It’s no question that restaurants are an important part of the fabric woven into our communities and local economies. From the onset of the COVID-19 pandemic, restaurants were hit particularly hard by lockdowns and bans on indoor restaurant dining. As a result, many restaurants turned to pick up and delivery orders and food delivery service partners to keep their businesses up and running.
One of the most popular food delivery services, DoorDash, now operates in the United States, Canada, Australia, and even Japan! In addition to their growing footprint, they also recognize and value restaurants. And so, they got involved in the effort to support them from the very beginning of the pandemic. In addition to assisting restaurant owners in applying for the Paycheck Protection Program (PPP), a federal government program enacted with the passage of the Cares Act, DoorDash also provided a collective $1 million in grants to small businesses in 2021 to help them keep their doors open.
Fast forward to 2022, DoorDash has listened to their partners and the number one thing they’ve all asked for? Quick and easy access to capital. That’s why DoorDash has launched DoorDash Capital: a new merchant service that provides fair and convenient access to financing for eligible, existing DoorDash merchants.
Let’s jump right into how it works and why merchants should consider the program:
How Does DoorDash Capital Work?
The idea behind DoorDash Capital is to provide effortless financing to restaurant owners in need of capital quickly and easily. Many restaurants, like small businesses, require capital to maintain operations, renovate, buy new equipment, continue to offer new products and services, etc. Now, there’s an easier way for restaurants to get the funding they need when they need it.
Because banks and financial institutions often require strict credit and business history, many small businesses do not qualify for traditional bank loans. This often leaves restaurant owners with few options when it comes to finding a way to fund their businesses.
In order to distribute the cash advances, DoorDash is working with a fintech company called Parafin to provide financing to eligible merchants. These funds can be used to cover any business-related needs, from equipment, monthly rent or utilities, payroll, marketing, etc. Finally, small business restaurant owners have a way to access the capital they need without being denied or jumping through too many hoops. Here are three simple steps to get started:
- Check Your Eligibility: Log in to your Merchant Portal and, if eligible, you’ll see your offer within the “Capital Widget” in the Financial Tab of your Merchant Dashboard. When you opt into the program, you’ll receive funding after Parafin verifies your business information. If for some reason you don’t see a Capital Widget, check back later or reach out to [email protected] so they can double check your eligibility.
- Customize Your Terms: You can decide how your offer works: the amount, how long you’ll have to repay, etc. The idea is to create as much flexibility for small businesses as possible.
- Accept Your Offer: You’ll get access to your funds via Parafin in as soon as 1-2 business days. The cash advance’s repayment is taken as a percentage of your DoorDash sales.
Why Should Restaurants Consider DoorDash Capital?
There are a number of reasons why restaurants, especially those who are already DoorDash partners, should consider the DoorDash Capital program instead of traditional financing options:
- No Application To Complete: Eligible DoorDash merchants can view their DoorDash Capital offer in the Merchant Portal and you’ll receive funds from Parafin directly to your bank account in as little as 1-2 business days; easy peasy!
- Straightforward Pricing: There are no hidden charges, no interest of any kind, and no prepayment penalty. You’ll just have to pay a one-time access fee when signing up, which can range from approximately 11 to 18% of the offer amount, depending on merchant qualification. The good news is that you can pay the fee over the duration of the cash advance instead of upfront.
- Flexible Repayment Options: You’ll be able to repay your offer automatically based on a percentage of your DoorDash sales.
- No Affect On Credit Score: Because this is an alternative type of financing and not a loan, no credit checks are required. This means no adverse effects on your credit score!
As you can see, there are various benefits to financing your restaurant with DoorDash Capital versus a loan from a bank or lender.
How DoorDash Capital Has Helped Restaurant Owners
While still a relatively new program, DoorDash Capital conducted a pilot program in which a number of eligible, existing DoorDash merchants accessed funds to use for their business. Here’s what three small business owners said about the program:
“The process and repayment for DoorDash Capital was seamless. There were no hidden charges and no recurring interest,” said Tyron Smith, Owner of Mae Velma’s Corned Beef in Milwaukee, Wisconsin. “It was the easier option to get the funding we needed to cover payroll and construction costs on our second location.”
It’s clear that the successful recovery of the restaurant industry is vital to our local economies. And this program is clearly helping small businesses owners like Tyron do just that!
Chad Williams, Co-Owner of A King’s Cafe in Philadelphia, PA, also benefited from the program.
“DoorDash Capital gave A King’s Cafe access to immediate capital, tailored specifically for my business needs. The cash advance allowed us to upgrade all of our kitchen equipment. I was able to purchase a new refrigerator and stove for the restaurant, which allowed our kitchen to run more effectively and efficiently. I would not have been able to get these upgrades completed without the cash infusion that came with DoorDash Capital.”
Last but not least, Noree Tyler, Owner of Chada Thai Restaurant in Norman, Oklahoma, was able to make major improvements to his restaurant thanks to the program:
“DoorDash Capital allowed us to renovate, install an air conditioning system and pay for deep cleaning services in our restaurant. We are so thankful to have access to this financing to help grow our business.”
The Bottom Line
The COVID-19 pandemic has truly changed the way the world operates. That includes what an institution is, how it works, and what it offers. In this case, a food delivery service has also become a financial institution. This program is the first of its kind, and I’m sure other competitors such as Uber Eats and Grubhub will follow suit.
If your restaurant is not already part of DoorDash, you can sign up to become a DoorDash merchant here. Once you grow your sales on the platform, you may become eligible for this program in the future.
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