Running a restaurant means juggling everything from payroll and inventory to equipment repairs and seasonal slowdowns. Traditional bank loans often involve strict criteria. Including a fixed payment schedule and lengthy approval processes that can’t keep pace with the speed and agility required in the hospitality industry. What happens when a failed commercial oven threatens your weekend service, but a bank loan takes a month to process?
To solve this, a growing number of payment processors and restaurant management platforms are offering revenue-based financing, also known as merchant cash advances or embedded capital.
What is Revenue-Based Financing (RBF)?
At its core, revenue-based financing is not a traditional loan. It is a purchase agreement for a portion of your restaurant’s future revenue. Instead of making rigid, fixed monthly payments, you repay the advance automatically through a percentage of your daily sales.
This embedded capital approach means that financing adapts directly to your business cycle: when sales are strong, you pay more; when business slows down during an off-season or a rainy Tuesday, your payments may decrease.
Top Integrated POS and Payment Platforms
For many restaurants, they can access capital is through the Point-of-Sale (POS) systems they already use every day. Because these platforms track your daily revenue, ticket sizes, and seasonal patterns, they can offer pre-approved funding right in your dashboard.
Toast (Toast Capital)
Toast is one of the most widely adopted restaurant-specific POS platforms in the U.S., handling everything from online delivery to payroll. They also offer Toast Capital, which provides merchant cash advances based entirely on a restaurant’s sales history within their ecosystem. Funding amounts are tied directly to Toast sales volume, and repayments are seamlessly deducted as a percentage of daily sales.
Square (Square Loans)
Square is highly popular among cafes, food trucks, and quick-service restaurants. Through Square Loans, eligible sellers receive custom cash advance offers based on their payment processing history. Like Toast, the repayment structure takes a fixed percentage of daily card sales, allowing for a quick infusion of cash for those who already process a high volume through Square.
Clover
Clover offers flexible hardware and user-friendly interfaces perfect for table management and staff tracking. While they do not fund directly, Clover partners with integrated lenders to offer merchant cash advances to eligible merchants directly through their platform, relying heavily on the restaurant’s processing history to determine limits.
CFG Merchant Solutions
The down side of using your POS systems is the cost of capital. However, at CFG Merchant Solutions, a revenue-based financing provider, you can receive working capital at a lower price. CFGMS specializes in restaurant fundings and offers tailored, customized solutions.
Alternative Delivery and Funding Networks
Beyond direct POS systems, other key players in the restaurant technology space have stepped up to provide revenue-based advances based on transaction data.
DoorDash Capital
Delivery platforms are an increasingly large chunk of a restaurant’s revenue. Recognizing this, DoorDash launched DoorDash Capital to offer business financing directly within its app. They craft the repayment structure to the restaurant’s DoorDash revenue, allowing business owners to access capital for equipment, rent, or payroll in as little as one or two business days—often without signing additional paperwork or pulling credit scores.
Rewards Network
Rewards Network takes a slightly different approach by pre-purchasing total credit card receivables to provide working capital. Under their Dining Credits program, restaurants get quick access to capital. They only remit funding when Rewards Network members dine at the establishment. This model uniquely pairs flexible funding with marketing efforts designed to drive new and repeat customers through the door.
Making the Right Choice for Your Restaurant
Using a POS system or payment processor for revenue-based financing is incredibly convenient. However, it’s important to remember that funding limits and terms are tethered strictly to your processing volume on that specific platform.
For restaurants looking to expand to a new location, refresh a dining space, or bridge significant operational gaps, evaluating specialized alternative funding providers ensures you get the most competitive rates and terms suited to your growth goals.