Catering Company Financing and Some Business Loan Companies

Article Summary:

• Catering companies looking to grow or fill gaps can look into business loans and financing.
• Banks, online lenders, SBA loans, lines of credit, equipment financing, and credit cards are options.
• The top business loan companies have different interest rates and terms.

Financing Options for Catering Companies

Any major event or meeting has something very important — catering. Owning a catering company can be rewarding, as you play a special role in milestone birthdays or anniversaries, conferences, and meetings. While you keep people happy and fed, behind the scenes it can be a lot of work managing a catering company.

According to Expert Market Research, the United States catering market size was $72.67 billion in 2024 and is slated to grow in the coming years. To stay on top of current trends and capitalize on this increase, you might need financing to help your growth and expansion. In this guide, we share the different types of catering loans and the top business loan companies to check out.

Common Costs for Catering Companies

Running a catering company can come with substantial costs, including:

• Rent or mortgage payment on kitchen space
• Kitchen equipment
• Cooking items and ingredients
• Serving utensils
• Vehicle transport
• Chefs
• Catering event staff
• Marketing materials
• Insurance
• Utilities
• Website and other tech costs
• Advertising

As a catering company, your bottom line depends on the number of events you have booked. Given the nature of events, a level of volatility and unpredictability can make it difficult to get financing. Bookings can fluctuate depending on the season, and there can be cancellations and refunds of deposits.

Depending on your contract requirements, payments may be staggered as well. Due to these factors, you might need to turn to business financing to improve your cash flow and keep things running smoothly while waiting for your next deposit.

Types of Small Business Loans for Catering Companies

You have multiple funding options if you need a small business loan for your catering company. Here are the most common types of loans from top business loan companies.

Term Loans

Business term loans offer small business owners lump sum funding. The loan amount is repaid on a specific term or schedule. The interest rates can either be fixed or variable. Some banks may require a down payment for a term loan, whereas online lenders may not. Term loans can be found from some of the top business loan companies.

SBA Loans

The U.S. Small Business Administration (SBA) has various loan programs to support small business owners. Catering business owners can look into the following:

• SBA 7(a) loan. Under this option, you can get funds to acquire real estate, get working capital loans, and purchase equipment and supplies. The SBA 7(a) loan has a maximum loan amount of $5 million.
• SBA 504 loan. You can get fixed-rate financing with an SBA 504 loan. Funds can go toward new facilities, existing buildings, or long-term equipment. The maximum loan amount on 504 loans is $5.5 million.
• Microloans. Through the SBA microloan program, you can get funding up to $50,000. This can be used for inventory, supplies, and equipment to help your catering business.

The small business loan terms vary by program. It’s important to note the SBA backs the loans but isn’t the lender. Instead, they partner with financial institutions and lenders from top business loan companies.

Alternative Financing Options for Catering Companies

Getting a loan from one of the top business loan companies can help catapult your growth. But depending on the stage of your business or your creditworthiness, you may need to look into alternative financing options.

Business Lines of Credit

If you’re looking for a financing option with flexible repayment and borrowing, a business line of credit could be an ideal fit. The way it works is a bank or lender will approve you for a set credit limit. From that amount, you can “draw” the funds you need. You’re only responsible for and pay interest on the funds you borrow.

You don’t get a lump sum in this case. Instead, it’s sort of similar to a credit card. Once you borrow and then repay the amount, you increase your available credit to use. Let’s say you have a $20,000 business line of credit and use $5,000. Once you repay the $5,000, then you may qualify for the full $20,000 line of credit. However, specifics vary by lender so make sure you understand how it works.

Equipment Financing

If you need a major upgrade in your equipment, you can look into equipment loans or financing. As the name suggests, this type of funding is specifically for equipment. As a caterer, this can help you purchase new refrigerators, freezers, commercial ovens, coolers, dishwashers, stoves, burners, food service trays, a catering vehicle, and more.

Equipment financing can be easier to get because the equipment purchased with the funds acts as collateral. So, if you default on your equipment loan, the lender can take the equipment to cover costs. Having collateral makes it easier for borrowers to qualify for financing and makes it less risky for lenders.

Merchant Cash Advances

If your catering business processes debit and credit card transactions, you can look into merchant cash advances. Through a merchant cash advance, you’ll get funds upfront. In exchange, you commit to repay the amount through a percentage of your debit and credit transactions, on top of a fee.

While this can be super convenient when you have a shortfall of cash, it comes at a high cost with high interest rates. So, if you have other options with lower interest rates, that can be more advantageous and beneficial in the long run.

Invoice Factoring

As a catering company, you probably are familiar with invoicing your clients for deposits and their remaining bills. You can turn your invoices into a business financing solution through invoice factoring.

Invoice factoring allows you to sell your unpaid or outstanding invoices to a third-party factoring company. You can typically get 80% to 90% of the invoice value upfront. The company then receives the payments from the customers. After collecting payment and deducting a 1% to 5% fee, the company will pay you the remaining amount. You might also see invoice factoring referred to as accounts receivable factoring.

