans: Mixed Signals from the Front Lines

To use unsecured business loans for start-up or expansion--or not to use? That's the question facing many small business owners who find themselves capital-hungry but short on collateral. And mixed signals from lenders aren't helping.

The Brits are Shying Away from the Unsecured
The UK can be seen as a microcosm for tanking unsecured business loans trend. According to Online Loans, there has been a 37 percent drop in the number of providers offering unsecured loans since July 2007. In addition to the drop in activity, the fees for this financing vehicle have grown considerably. To make matters even worse, those that are still lending are moving the unsecured portion to a different branch, such as the Barclays Bank brand.

The Feds are Embracing the Unsecured
The Personal Money Store blog is quick to point out that the Federal government has not turned its back entirely on unsecured business loans. Federal Reserve Chairman Ben Bernanke is of the opinion that the health and viability of small businesses depends entirely on access to sufficient operating funds. Unsecured business loans may be required to do that, as owners find themselves with little collateral to offer other than future business.

More Changes that Effect Unsecured Borrowing
Andrew Freiburghouse, a writer, businessman and blogger for Rebuild.org, summarizes several new changes to unsecured business loans that will no doubt affect the way owners borrow in the immediate future. They include a simplified application process, the inclusion of a solid repayment plan, and the virtual disappearance of credit card lines.