Why restaurants should consider merchant cash advance this Christmas

As every business owner in the restaurant and hospitality industry knows, no two months in this sector are the same and revenues can fluctuate significantly from month to month. As it’s November, we’re approaching Christmas, which is traditionally the busiest time of year for the restaurant sector.

That’s why now is the time to make the most of every sale that you put through your till, and merchant cash advance is a great way to do this.

Here we’ll talk about what merchant cash advance is, and how it can benefit restaurants at any time of year, but why it can be especially profitable during the festive period.

What is a merchant cash advance for the restaurant sector?

Whether your business is a hotel, restaurant, cafe or bar, all of the hospitality sector faces similar challenges when it comes to keeping cash flowing – and finding the right funding solutions for your business can sometimes mean the difference between sinking or swimming in this competitive sector.

Businesses within the restaurant industry need flexible finance that is available quickly, easily, and will ensure that your business can continue to grow, but obtaining a traditional business advance in the restaurant trade is becoming more difficult, with banks becoming increasingly more reluctant to lend. However, merchant cash advance provides the ideal funding solution for the restaurant industry and is becoming an increasingly popular option for hospitality businesses in the UK.

Merchant cash advance is a type of business financing. Merchant cash advances are ideal for businesses such as restaurants which accept debit and credit card payments/use a PDQ machine.

How does merchant cash advance work?

The lender will provide the business with a cash advance which is then repaid as a percentage of its customers’ card payments using a card terminal (PDQ).  As soon as the lender approves your application for a cash advance you can access the cash. This amount is then repaid with a percentage of your debit and credit card sales, via your card terminal. The merchant cash advance provider will deduct a daily or weekly percentage of debit and credit card sales until the amount is repaid in full; this amount tends to be around 10% – 15% of the sale.

The beauty of this is that the advance is repaid in line with sales: your business only pays back the advance when it receives customer card payments, which helps to manage cash flow.

You can use the cash you free up for numerous things, such as:

  • Boost working capital
  • Purchase equipment
  • Refurbish your restaurant
  • Undertake repairs
  • Finance a menu redesign
  • Marketing
  • Training
  • Website Development
  • Paying regular bills during periods when you have fewer customers

Why is merchant cash advance ideal for the restaurant sector?

A major benefit of a merchant cash advance is that your repayments are all based on revenue, and repayment is only made in line with sales. As well as being great for cash flow, this means that there is less risk of you defaulting on your advance.

Merchant cash advances are ideally suited to restaurants as a high proportion of restaurant customers pay using debit and credit cards. The more sales you put through your card terminal (and the higher the amounts), the faster you will repay your merchant cash advance.

And this brings us onto why you should consider a merchant cash advance this Christmas…

Your lender will deduct a daily or weekly percentage of debit and credit card sales until the amount is repaid in full; this amount tends to be around 10% – 15% of the sale. If you want to get your merchant cash advance paid off as quickly as possible, there’s no better time to start repaying it than in the run up to Christmas- your busiest time of the year.

Every time a sale goes through your PDQ machine you’ll be paying off your merchant cash advance in a way that doesn’t impact your cash flow. It makes sense to get your merchant cash in place before the busy festive period, as that’s when you will have more transactions (and of higher values) being put through your PDQ machine. Which means your cash advance will be paid off more quickly.

Make the most of this busy period to pay off a merchant cash advance that you can use to grow your business.

How do I apply for a merchant cash advance?

The easiest way to apply for a merchant cash advance is to contact a business finance broker such as PMD. PMD are experienced in securing this type of funding for restaurant businesses just like yours, and are always on hand to help and advise on the best funding options for you.

PMD has an unrivalled range of solutions, specialists, and access to over 150 lenders. We take the hard work out of securing merchant cash advance for your business, liaising with lenders on your behalf, leaving you free to focus on running your business.

If you are a restaurant owner and are interested in securing a merchant cash advance this Christmas, the application process is quick and easy get in touch today to see how PMD can help.

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