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Business Loans for Catering Services

The days of people completely catering their parties are fading into the background, catering businesses have a great opportunity to build a great business or expand. Regardless of where your catering business is in its lifecycle, partnering with the right finance company can make all the difference to your chances of success or failure.

 

Starting out

Launching a catering business is about a lot more than having a fistful of grandma’s recipes and an oven. A successful catering business that can handle large gatherings with a variety of different foods needs a commercial kitchen. That requires an investment in ovens, pots and pans, utensils and other equipment. You’ll probably also need a vehicle. Also, there are the establishment costs of a new business like staffing, insurance and other set-up expenses that have to be paid before you’ve earned a cent.

 

Bankrolling your launch can happen in a few ways.

If you have an asset of value, you can use that as collateral against a secured loan. That means the lender can reduce its risk as it uses that asset as security against the loan. As a result, subject to the value of the asset,

lenders will typically allow you to borrow more and offer a lower interest rate.

A home loan is an example of a secured loan. The value of the property is used as security against the amount of the loan. In contrast, a credit card is a form of unsecured credit. There are no assets at risk, but interest rates on credit cards are higher than mortgages, and credit card limits are lower than lending limits on home loans.

Business owners and operators without an asset to borrow against aren’t left without options. Unsecured business loans allow you to borrow funds without putting an asset at risk. Often, unsecured loans come with flexible payment terms.

 

For example, lenders like Capify have options that allow you to make small payments, from your daily cash flow for example, rather than requiring lumpy monthly payments…

 

Dealing with the unexpected

The life of a business operator is never straightforward. There can be a slow month. Or a piece of crucial equipment – like your vehicle or an oven – could break down.

Perhaps a hectic period is about to start, and you need to rent or purchase extra equipment, buy additional stock or hire more staff.

While being on good terms with suppliers is essential as you may be able to negotiate favourable credit terms with them, there will be times when you need access to cash in a hurry. That’s where a lender that understands the needs of business operators is critical.

Each day you’re kept waiting is a day when your earning capacity is limited. You want a lender that makes it easy to apply for the finance and can get the funds into your account quickly.

Traditional lenders will typically ask for several documents and reports that may take you some time to get in order.  Then there’s the application process, which often involves complex forms and a meeting, followed by an approval process. That could take days if not weeks.

 

Dealing with growing pains

When a business starts to grow, it can be a double-edged sword. On the one hand, surging demand for services is a sign that you’re doing something right. Existing customers are using your services more often, and word of mouth referrals are bringing new clients to your door.  Or, you may want to expand your business which will require an investment in marketing and advertising.

However, that growth comes, you’ll need to fund the expansion. While some of that may arise through revenue, you may need to look at an injection of funds. Depending on what assets you own, the amount you want to borrow, and what repayment terms work best for you, you can look at taking out either a secured or unsecured business loan.

 

What sort of lender do you need?

 

When a catering business isn’t cooking and delivering great food, it’s not earning any money. You want a reputable lender that understands this and will partner with you to give you the support you need when you need it. You’ll wish to flexible payment terms that fit in with the way you operate.

 

When you’re looking for a lender, such as Capify, you’ll want to deal with someone who understands the needs of small business, has a proven track record supporting businesses and can deliver funds to you quickly.

 

No matter where your business is in its life, maintaining reliable cashflow so that bills, wages and maintenance are paid, and having enough working capital for growth is critical. Partnering with a reputable finance company that understands your needs is a valuable asset your business needs.

Catering-Business-Loans

Catering business loan helping with cashflow

Best Alternative Funding

Alternative lending includes business lenders that exist outside of the traditional lending space. The different types of alternative lending these lenders provide include short-term business loans, medium-term business loans, lines of credit, invoice financing, equipment financing, merchant cash advances and more.

Alternative lending is any lending that occurs outside of a conventional financial institution. Alternative loans tend to be more flexible than traditional loans and often have faster application turnaround as well. There are many different types of alternative funding available, so there is likely an alternative loan out there that suits your small business’s circumstances.

 

Unsecured Business Loans

As we mentioned before, not all online lenders require collateral for loan approval. In short, an unsecured business loan is based on your creditworthiness as a borrower. Some lenders—namely, bank lenders—will require that you begin with a secured business loan to establish a relationship. This relationship will enable you to take out that unsecured loan. With online lenders, however, you have more options for better approval odds:

Long-Term Loans

Unsecured long-term loans are extremely rare, but they do exist. The unsecured long-term business loans can range from terms of a few years to a few decades, depending on the amount you need to borrow. Since these types of loans for larger amounts of money and require a longer repayment term, online lenders typically require records of your business’s history.

If you’re starting a coffee shop business, your approval odds for this type of loan will not be in your favour.

Short-Term Loans

Unsecured short-term loans, on the other hand, are much easier to qualify for as a new business owner. Most of these short-term loans have a repayment term of one year or less. They’re the type of loan you take out if you need new equipment, are going through a slow season, pay unexpected expenses, are expanding, or for other short-term reasons.

Short-term unsecured loans are best for small business owners, and they don’t necessarily require records of your professional history.

Merchant Cash Advances

Merchant Cash Advances (MCAs) are another type of unsecured business loans that are ideal for businesses that deal with a lot of credit or debit card sales. The repayment terms of this loan are determined by a percentage of your daily credit and debit card transactions. In other words, the agreed-upon rate between you and your lender is taken out of those daily credit and debit card sales to pay back the loan.

