restaurant financing

DoorDash offering restaurant financing to partners

DoorDash is introducing a new merchant service that provides partner restaurant financing in the form of cash advances for its merchants.

DoorDash Capital is described as a new merchant service that provides fair and convenient access to financing for eligible merchants. The idea is that at a time when getting investment and capital is more difficult than ever for a beleaguered industry, restaurants can use the money to pay for business expenses including payroll, equipment purchases, rent, hiring and marketing.

Eligible restaurant partners will be pre-approved for revenue-based advances facilitated by financial tech company Parafin. Operators can check their advance amounts in their Merchant Portal. 

DoorDash partners that accept the restaurant financing advance will receive the funds in a few business days.

Restaurants will repay the advance via deductions from their DoorDash earnings. The financing does not carry interest, though there is a one-time fee of up to 10 per cent of the funding amount. That fee is also paid in increments.

DoorDash estimated that restaurants would be able to pay back the advance “within one year.”

Two crucial points to note are that accepting the advances will not affect restaurants’ credit scores and DoorDash will not charge interest on the advances.

RELATED: DoorDash introduces DashMart grocery & convenience store

The U.S. Independent Restaurant Coalition estimates that 41 per cent of restaurant operators who did not receive Restaurant Revitalization Fund grants have taken on personal loans to support their businesses.

In that context, it should not be too surprising that a pilot test of this initiative with over 1,000 DoorDash partners yielded largely positive feedback.