Business Credit Cards

In your current stage of business, you may not qualify for a loan from the best business funding companies. If you can’t immediately qualify but still need financial support, a business credit card is a good short-term tool to fill gaps.

If you’re able to pay off the balance by the due date and avoid accruing interest, you’ll be in great shape. But if you can’t, be aware you will pay interest on the balance. Interest rates on all credit cards tend to be steep and higher than personal loans.

In the meantime, you may be able to rack up rewards and establish your business credit history. Talk with your credit card issuer to confirm they report to the major business credit bureaus. Make payments with your business checking account, so your financial accounts are connected. Doing this can help you keep your personal and business finances separate and build business credit.

What Are Some Business Loan Companies?

If you need funding for your catering company, you want to work with a trusted provider.

Though each company has different requirements, funding amounts, and business loan terms and rates, they look at many of the same things.

The top business loan companies look at numerous factors including:

• Personal credit score. Lenders review your FICO credit score and credit history when applying for a business loan. Some lenders work with borrowers with bad credit. But in general, most lenders want borrowers with good credit with a score of 680 or higher. To ensure your information is accurate, go to AnnualCreditReport.com and review reports from all major credit bureaus, Experian, Equifax, and TransUnion.
• Business credit score. Small business owners with an established credit history may have a business credit score from 1 to 100. For the best interest rates and shot at approval, you want a business credit score of 76 to 80 or higher, depending on the scoring model. You can keep tabs on your business credit reports at Experian, Equifax, and Dun & Bradstreet.
• Revenue. As part of the application process, lenders will evaluate your annual revenue or monthly revenue. The lender may have minimum revenue requirements to ensure you can afford the monthly payments.
• Business history. Your length of time in business is one metric that lenders look at if you’re applying for small business financing. Catering company owners with many years of experience will be seen as less risky to lenders than new businesses.

How to Get Funding from the Top Business Loan Companies

1. Gather documentation. You typically need to provide several documents to prove your income and legitimacy as a business. Get your bank statements, tax returns, profit and loss statements, business licenses, business plans, and other financial statements as needed.

2. Get your credit in shape. Review your personal and business credit history and scores. Continue to make on-time payments and aim to lower your credit utilization.

3. Compare lenders. Every catering company has different business needs. So, what’s a good fit for one company might not be a good fit for another. Compare the top business loan companies and review the eligibility and credit score requirements. Once you narrow your options, compare the maximum loan amounts, origination fees, interest rates, repayment terms, and down payment requirements. If you plan on paying off the loan early, confirm the lender doesn’t charge prepayment penalties.

4. Apply for a small business loan. After researching companies, you can choose a lender with a strong reputation and competitive interest rates. Go through the process of submitting your loan application. Even though you’re applying for a small business loan, you’ll likely need to provide a personal guarantee. This means you’re responsible for the loan and not the business.

5. Receive funds. Depending on the type of loan, you may receive a lump sum of cash upfront. Funding times may be faster with online lenders. Traditional banks and the SBA can take longer. Once you receive the funds, keep them in your business bank account.

Final Thoughts

Owning a catering company can be a fast-paced adventure. You’re there to celebrate people’s special days, like birthdays and weddings. You can help nonprofits and corporations with their meetings and events.

In other words, you play an important part in many events and can make an impact. But there’s no doubt that catering comes with some unique challenges. To help focus on your clients, you can look into different financing and loan products. Using this guide, you can research the top business loan companies to work with and find a solution for your business needs.

FAQs About Some Business Loan Companies

If you want to grow your catering business and serve more people while maintaining excellence, you might need business financing. Here are some frequently asked questions about the top business loan companies and loan options for catering businesses.

Can a New Catering Business Get a Loan from an Ideal Business Loan Company?

It can be difficult for a new catering business to get approved for a loan. However, if you meet the minimum credit score and collateral requirements, you may have better luck with an alternative lender. New businesses can look into a credit line and microloans from the SBA.

Is it Easy to Get a loan for a Catering Business?

Qualifying for a catering loan can be tough. However, microloans from the Small Business Administration, business lines of credit, and equipment financing are business loan options that may have easier eligibility requirements to meet. Research the top business loan companies and compare interest rates and repayment terms.

What Are the Companies for Small Business Loans?

Some of the options for small business loans include the Small Business Administration (SBA), financial institutions, and online lenders who can typically provide fast funding. Business loan companies offer different loan products and provide funding to borrowers.

What Are Typical Catering Business Loan Terms and Rates?

Small business loan terms and rates vary by type of lender. However, on average you can expect a loan term between 18 months and six years or more, depending on if they’re short-term loans, medium-term loans, or long-term loans. Find the best rates from one of the top business loan companies.

Frequent searches leading to this page