Restaurant Loans: 4 Advantages of Using Merchant Cash Advance Loans

Posted by Factor Funding Co. on October 28, 2014

With the recession still a painfully fresh memory, banks are increasingly wary about lending people money. People who genuinely need cash to keep their businesses afloat often face disappointing denials when they limit themselves to borrowing from these institutions. In particular, restaurant owners face one of the biggest risks of being denied simply because traditional lenders view the restaurant industry as too risky and not financially lucrative enough to guarantee repayment.

Despite signs indicating that more restaurants are faring better today, banks still are less than eager to extend financing to these types of businesses. With that, you may wonder what your best options are when it comes to securing cash for your own fine dining establishment. You can get the money you need today and avoid the frustration and disappointment that comes with applying for traditional bank loans when you consider the advantages of utilizing merchant cash advance loans.

1) Easy and Fast Application Process

You may well know the lengthy process that comes with applying for a bank loan. The paperwork itself can take hours to complete to the bank's satisfaction. After you get the paperwork submitted, you must then wait days to hear if you are approved or declined.

Time can be of the essence, however, when you need cash for your business. When you lack the time to wait around for an approval, you can instead fill out an online application for merchant cash advance financing. The application generally takes only a few minutes to complete; even more, you can usually find out within hours if you are approved. This shortened process can give you the money you need faster.

2) Better Chances of Approval

After spending a great deal of time filling out a bank loan application, it can be crushing to be told that you are not approved for the money you need for your restaurant. When you want to improve your chances of being financed, you can bypass banks altogether and instead choose a merchant cash advance lender to provide you with the funds your business requires.

Because this type of financing is unlike that offered by a bank, the credit and collateral criteria differ greatly. In fact, you typically do not need to put down any type of collateral like a house or car to secure the loan. Rather, the lender buys a percentage of your future credit card sales and bases the amount of your loan on these numbers. You can be approved quickly for your loan without going through the typical lending process that is found at most traditional banks today.

3) Affordable Payments

Bank loans often come with fixed interest rates and payment amounts each month. If your business staggers one month or you lack the money to make the payment, the bank often will not reduce the amount of your payment or adjust the amount of interest you must pay.

However, with merchant cash advance loans, your payments are based on the credit card sales purchased by the lender. If you have a slow month, your payments will be more affordable and in line with your current financial circumstances. You will not be expected to make impractical payments that leave you scrambling for money on which to operate the rest of the month. Likewise, if your restaurant does well during the month, you can make a larger payment and pay off the loan faster. The lender bases the payments on the purchased credit card sales of your restaurant.

4) Flexibility for Using Cash

Banks are notorious for requiring in-depth explanations for how a loan will be used. You may have to provide documentation about prices and bids before the bank will lend you any cash. Even more, it may only extend you just enough money to buy essentials for your restaurant and leave you no money left over for emergencies or other purposes.

However, a merchant cash advance loan can be used for a multitude of purposes with little or no explanation. If you need to buy new equipment for your kitchen, you can do so without fearing that the lender will revoke your funds or require you to use the money for another purpose.

You can also use the cash to build your brand or expand your menu. Purposes such as these often are viewed with less favor by banks because they do not provide tangible collateral that can be seized in case you default. Even so, these purposes are vital to you being able to run a successful restaurant. With that, a merchant cash advance loan can give you the opportunity to expand your menu, build your brand, and grow your business as you see fit.

Banks are still wary about loaning restaurant owners money. When you need money today to grow your fine dining establishment, you can get financed without experiencing the same frustration and disappointment that comes with applying for bank loans by choosing merchant cash advance loans instead.

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