Funding for Restaurants & Cafes

HomeFunding for Restaurants & Cafes


Despite the inconveniences and uncertainties brought by the COVID-19 pandemic, which started spreading worldwide in the year 2020, the restaurant industry has witnessed steady growth in the last few decades. As per the National Restaurant Association, the U.S. restaurant industry was anticipated to make sales of USD 899 billion in 2020, but, due to the pandemic, more than 110,000 restaurants were permanently shut down. However, to help the industry recover and gain back its momentum, the government issued safety instructions for the restaurant owners to follow to reopen their dining facilities and also lifted strict lockdown in the non-containment zones.
Research says the U.S. restaurant/café market is expected to grow at a compound annual growth rate of 3.9% from 2021 to 2028 ( The increasing population of busy working professionals in the U.S. is, primarily, fuelling the industry. Though the concept of food delivery apps or restaurant apps, third-party ordering and direct online ordering was there for several years, the pandemic showed the world its significance. The rapid adoption of technology is expected to hugely contribute to the growth of the restaurant industry, in the coming years.



      Factors Affecting the Industry

      Labor Shortage

      After the pandemic hit the world, labor shortage became a serious concern for the restaurant industry. Cooks, servers/waiters, managers and all other restaurant staff were not ready to travel to work to ensure optimum safety. Also, continuous trucker shortages and regular delays in delivery created turmoil in the restaurant industry. As a result, it became extremely difficult for restaurant owners to run their businesses.

      Supply Chain issues

      Supply chain issues were one of the primary challenges the restaurant owners faced during the lockdown phase. It became extremely difficult for the entrepreneurs to source fresh produce, meats, takeaway containers and other necessary items due to the limited availability and soaring costs. As per the National Restaurant Association, the cost of wholesale food went up to 7.9% in 2021, and the hourly costs of labor rose to 8.6% in the same year.

      Current Restaurant Trends

      Home Delivery System

      Restaurants, which once had only dining set-ups, have started delivering to homes/offices and accepting online payments, post the pandemic, to meet the growing demand for contactless transactions, which were believed to control the spread of the virus. Besides, people got used to the convenience of getting their meals delivered from their favorite restaurants and eating them comfortably while watching their favorite shows/movies on Netflix.

      Smart Restaurant Technology

      The constant advancement of technology is immensely helping restaurant owners to cope with the labor shortage, caused due to the pandemic. By integrating technology into the business models, restaurant owners are now capable of speeding up the time required to complete a task manually. Most restaurants, these days, are automating online orders and accepting orders through delivery apps. Today, restaurants are also automating customer communications by replacing customer care executives with AI-supported chatbots. Digitalization has helped the restaurant industry to decrease costs and increase efficiency.

      Creative Customer-Engagement Initiative

      After the pandemic shook the hospitality industry hard, it became very crucial for restaurant owners to put extra effort to boost customer loyalty and ensure optimum sales, by implementing various customer-engagement initiatives. Restaurant/cafe owners, today, are considering new business verticals or adopting new marketing strategies like offering subscriptions and memberships, selling meal or cocktail kits etc. to keep the customers enticed. Also, restaurants, all over the world, are re-planning and improving their loyalty programs to get a clear understanding of customers’ preferences and enhance customer satisfaction.


      1. To cover unexpected repair costs.
      2. To integrate the most advanced technology with the businesses and automate the restaurant kitchens to ensure unparalleled performance.
      3. To buy inventory and pay bills.
      4. To renovate or expand restaurants.
      5. To carry out impactful marketing campaigns, both conventional and digital.
      6. To meet seasonal demands.

      MCA for Restaurant Businesses

      MCA For Restaurants & Cafes

      A restaurant cash advance is the sale of a specific percentage of the restaurant’s future revenues, in return for a lump sum amount. An MCA lender pays an up-front lump sum to a restaurant owner and buys a percentage of the restaurant’s future sales.

      Repayment Structure

      The lender typically redeems the percentage of sales that it has bought through an automated approach, a daily ACH(Automated Clearing House) deduction directly from a bank account. The cost of a merchant cash advance is typically presented as a factor, which is a fixed percentage of the amount advanced. This is added to the amount that the restaurant needs to pay back to the MCA lender. MCA loans are ideal for businesses that accept credit or debit card purchases, as the repayment amount gets directly deducted from the daily credit/debit card sales of the borrower.

