Restaurant cash advance and working capital
Price the lower-cost options on this page before a restaurant advance, and use one only when the gap ends inside its term. A restaurant merchant cash advance comes back out of the card sales your payment processor settles, or out of bank deposits, with the funder debiting its share every business day or every week. It fits a short gap that pays itself back, and it usually costs more than a line of credit.
Business funding for restaurants with business bank deposits. Never personal or payday cash.
How does a restaurant cash advance work?
A funder buys a slice of the sales you'll make over the coming months and pays you for it up front. You agree to a total payback, and the funder collects it in one of two ways.
| Split of card sales | Fixed bank debit | |
|---|---|---|
| What comes out | A set share of each day's card batch | The same dollar amount each day or week |
| In a slow week | The payment falls with sales | The payment stays the same |
| Set by | The funder, written in the offer | The funder, written in the offer |
| Watch for | A processor change that breaks the split | A reconciliation clause you can use if sales drop |
The price is written as a factor rate: a multiplier on the amount you receive that fixes the total payback at signing. Paying early doesn't always lower it, so ask before you sign. Most offers also ask for a personal guarantee, which makes the owner answerable if the business breaks the contract, for example by switching processors or closing the account the debits run through. It's not a promise to repay if sales simply fall. Read that clause with an attorney if it's unclear.
Compare offers by the payback in dollars and the debit in dollars. A rate on its own hides how long the debits run and how much of your week they take.
What can a thin margin carry?
Restaurants keep very little of each sale. In the National Restaurant Association's latest State of the Restaurant Industry report, the median full-service restaurant kept about $2.80 of pre-tax income from every $100 in sales, and a limited-service place about $4.00. The same report found that more than four in ten operators (42 of every 100) said their restaurants were not profitable in the prior twelve months.
The two biggest costs explain why. Among full-service operators, salaries, wages and benefits took a median $36.50 of every $100 in sales, and food and non-alcohol drinks took $32.00.
| Line | Per $100 of sales | On $70,000 a month |
|---|---|---|
| Food and non-alcohol drinks | $32.00 | about $22,400 |
| Salaries, wages and benefits | $36.50 | about $25,550 |
| Income before taxes | $2.80 | about $1,960 |
| Same line at a limited-service place | $4.00 | about $2,800 |
Applied to a sample $70,000 month. The per-$100 figures are the Association's medians, not your numbers.
Here's the problem in one line: a restaurant at the median has about $1,960 of monthly profit to work with. An advance whose debits run $5,850 a month can't be paid from profit. It has to be paid from what the money produces, such as reopening a closed kitchen or selling holiday stock, or from cash you already hold. If neither is true, the advance just moves the gap a few weeks later and makes it bigger.
The walk-in died: repair or replace?
This is the most common reason an owner calls. The answer depends on whether you're fixing a part or buying a new machine.
| Repair | Replace | |
|---|---|---|
| Typical job | Compressor, fryer thermostat, hood motor, dish machine pump | A walk-in box, an oven line or a full hood system |
| What the money covers | Parts, labor, spoiled stock and payroll while you're closed | The new equipment, delivery and install |
| Structure that usually fits | Working capital, often an advance | Equipment financing or a lease, paid to the vendor |
| Why | Mixed costs, and the kitchen earns again within days | The equipment secures the deal and the term can match its working life |
A repair is a cash-flow event. The spend is mixed, the timing is urgent, and the equipment goes back to earning within days, so working capital fits. A replacement is a purchase of an asset that will earn for a long time. Equipment financing or a lease pays the vendor directly, the equipment secures it, and the payments spread over its working life. Repaying a long-lived oven on an advance's short schedule creates a cash problem at signing.
Before you fund either one, ask three things. Does your property or equipment-breakdown insurance cover the repair or the spoiled food? Can a refrigeration company rent you a unit to keep the stock cold while you sort out the money? Will the vendor take a deposit and bill the balance on delivery? Each answer can shrink the amount you need.
Payroll, slow weeks and holiday stock
Working capital is the cash you have left after this month's bills: what's in the bank and on the shelves, minus what you owe suppliers, staff and the landlord soon. A restaurant pays for food before it sells it and pays staff every week while sales arrive one ticket at a time, so the gap is built in. It isn't a sign the business is failing.
- Payroll bridge. If a slow stretch lands right before a payroll, an advance can cover it, but only if sales come back before the debits outrun them. Count the weeks first.
- Holiday and event stock. Buying wine, proteins and paper goods ahead of a busy season, a catering contract or a private event is a gap with a clear end, which is the kind an advance handles.
- Repeating gaps. If the same quiet months hit every winter, a business line of credit usually costs less, because you pay only on what you draw. See the restaurant line of credit page.
- Gaps with no end. If labor and food take more of each $100 than sales can cover, no advance fixes that. Menu prices, hours and staffing are the levers.
What does an advance look like for a pizza shop?
