Restaurant Financing Providers Offer Financing Through Merchant Account Loans

While you manage your own restaurant there will be moments when you face the unexpected and find your establishment in desperate need of restaurant financing. Heading to the local bank or Small Business Administration office may be your initial course of action, but don’t bother. Neither is really providing credit at this point, and the few that can demand so much paperwork and collateral that it isn’t a viable option for many new establishments.

Don’t you find it ironic that the very venues that are designed to extend financing won’t, but don’t despair--there is another choice. You can find restaurant financing with a merchant account loan through that tiny credit card terminal sitting on your counter at the register. That’s right, the credit card account can help your establishment get financing when you need it. The flexible repayment schedule associated with the program is linked to your credit card receipts and ensures that your payments will be sent straight to the funding company. Analyzing your past merchant account statements institutions extending these merchant loans already understand that your establishment is a success, and they are willing to help you get further by extending a merchant account loan.

This arrangement, called a factoring agreement, involves you selling the factoring company a percentage of your anticipated credit sales in the future for capital now. Seeing that they already know how much you make on credit sales each day, they know how little risk you pose. That means that your company can access $5,000 to $1,000,000 for each location for important expenses.

The repayment terms that are associated with your business cash advance is directly correlated to your volume, so you do not have to worry that you will be overburdened. Also, this is a short term advance which you will pay back in a 6 - 12 months at most, freeing up that capital for reinvestment when you are prepared to use it for something else.

Many companies furnish credit card factoring for small businesses. Although the program is the same for the most part, there are some significant differences among the companies. Namely, the cost of the funds and time frame in which you are expected to return the capital. Although there is not an interest rate or set term, there is a factor rate and a hold back % of your future credit card sales. As an example, if you qualify for a factor of 1.32%. This denotes on a $10,000 advance you would have to pay back $13,200 or $.32 on the dollar once it’s all paid back. As for the hold back, if it is 10% this means the factoring company will take 10% of your future credit card sales each day until the balance is paid back. So on the above example, assuming you process $10,000 month to month, you will pay back about $1000 per month. This calls for a term longer than normally issued. Realistically, your business will attain a hold back of 20% so that you pay $2,000 per month and are finished within 6 months.