There are no fixed payments required for a Merchant Cash Advance, which is a great convenience. Of course, upon deciding if an MCA is right for you, you’ll want to take a close look at the loan’s interest rate and the required percentage of sales being offered by your lender. If you only qualify for MCA terms with high-interest rates and a large portion of daily transactions, this option may not be as beneficial for you as having a fixed payment.

 

Finding Online Business Loans

If starting a cafe is your dream, then online business loans are your best bet in getting the funding you’ll need. If you’d like to find out more about unsecured loans for small businesses, you can check out our website or contact us with any questions. Let us worry about the money while you worry about the coffee.

 

Are you looking for funding? When banks let you down, consider an alternative loan.

  • Traditional bank loans have lower interest rates and longer terms than alternative financing but stricter requirements for approval.
  • Alternative lending options include direct private lending, marketplace lending and even crowdfunding platforms.
  • Alternative loan types include lines of credit, short-term loans, microloans, factoring, equipment financing, bridge loans and merchant cash advances.

Picture this: your company is relatively new on the block, and has started gaining ground on the competition in terms of market share. However, competing firms have begun expanding their operations response to your company’s emergence. Keeping up with the game will require “upholstered” marketing and operational plans as well as new structures, all of which point toa sudden need for sizable funds.
The world of business in itself is a series of calculated risks and pushing forth with large purchases can sometimes entail the need for the involvement of third-party lenders. Alternative lending may be the ideal option given this scenario. The same goes for a lot of companies affected by an economic recession.

 

Alternative lending offers a comfortable and flexible payment scheme, much to the convenience of enterprises in need.

Sometimes, though, small business owners can’t qualify for these loans or need something shorter term or more flexible. In these cases, alternative lenders offer various ways to access the capital you need to grow your small business. Alternative loans come in many shapes and sizes, so you can generally find the right one for your current needs.

 

1. Pay your loan back as you get more sales

For a growing company, especially one that keeps pace with the advancements in 2015, acquiring and installing all the necessary equipment would require a bulk of the cash. The first thing that comes into mind is getting a business loan. Alternative lending, in the form of a Merchant Cash Advance, can present a more straightforward loan payment method, thus allowing new enterprises to borrow more funds.
Since the payment is staggered – based on the arrival of credit card sales – those who opt for alternative lending have the luxury of borrowing large sums of cash, which can be turned into additional staff, machinery and even a financial pillar for expansion.  In a nutshell, the success of your company figures in paying for the owed sum, a far cry from the terms that usually come with traditional financing.
The resulting financial freedom allows new companies to manage their cash flows, make valuable purchases and fill up all their basic staffing needs with relative ease. Partnered with an in-demand product/service and a series of sound strategies, an enterprise should likely experience a progressive growth in sales to cover for the amount owed in the long run. Your success is the alternative lender’s success, to put it simply.

 

2. Easier to manage your cash flow

Without the proper grasp of one’s cash flow, an entrepreneur will be surprised at the sudden surge in expenditures and perhaps forgo necessary spending in favour of the perception of preserving business capital. It’s tough to run a business if you have no idea whether you’re making money out of a particular venture. Here is where cash flow management and lending come in.
Upon noting down all of the company’s sources of income and expenditures, you’ll have an idea on where you should concentrate your funds, prepare for future expenses and consider possible loans. Alternative lending enters the fray with smaller daily collections, which are easier to manage than a staggering figure payable at the end of the month. Payments are relaxed and come with smaller amounts, giving business owners more control over their finances.
This way, companies can allocate small loan payments daily, without getting in the way of their operational necessities.

 

3. Fewer requirements than a bank loan

New forays into technology, like big data and digital marketing, can turn a budding enterprise into a well-oiled profit-generating machine. The thing that stands between a company and those high-tech amenities, however, is a sizable amount of cash – which not all companies have, new ones in particular.
Normally, a generous bulk of funds can be doled out by a lending company if an enterprise has a favourable credit score. Gaining such takes time, putting new companies at an immediate disadvantage. Alternative lending, through an unsecured business loan, is the golden ticket in this scenario.
An unsecured loan has lower credit and income requirements, fitting the needs of new companies that are experiencing progressive growth, albeit small scale. The interest rates may be higher than secured loans, but if your business has taken on a rather profitable path, paying for your dues would not be too troublesome in the long run.

 

4. Fast to secure alternative loan funds

Let’s take a look at some of the requirements for traditional business loans. Banks and financiers would necessitate an entrepreneur to hand out their tax returns, credit history and rating, a comprehensive business plan and so forth. This tedious process takes time and effort, which could have been focused on essential endeavours, such as improving the business process or attracting more clients.
Fortunately, this is not the case with an unsecured loan. This type of loan though tagged with more risk does not always require tax returns, credit card processing and complex paperwork. In less than three weeks, a qualified organisation can already obtain much-needed funding from an alternative lender, thus propagating more focus toward growing the business and not on loan.

 

5. Alternative loans make it easier to run a successful business

Starting a business is easier said than done since most ventures come with an array of expenses that not every budget can afford. Even if you have just enough to cover the initial expenditures and the operating capital, the cash-outs expand over time, and new ventures don’t always prove to be successful at first. Don’t fret; it’s not the end of the world; far from it to be honest.
Financial institutions that provide alternative lending allow prospective business people to follow their entrepreneurial dreams and perhaps make it on the industrial front. T

The terms they offer are geared to accommodate the financial capacities of these business owners. The small daily payments from an unsecured loan do not make large dents on your business finances while the stretched payment scheme of a Merchant Cash Advance lets a new business grow before compelling large settlements.
The initial stages of putting up a business are often the hardest, and a new entrepreneur would love to have as much breathing room as possible in terms of cash. Alternative lending, for many, happens to be that breathing room.

 

 

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