Sample figures. These are round numbers for checking the arithmetic by hand, not typical terms and not a quote. The funder sets the real terms.
| Line | Math | Result |
|---|---|---|
| Monthly business deposits | From bank statements | $70,000 |
| Advance | Purchase price set by the funder | $30,000 |
| Payback | Total set by the funder in the offer | $40,500 |
| Weekly debit | $40,500 ÷ 30 weeks | $1,350 |
| Debits a month | $1,350 × 52 ÷ 12 | $5,850 |
| Cost of the money | $40,500 − $30,000 | $10,500 |
The test is whether the debit still clears in your worst week, not your average one. If a snowstorm or a road closure cuts a month to $50,000 of deposits, $5,850 of debits takes about $11.70 of every $100 instead of $8.36. On a fixed debit that comes straight out of payroll money. On a split of card sales the payment falls, but the debits run longer. Run your own numbers in the MCA cost checker, and set the $10,500 cost beside what the money earns you.
Before you sign an advance contract
A merchant cash advance is a purchase of future receivables, and the rules that apply to it differ from state to state; our guide on whether a merchant cash advance is legal covers the basics. Ask an attorney or tax advisor about your own contract.
Wrong tool for a restaurant? What to price first
- Two or more advances are already debiting the account. See consolidation before adding a third.
- The money is for a full equipment replacement or a build-out. Equipment financing or a lease usually costs less.
- The debit only clears in a strong week.
- The gap comes back every winter. A line of credit fits a repeating need.
- Sales don't cover food and labor today, and the money has no plan to change that.
Cheaper options to price first: a business line of credit, a bank term product, equipment financing, supplier terms on food and paper goods, or SBA-backed financing under the SBA 7(a) and 504 programs, which take longer but are repaid monthly over a longer term.
How is Afterfirst paid on a restaurant file?
Merchants pay Afterfirst MCA no application fee and no broker fee. Funding companies pay us a monthly membership (plans run from $249 to $1,299 a month), and the funder pays us a commission when a deal funds. What you owe on an advance is paid to the funder and is shown in your offer: the amount, the payback, the payment and the term. Membership level does not change the order or the terms of the offers shown to you. Higher plans can change when a funder sees a file.
One funding partner has shared a list of 30 deals it funded, about $1.97 million in total, by industry and amount. The figures are the partner's own and Afterfirst has not independently verified them. Food and drink deals on that list include a restaurant at $80K, a pizza shop at $60K, a food truck at $25K and a bar at $12K.
Full detail: how Afterfirst is paid.
What should a restaurant send?
- The application at afterfirstmca.com/apply.
- Recent business bank statements, the ones that show card batches and delivery app payouts.
- Card processor statements, if most of your sales are on cards.
- The contract for any advance you already carry, so the funder sees the debit.
- For a repair: the technician's quote. For a replacement: the vendor's quote.
Afterfirst MCA is a broker, not a funder: we shop one application and show every offer side by side, in dollars. We email you first from info@afterfirstmca.com. A person calls only if you ask.
What do restaurant owners ask us?
Is a merchant cash advance a form of debt?
Not in the usual sense. A true advance is a purchase of a share of your future receivables, so the funder is buying sales you haven't made yet. You still owe the payback in the contract, and the debits come out of the same account that pays your food and labor, so treat it like a bill. Read the reconciliation clause before you sign.
Can my POS or delivery app fund me instead?
Some point-of-sale and delivery platforms offer their own advances and take payment as a share of sales that run through the platform. That can be simple, but it's still an advance with a price. Put any platform offer next to the offers we show you and compare the payback in dollars.
How much can a restaurant get?
It depends on monthly deposits, how steady those deposits run, any open advances and the funder's criteria. Food and drink files on our partner's list range from $12K for a bar to $80K for a restaurant. A funder sizes the advance to what your deposits can repay, not to the bill you need to cover.
Will applying hurt my restaurant's credit?
Applying won't start a credit review. A funder may check credit later if you choose an offer, and the offer tells you before that happens. How credit inquiries work.
Do you work with bars, cafes and food trucks?
We do. A bar, cafe, pizza shop, caterer or food truck with business bank deposits can apply the same way. Bars and trucks have their own pages because their cash swings differ: see bars and food trucks.
Can I get one if I already have an advance?
Sometimes it can. A second advance adds a second debit, and many funders decline a file with two or more open positions. If the debits you have already squeeze payroll, ask about consolidation before you add another.
Sources: National Restaurant Association, State of the Restaurant Industry report (pre-tax income, unprofitable operators); National Restaurant Association, labor cost analysis; National Restaurant Association, food cost analysis; eCFR, 13 CFR part 120 (SBA business programs); membership plan prices from how Afterfirst is paid; deal figures from a funding partner's list, not verified by Afterfirst. The $70,000 restaurant and the pizza shop are our own sample figures.
Send your statements and the repair quote
One application, and we'll lay every offer next to your weekly sales and your payroll. We email you first from info@afterfirstmca.com. A person calls only if you ask. Applying costs you nothing, and Afterfirst MCA charges you no fee. Funders pay us a commission when a deal funds, and funding companies pay us a monthly membership. The price of an advance is set by the funder and is shown in your offer.