Author: Tom Pickett, Chief Revenue Officer
Restaurants are an essential ingredient in the overall health and well-being of our communities and local economies. At DoorDash, we are committed to ensuring that these businesses thrive and continue to grow to their fullest potential. This is why we stepped up during the early days of the pandemic to help local restaurants apply for PPP loans and offer millions of dollars in grants to small businesses to help keep their doors open. We’re proud of our work helping restaurants throughout the pandemic, from launching relief programs that have saved restaurants hundreds of millions of dollars, to ensuring that our platform helps more restaurants stay open – compared to all U.S. restaurants, the odds of staying in business were 8x better for restaurants on DoorDash in 2020.
As we continue to listen to our partners and adapt our services and offerings to meet their needs, one key area where they have asked for support is quick and easy access to capital. That’s why today, DoorDash is introducing DoorDash Capital, a new merchant service that provides fair and convenient access to financing for eligible merchants.
“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,” said Chad Williams, Co-Owner of A King’s Cafe in Philadelphia, Pennsylvania. “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.”
Many restaurants, like all small businesses, require access to capital to maintain operations and invest in their future growth. Over the course of a restaurant’s lifespan, many owners will require some kind of capital investment, whether to cover unexpected expenses, to open a new storefront, or just to meet normal operating costs.
But small businesses often do not qualify for traditional bank financing. Banks impose strict credit and business history requirements, which often leave thousands of entrepreneurs and small business owners without lending options. Not to mention, applying for a loan can be time-consuming, involves upfront fees and often impacts credit scores. In fact, only 35% of small businesses with revenue between $100,000 and $1 million had received bank funding in the past five years.
With DoorDash Capital, merchants with a proven track record on DoorDash can now access revenue-based financing to power growth, operate their day-to-day business with additional cash flow and invest in the long-term. Partners can use DoorDash Capital to support business-related needs including purchasing equipment, marketing costs, rent, hiring, payroll and more.
“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,” added Noree Tyler, Owner of Chada Thai Restaurant in Norman, Oklahoma.
At launch, DoorDash is working with Parafin, an embedded fintech company, to offer revenue-based financing to eligible merchants. Here’s how it works:
Eligible merchants will soon see a pre-approved advance amount in their Merchant Portal under the “financing tab.”
If a merchant accepts the offer from Parafin, they can receive the funds in their bank account in as little as 1-2 business days. Accepting the offer is simple and no additional paperwork is required. Accepting an offer also has no impact on a credit score.
Merchants will pay a one-time fee, paid over the duration of the advance. There are no hidden charges, no recurring interest, and no prepayment penalty.
Repayment is simple and automated, based on a percentage of DoorDash sales.
DoorDash Capital’s repayment structure is based on business performance, which can be more flexible than fixed payment periods. During our pilot program, over a thousand DoorDash merchants used DoorDash Capital for various business needs, and gave the service a high Net Promoter Score* of over 80.
“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.”
While we are excited to make this service more accessible, especially at a time when restaurants are seeking more capital to operate or invest in their business, we encourage partners to explore available options to ensure they choose the best option for them. Learn more here.
“The pandemic has shown that having a variety of financial tool options for small businesses can be critical to their success during lean times. Opportunities like these can be a great resource for when unexpected challenges arise,” added Justin Nelson, Co-Founder & President, National LGBT Chamber of Commerce.
The successful recovery of the restaurant industry requires continued investment. Restaurants are the fabric of our local economies, and it’s important that we continue to invest in their businesses. With DoorDash Capital, we hope to help our partners looking for accessible lending find an alternative option and invest in their businesses for the future. In our evolving efforts to support restaurants, we will continue to develop products and services rooted in strengthening our restaurant community.
*NPS stands for Net Promoter Score which is a metric used in customer experience programs. NPS measures the loyalty of customers to a company. Promoters respond with a score of 1-10 with 10 being highly satisfied, enthusiastic customers