Quick answer
Caterers usually borrow for commercial kitchen equipment, refrigerated vans, event hire gear, and working capital to cover food and staff before clients pay. Event caterers collect deposits but face big seasonal peaks, while corporate and contract caterers often wait 30 days or more for invoices to be paid. Equipment finance suits ovens and vehicles, and invoice finance or a line of credit suits the cash gap. Banks lend to established caterers with strong accounts and property.
Key points
- Wedding, corporate and contract catering have very different cash flow patterns, and lenders assess each differently
- Corporate and institutional clients often pay on 30 day terms or longer, so a new contract can drain cash before it adds any
- The ATO's 2023–24 catering benchmarks show cost of sales of roughly 31% to 43% of turnover, with total expenses climbing as businesses grow
- Combi ovens, blast chillers and refrigerated vans hold value, so they're usually the cheapest part of a catering business to finance
“Catering” covers a lot of different businesses. A wedding caterer taking deposits a year in advance, a corporate caterer dropping off platters to offices five days a week and a contract caterer feeding a mine camp or an aged care home might share a commercial kitchen, but their money moves in completely different ways. Lenders know this, and the first thing a good one will ask is which kind of caterer you are.
Which kind of caterer are you, in a lender’s eyes?
| Catering model | How money flows | What lenders watch | Finance that often fits |
|---|---|---|---|
| Weddings and private events | Deposits in advance, balance before the event | Seasonality, cancellation exposure, forward bookings | Line of credit for peaks; equipment finance for hire gear |
| Corporate and office catering | Invoices on account, frequent small orders | Debtor days, client concentration, repeat orders | Invoice finance or a line of credit |
| Contract catering (mine sites, aged care, schools, hospitals) | Monthly invoices under a contract | Contract length, client strength, renewal risk | Term loans, equipment finance, invoice finance |
| Café-style or venue catering | A mix of walk-in sales and functions | Takings, lease term, venue costs | Unsecured loans and equipment finance |
Most caterers sit in more than one row. If that’s you, describe the mix to a lender with rough percentages. It answers their first question and shows you understand your own numbers.
Why can winning a contract leave you short of cash?
It sounds backwards, but it’s one of the most common reasons caterers borrow. A new corporate or institutional client means more food, more staff hours and sometimes a new van, all paid for weeks before the first invoice is settled. If the client pays on 30 day terms, and actually pays on day 45, the business has been funding that client for six weeks or more.
Lenders call the average time it takes to get paid your debtor days. Every extra day on that count ties up more of your own cash. A caterer turning over $80k a month on 30 day terms might easily have $100k or more sitting in unpaid invoices at any time.
Practical ways to fill that hole:
- Invoice finance releases a large share of each invoice soon after you issue it, and grows automatically as your sales grow. See invoice finance, and estimate the cost with our invoice finance calculator.
- A business line of credit works for smaller or irregular invoice books. See business line of credit.
- Better terms up front. For new clients, ask for 14 day terms or a mobilisation payment at the start of a contract.
Our situation page on funding a big contract you’ve just won walks through this step by step.
Just signed a contract you need to resource? Tell us about it here. Expect to spend about a minute on the form, and an enquiry leaves no footprint on your credit file.
How do lenders view catering margins?
The ATO publishes small business benchmarks for catering services based on 2023–24 tax returns. For most turnover bands, cost of sales sits somewhere between about 31% and 43% of turnover, with averages around 36% to 37%. Total expenses as a share of turnover rise noticeably as caterers grow, averaging about 68% for the smallest businesses and 86% for those turning over more than $600k.
What that tells a lender is that a larger caterer may have more revenue but thinner percentage margins, often because of more staff, vehicles and kitchen overheads. They’ll want to see that pricing keeps pace with food and labour costs. Our margin and markup calculator is a quick way to check your quotes still leave enough profit after food price rises.
What do caterers typically finance?
- Commercial kitchen equipment: combi ovens, bratt pans, blast chillers, cool rooms and dishwashers.
- Vehicles: refrigerated vans and trucks for transporting food safely.
- Event gear: chafing dishes, portable bars, marquees, crockery and cutlery, so you stop paying hire fees on every job.
- Kitchen fit-outs: setting up or expanding a production kitchen. See commercial kitchen fit-outs.
- Working capital: food, packaging and wages for peak months or new contracts.
- Buying another caterer: taking over an established client list and kitchen.
