How Does Revenue-Based Funding Work for a Dickinson, ND Restaurant or Retail Store?

A revenue-based loan, in the strict sense, is a loan whose payment is set as a percentage of revenue instead of a fixed amount. The merchant cash advance on this site rests on the same idea but is a different product: the provider buys a share of future card sales and collects it as those sales come in, so it is not a loan. The merchant cash advance page walks through that collection.

Illustration only, invented figures: a Dickinson, ND restaurant replaces its dish machine for $14,500. An advance of $14,500 with a fixed total of $18,125, collected at 10% of card sales, takes $1,100 out of an $11,000 card week and $700 out of a $7,000 one.

A dish machine is also equipment, so equipment financing is the other route. The advance fits when the payment has to follow sales; a fixed payment fits when the kitchen would rather know the number every month.

Retail is the largest sector in the Stark County, ND employer count, with 165 retail trade establishments in the 2023 County Business Patterns (NAICS 44-45). In the 2023 ZIP Code Business Patterns, which place each business at its physical location, 151 retail employer establishments sat in ZIP 58601.

A shop buying a new POS system, meaning terminals, card readers and the software that runs them, can pay for it in two ways: an advance collected from card sales, or a financing agreement for the hardware alone. Because an advance is collected from card sales, switching the POS system or the card processor can change how collection is set up, so ask the provider before the switch. Store-type figures for the county are on the retail funding page.

Illustration only, invented figures: a Dickinson, ND restaurant needs $30,000 for two fryers and a slow-week payroll. Option one is an advance with a fixed total of $37,800, collected at 12% of card sales, which costs $7,800. Option two is a 12-month term loan at 12% a year: $2,665.46 a month, $1,985.52 of interest over the year. In these invented figures the loan is $5,814.48 cheaper in dollars.

The advance moves with the till. With $9,000 of card sales a week, it takes $1,080 a week and is collected in 35 weeks; with $6,000, it takes $720 and runs 53 weeks. Its total does not change, so slow weeks make it last longer but not cost more. The loan payment stays the same in a slow week, which is the trade-off: lower cost here, against a payment that does not bend.

The fryers are equipment and the payroll is a working capital cost, so the two can also be split between two products. County figures for full-service and limited-service kitchens are on the restaurant funding page.

Revenue-based lending, where a lender offers it, is the strict-sense loan from the first section of this post, with payments set as a share of revenue. It is not one of the products on this site: the sales-linked option here is the merchant cash advance, which is not a loan. For a retailer opening a second storefront, shelving, display fixtures and store equipment can go to equipment financing or a term loan, and the opening stock to inventory financing. Work on the building itself and buying the property are outside this site.

The answer for retailers: an advance collected from the first store's card sales suits a second location when those sales are steady enough to carry the collection while the new store builds its own. When they are not, a business line of credit for the opening stock, or a fixed-payment loan, can be simpler to plan around. County and ZIP retail counts are on the Dickinson, ND business funding page.