Restaurants take advantage of merchant cash advance (MCA) financing more than any other business, according to leading MCA providers. Its not difficult to see why: food service businesses are particularly well positioned to take advantage of the MCA product. Restaurant owners rely on quick access to working capital to respond quickly to market shifts and invest in the growth of their business.
Fresno, CA -- (SBWIRE) -- 01/04/2016 -- As an alternative to other business financing options, business owners oftentimes turn to merchant cash advances when they need to infuse some quick cash into their companies. Basically, a merchant cash advance is not a loan. It is the sale of a percentage of a company's future credit and/or debit card sales. As a result, companies that provide these cash advances are not typically bound by the usury laws of the state that they are located in. Those laws limit banks and lenders from charging excessive or usurious interest rates.
Merchant cash advances were originally set up in the form of a lump sum payment in exchange for a percentage of the company's future credit and/or debit card sales. However, the terminology now applies to a number of financing options geared to smaller businesses that need shorter payment terms and smaller monthly payments. These factors are not commonly associated with the more traditional financing and loan options that are currently available. The term "merchant cash advance" is also used to describe receivables and revenue factoring as well as short-term business financing and lending.
The Benefits of Merchant Cash Advance Funding
Financing is one of the most crucial aspects of starting up a business and there are a number of options that are currently available to aspiring entrepreneurs. One such option is the merchant cash advance and it is one of the best ways for you to obtain anything and everything necessary to starting up your business. Based on the fact that you can get the funding you need to expand or start up a business, it is similar to a small business loan.
However, the key difference between a merchant cash advance and a small business loan is that the latter requires collateral in order to secure it whereas a cash advance is unsecured. Unlike the more traditional business loans, the merchant cash advance is based entirely on that company's cash flow. The primary benefits of this type of funding include:
No demands for equity ownership shares in the company
No investigation of you and your company is required
It is the cash flow that is generated from your credit and debit card sales that merchant cash advance approvals are based on.
Restaurant Financing On Time
Restaurants are on the frontlines of the service sector, subject to the changing tides of consumer demand. Survival in the volatile food service industry depends on agility. The ability to seize opportunities and evolve with the times distinguishes the perennial dining favorite from the fleeting hot spot. Merchant cash advances help restaurant owners keep pace with the marketplace by anticipating emerging trends and tastes.
Instant access to working capital enables restaurateurs to:
Invest in new equipment, from kitchen appliances to computer systems and beyond
Update restaurant decor or design
Take advantage of limited-time offers and volume discounts from suppliers
Establish a new location
Ramp up capacity in response to an upswing in demand
Host a promotional event
Marketing and advertising campaigns
Ride out a slow period
Fast financing enables restaurant owners to stay on their toes and keep their tables filled to capacity.
Why the Merchant Cash Advance Works for Restaurants
Merchant cash advance companies offer restaurants quick and easy access to the business funding they need to stay competitive. The CEO of a leading MCA company sums up the value of this type of restaurant financing: "merchant cash advances are an especially great option for restaurant merchants, not only because these types of businesses can hardly be funded by the traditional bank, but also because of the immediate liquidity and simple process."
Low bar to entry. MCAs are more likely than banks to accept restaurant financing applicants. Banks generally consider food service a "high-risk" industry. To qualify for a commercial loan, restaurant owners may have to provide collateral or demonstrate strong credit. Newer restaurants typically have trouble meeting commercial lender credit qualifications. Merchant cash advances offer financing without collateral or credit requirements. Applications are evaluated based on past credit card receipts and a minimum time in business (often under a year).
Quick turnaround. Traditional small business bank loans can take several months to clear, if the applicant qualifies at all. Merchant cash advances typically take two weeks to clear.
Easy application process. Few restaurant proprietors have the time or financial expertise to negotiate lengthy business loan applications. A merchant cash advance features a straightforward application process. MCA companies typically ask for a report of previous months credit card receipts.
Revenue-based repayment. Restaurants are subject to a continual ebb and flow of business volume, based on seasonal shifts, trends, and many other factors. While small business loans require a fixed interest and repayment schedule, the merchant cash advance payment is calculated as a portion of credit card sales. The MCA company effectively buys a monthly percentage of future credit card receipts. If the restaurant has a slow month, the MCA payment amount decreases proportionately.
Small businesses competing in a volatile market need immediate access to working capital. Restaurants rely on merchant cash advance financing to anticipate market shifts and act on opportunities as they arise.
About Biz4Loans Merchant Cash Advance
Biz4Loans is a California-based company with an exciting new way of quickly closing commercial loans for businesses small and large. With a customer-centric focus and a high standard for quality service, we embrace new technology to pass cost savings on to our business clients. Entrepreneurship Advocates "Entrepreneurship is living a few years of our life like most people won't, so that we can spend the rest of our life like most people can't. " –Anonymous We believe entrepreneurship to be one of the most rewarding journeys that a person can pursue and that no two entrepreneurs are the same. Some seek a better life for themselves and their families while others take on the risk in pursuit of independence. Whether it is a small town where everyone knows each other or a big city that never sleeps, every community relies on entrepreneurs to create and provide jobs and to usher in new possibilities. At Biz4Loans, we understand the challenges that entrepreneurs face in financing their venture. We also understand that a startup entrepreneur frequently has to wear many different hats while her company is getting off the ground. This is why we provide a quick, convenient, and detail-oriented process that achieves results without unnecessary delays or obstacles.
Growing the Business Community commercial loan brokers. Whether it is financing to cover initial start up costs, purchasing of new equipment for an existing business or an expansion of facilities, Biz4Loans can help. We know that sometimes unexpected costs as well as unexpected opportunities require quick and decisive action. Our ability to quickly close a wide variety of loans has allowed us to build strong relationships based on our reputation for serving our clients effectively. Because of our speed and adaptability, Biz4Loans has brokered over $500 million in funding to businesses ranging from farms, hotels, and non-profits to office buildings, surgical centers and apartment complexes.