Vans and kitchen gear tend to get approved with the least fuss, since the lender can hold the asset as its security. Equipment finance and commercial vehicle finance keep these purchases separate from your cash flow funding, which tends to keep total costs lower.
When are catering’s busy and quiet times?
Lenders reading your bank statements will see your calendar.
- Spring and autumn are peak wedding seasons in much of the country.
- November and December bring end-of-year functions and Christmas parties, often the biggest month for corporate caterers.
- January can be very quiet as offices empty out.
- School terms drive demand for school and childcare contracts, with holiday gaps in between.
- Mining and remote contracts can run steadily year-round but depend on contract renewals.
With income that rises and falls like this, a revolving facility usually beats a single upfront sum. Our seasonal business loans page explains why, and the guide to cash flow for event businesses has planning tips.
What risks will a lender ask about?
- Client concentration. If one client makes up most of your revenue, losing them would be serious. Lenders will ask about contract terms and renewal dates.
- Event cancellations. Weather, illness or a client changing plans can hit deposits and stock.
- Food safety. Caterers handling ready-to-eat, potentially hazardous food are category one businesses under Food Safety Standard 3.2.2A, so you’ll need a certified food safety supervisor, trained staff and records. A serious incident could end a contract overnight.
- Staff costs. Penalty rates for weekend and evening events, plus payday super since 1 July 2026, mean wages leave the account in step with every pay run.
What should a caterer bring to a lender?
Gather bank statements for your trading account, your recent BAS and latest financial statements, a client list showing your main accounts and their payment terms, copies of any major contracts, an aged debtors report, quotes for equipment or vehicles, and an ATO portal statement. A forward bookings summary helps event caterers show future income.
Worked example: a corporate caterer winning a hospital contract
Invented figures for illustration. A Perth catering business with $1.1m in annual turnover wins a three-year contract to supply staff meals at a private hospital, worth about $45k a month. The hospital pays monthly on 30 day terms. To service it, the caterer needs a second refrigerated van ($72k), a larger blast chiller ($24k), four extra staff and more stock.
The van and chiller go on equipment finance, secured by the assets. For the cash gap, the owners set up invoice finance across all their corporate accounts, which releases most of each invoice soon after it’s issued. That covers food and wages during the first two months, before the hospital’s payments settle into a rhythm. The bank had offered to help, but needed a mortgage over the directors’ home for the working capital, which they preferred to avoid.
Ready to take on the next booking?
Catering finance is about timing: having the gear, the staff and the cash ready before the client pays. Match equipment to equipment finance and cash gaps to flexible funding, and the business can grow without running dry.
If you’d like us to look at your situation, send through a short enquiry. It takes around sixty seconds, and your credit score stays out of it at this stage. We’re not a lead marketplace, so your enquiry isn’t sent out to a stack of funders. A specialist goes through it personally, then picks up the phone. Precise answers on turnover, contracts and the sum required mean the option we bring you should fit from the outset.
Frequently asked questions
Can a catering business get a loan without a shopfront?
Yes. Many caterers work from a commercial kitchen or a shared production space, and lenders are used to that. They'll focus on your bank statements, client list, contracts and equipment rather than on foot traffic.
How can I fund a big catering contract before the first invoice is paid?
Common options include invoice finance, which advances most of each invoice once it's issued, and a business line of credit to cover food and wages in the meantime. For a large multi-year contract, some lenders will also look at a term loan sized on the contract value and the client's track record.
Do event deposits help with a loan application?
They help with cash flow, and a strong forward booking book shows a lender future income. Lenders will usually still want to see that deposits are managed responsibly, because they are owed back or owed in service if an event is cancelled.
Can I finance a refrigerated van for catering?
Usually, yes. A refrigerated van is a commercial vehicle with clear resale value, so it can often be financed with a chattel mortgage or equipment finance, secured by the van itself. The refrigeration unit is normally included in the finance.
Will a bank lend to a caterer?
Yes. Established caterers with two or more years of profitable accounts and property security are often well served by a bank, and the cost is frequently the lowest available. If the bank declines or takes too long, non-bank lenders can assess recent trading and contracts instead.
What if my catering business has ATO debt?
It doesn't automatically rule you out. Non-bank lenders often consider tax debt case by case, particularly if it's on a payment plan that's being met. Some loans are structured to pay the ATO directly as part of the funding.