There are many differing types of restaurant funding available here in the UK. Gone are the days of the simple, secured bank loan being the only option available. In fact, there are so many alternative finance options available to restaurant owners you can easily become spoiled for choice. But with choice comes confusion as to which option is truly the best option for your restaurant.
A merchant cash advance is a new type of alternative funding which is backed by the UK government via the British Business Bank. It has gained rapid growth over the last five years with more business owners using the product – especially restaurants using the service as and when required.
What makes a cash advance a good option when looking for restaurant funding?
Unlike a traditional bank loan or other types of commercial finance a business cash advance has lots of benefits. Here are some differences below:
It works with your cash flow.
With traditional commercial finance, there is an expectation to repay your loan with set monthly payments linked to an APR (Annual Percentage Rate). With a merchant cash advance, your restaurant only repays as and when you make sales via your credit and debit card transactions.
This way it allows your business to repay in line with sales, releasing the pressure connected with the meeting of set monthly payments. So if your restaurant has a quiet month on sales then you pay back less for that month.
There is no APR.
It works differently to a bank loan. An agreed amount is advanced to you. As an example, if your restaurant generally turns over £6000 per month on card sales, funding can be put in place to match this amount and in some cases up to 150% of your monthly card turnover. We have helped to provide restaurant funding from £3000 up to £300,000 based on this model.
What about charges?
There is just one fee that is calculated and added to your cash advance. There are no extra charges, early or late payment penalties, no charges for missed payments, no setup fees. Just one repayment value that you repay as and when you make sales.
How much does my restaurant payback on each card transaction?
This is agreed when you talk with us. Usually between 10% and 15% is a fairly common average. For example, if a till receipt for £100 is payable from a customer eating at your restaurant and they make payment via your card terminal, based on 10% repayment, £10 will go to pay off your cash advance and £90 will go into your business bank account. Cash sales are not taken into account.
It is unsecured.
This means unlike a bank loan or other secured finance options there is no requirement to secure the restaurant funding against a personal or business asset such as your home or commercial property. This will give you good peace of mind.
It’s quick to fund.
Once you fill in the quote form which only takes a minute to fill in with basic details you will receive a call back from our team who will give you a no obligation quote. There is no further lengthy form work or business plans required. This is a great way to find out more information about the product too. We’re a friendly bunch and would be delighted to help you further.
What if the business or myself has bad credit history?
This type of restaurant funding isn’t based on underwriting decisions that consider bad credit. We can always discuss this with you and we appreciate not all business can avoid the odd credit blemish from time to time. We have helped many, many businesses with bad credit so don’t worry and talk with us today.
I have heard that the government supports the product.
Yes, The British Business Bank Investments have invested millions of pounds to support the business cash advance product. In turn helping hundreds of restaurants find the funding they need.