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Food delivery company DoorDash has rolled out a new line of business, which it calls DoorDash Capital, that will provide money to restaurants and other businesses on a short-term basis.
The offers are technically not loans, but rather cash advances for which the merchants will pay a fixed fee upfront. The merchants who accept the cash advances will pay them back as DoorDash takes a percentage of the merchant's daily sales and puts it toward repayment.
San Francisco-based DoorDash has partnered with Parafin, a fintech company, to offer financing to eligible merchants. Once the financing has been approved, funds are distributed in one or two business days. The money used to pay back the advances will be taken automatically from merchants' bank accounts under the terms of the agreement with DoorDash Capital.
“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,” Chief Revenue Officer Tom Pickett wrote in a company blog post on Wednesday.
The rollout of DoorDash Capital comes after the company tested it during a pilot program. During the pilot program, more than 1,000 merchants used the service for various business needs, according to DoorDash.
As of the end of 2021, DoorDash was the largest food delivery operation nationwide, with 58% of the market. The company went public in 2020 with an initial public offering, and it is now looking for new revenue streams, Bloomberg reports.
DoorDash stock was up more than 8.6% Wednesday, but over the last year, it has declined nearly 42%.
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