With food and labor costs rising and foot traffic flat or falling, many operators have been tempted to take out merchant cash advance loans to provide quick funding to cover balance sheet gaps.
But MCA loans come with a catch: They can be costly and require payments regardless of how a business is doing. MCA loans have contributed to a handful of high-profile bankruptcies in the past year. Subway franchisee MTF Enterprises said MCA loans led to significant financial problems that drove it to file for bankruptcy in February. A Del Taco franchisee, Matadoor Restaurant Group, declared Chapter 11 bankruptcy last year after its revenue could not keep up with its MCA…