Financing Options for Catering Businesses

The last decade has seen a huge change in the way most small companies do business. Not only has the financial atmosphere been in flux in the post-recession age, but technological innovations have also provided more financial tools to businesses, including both lenders and their client companies. As a result, today’s businesses tend to rely on credit in ways that companies never have before. Loan products are more specific to individual entrepreneur needs in different industries, and they are also often delivered with a speed that was impossible just a decade or two ago. If you’re running a catering company or looking to start in the restaurant industry, understanding how these changes have affected your industry is vital to your success.

Let’s start with the basics. Catering companies use many of the same general credit services as most other businesses. That means you might want lines of credit or a business credit card, and if you need equipment or facilities you’re likely to use the same standard loans or SBA loans as companies in other industries. That’s because these time-tested cash flow management resources solve problems that are inherent to running a business, no matter what type you run. Beyond that, specific instruments are designed to fulfill specific needs that those traditional tools did not necessarily anticipate.

In the restaurant industry, credit card transactions are incredibly common, and there are financing options that let you leverage the frequency of your merchant account use by giving you a chance to take an advance against future income through the account.  MCAs can provide upfront cash for inventory load-ups or finance the staff you will need for a big event, so you have all your payroll covered in advance. When you make the big sales you expect, the incoming cash pays the advance. MCAs can also be used to turn around a company that needs a marketing boost or another major revision to its methods to bring in a new wave of customers, and it works with you because the payment is a percentage of your credit receipts instead of a flat cost.

Asset-based loans can also be a good tool to go beyond the basics because they allow you to get credit based on a combination of inventory holdings, invoices, equipment equity, and other assets in balance. They need regular administrative attention, but they are a good option for catering companies that bill for large events and have to wait for payment. No matter what your niche in the restaurant industry turns out to be, there are options out there to help you manage your cash flow. It just takes a little time and research to find the ones for your business.

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