      Funding for Restaurants & Cafes

      As we mentioned before, the application process is simple.
      We will break it down for you step-by-step.

      Step 1
      Funding for Restaurants & Cafes

      The borrower needs to provide the lenders with social security numbers as well as signatures to get the credit pull authorized.

      Step 2
      Funding for Restaurants & Cafes

      IMCA lenders ask for sales volume by card type, return frequency, processing fees, chargeback history, monthly costs, batch frequency, average transaction size and processor imposed reserves. The borrower needs to submit all pages of each bank statement, besides the above-mentioned documents. Articles of Incorporation, K-1 of recent business tax return, business property lease, any photo ID, voided cheques, recent business tax return and financial statements are also needed to be submitted.

      Step 3
      Funding for Restaurants & Cafes

      The underwriters then get in touch with the borrower’s vendors, business property landlord, if any, or the bank holding the mortgage on the business property, to understand if the business has the permission of continuing operating in the same location at least throughout the loan repayment time frame.

      Step 4
      Funding for Restaurants & Cafes

      The lenders contact the borrowers over calls to review the business information, discuss the use of the advance and assess the borrowers’ willingness to follow through with the contract terms. Some MCA providers hire inspection firms to perform a site inspection by visiting the borrowers’ location to verify the address, examine inventory and take note of the number of credit card machines available on site.

      Step 5
      Funding for Restaurants & Cafes

      Finally, the repayment method is decided on and approval is given. The funds get transferred to the borrower’s business account within 48 to 78 hours.

      Primary benefits of opting for MCA for your restaurant

      MCA doesn’t require the borrower to put up any tangible asset as collateral.
      MCAs are easy to acquire, as MCA lenders have much lower credit score requirements, compared to banks.

      Once the borrower is found eligible by the lender’s underwriting standards and he/she has all documentation in place, the funds get disbursed within 24 to 72 hours or a maximum of a week

      MCAs do not put restrictions on the usage of the funds. The borrower can utilize the advance in any business operation. As flexibility is quite crucial in the restaurant industry, MCA turns out to be an ideal financing option.

      MCA offers convenient and flexible repayment options. As the profits of restaurants fluctuate almost regularly, MCA often turns out to be a good financing option for restaurant owners.

      Business Line of Credit for Restaurant Businesses

      Similar to a credit card, a business line of credit offers business owners working capital, when needed, along with the flexibility to decide how much to use and how much to keep reserved for future use. Interest will be applied to only the amount used and not to the entire approved amount.

      Primary Benefits

      Funding for Restaurants & Cafes

      A flexible financing option, business LOCs give small businesses access to funds that can be used for multiple business purposes.

      Funding for Restaurants & Cafes

      These come with low-interest rates.

      Funding for Restaurants & Cafes

      The repayment period of a business LOC is generally short and goes up to 60 days.

      Funding for Restaurants & Cafes

      There is no prepayment penalty, in the case of a business LOC.

      Invoice Factoring for Restaurant Businesses

      Often used by small and medium-sized businesses, Invoice Factoring involves the selling of unpaid invoices to a third party, known as a factor or factoring company, which keeps a percentage of the original invoice amount as a fee.
      Long receivables are quite common in the restaurant industry’s business cycle and long payment terms or credits of 30, 60 or 90 days make it difficult for a restaurant to grow or even carry out its day-to-day operations.
      Hence, invoice factoring often turns out to be a good option for restaurant owners looking for quick working capital. In the case of invoice factoring, the borrower sells any number of unpaid invoices to a factor at a discounted rate and he/she receives the majority of the invoice amount, up to 90%, within a few business days.

      Primary Benefits

      Funding for Restaurants & Cafes

      Invoice factoring offers restaurants short-term boosts, they need to order supplies and run their businesses.

      Funding for Restaurants & Cafes

      It enables the restaurant owners to purchase new equipment, hire new staff, renovate or expand.

      Funding for Restaurants & Cafes

      In the case of invoice factoring, one doesn’t have to worry about repaying the amount he/she used with interest.

      More info on Merchant Cash Advances (MCA) & Restaurant Industry Funding.