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Restaurant Financing, Up To $750,000

By JM Luna

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Published: 23Aug2008
Word count: 646
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For this update, restaurant financing can come in the form of financing/leasing and seeking working capital in the form of a cash merchant advance and/or merchant cash loan.

Todays financing market is very illiquid in offering restaurant businesses leasing/financing. Most lender portfolios are better off served in different industries from a risk/reward factor. However, there are niche lenders out there that will entertain restaurant financing but usually require the applicant to have at least a minimum of one to two years time in business. Most startups don't have a chance unless their personal credit score are over 700 and are willing to pledge additional collateral to the deal with additional clear and free assets. The lenders that finance restaurants will properly offer up to $50,000 application only and over that amount full financial and tax disclosure would be required... Approved leases can run between 24-60 months with various buyout clauses...

The most unique part of this article is the merchant cash advance/loan programs. Most people aren't even aware of these programs....

The initial question a lot of people are asking is what is a merchant cash advance? An established business in existence for one year or more with visa and mastercard sales can qualify for a loan or a merchant cash advance on their past activity up to $150,000 from a financial institution and $750,000 or more per location from a true merchant cash advance company. The monthly average of their visa and mastercard sales x 1.5 will be a qualifying amount that the lender will fund up to. Some cash merchant advance companies will fund up to $750,000 per location.

This is a great way for a business to obtain working capital. Most conventional lenders shy away from the restaurant industry These cash merchant advances/loans are great for businesses that have seasonal cash flow needs, that aren't capitalized properly and need more time to achieve their sales base, have credit issues that can't be overcome at the bank, businesses that need instant cash now, and obviously many other factors tailored to specific businesses.

These lenders aren't FICO driven and are interested in your past Visa/ Mastercard Sales for the previous six months. Usually the company's bank statements, the merchant processing statements and a signed application are required to commence the lending process. Once the lender has received these requirements, a decision can be made fairly quickly, usually within 24-48 hours. Beyond an acceptance, the money is usually funded within seven business days.

The next obvious question, is how does the customer repay back the loan or cash merchant advance? It is from the future card sales, a small portion is paid back each day to pay back the lender. This is important because there are no balloon payments or monthly payments to consider. The lender calculates a small repayment per day that can last up to one year.

Other programs that we have come across don't use Visa/Mastercard as the total measuring stick for the qualified loan amount. They use the total annual gross sales and apply a percentage against it. The beauty of this program is also they don't require you to change your processor. Minimum Credit scores start at 550 and this loan can be funded up to $500,000. Tax and Financial statement requirements are needed for funds requested over $125,000. This program also applies to restaurants so this can be real bonanza if you are having trouble raising capital at your local bank...

Finding available capital whether through leasing and working capital can be very difficult in todays times. The cash merchant advances/loans can offer the seasoned business an unique opportunity to acquire funds without all the red tape conventional banks require..

Happy hunting for your financing.....

J.M Luna has over thirty years experience in the financial field. This includes accounting and taxes, leasing, hard asset money and commercial loans. U.S Corporate Capital Leasing Group assists the startup as well as the seasoned business for funding in all different types of industries. http://www.cclgequipmentleasing.com/merchantloans.htm http://www.cclgequipmentleasing.com/75k.htm

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