Finance for your Mobile Food Business

To succeed in catering you need the right menu, price, and overall service experience your customers expect. But you may not need premises. Food Stalls and Mobile Food Trucks provide a vital service - and a good living for owners and operators. There are now over 25,000 people employed in the mobile catering industry with over 6300 registered business. The low start-up costs and limited specialist knowledge required, make starting up simple. 

There will always be a demand for ice cream, for roadside snacks, and for pies and burgers for sporting events.

Festivals have provided new opportunities, for whole foods and vegan catering alongside the old favourites, and there are new opportunities, like mobile cocktail bars for private parties, juice bars and speciality foods.

With a food truck selling speciality food, you can explore the demand for the type of cuisine you want to provide. Experiment with menus, discover what people are eager to eat and even perfect your cooking skills.

You can even take advantage of your mobility, and find a pitch in an area where there is a ready market for your food. Some locations may be better-suited for particular dining styles than others - a food truck lets you find where your keenest customers are to be found.

 

Mobile food businesses include

• Ice Cream vans
• Burger vans
• Fish and chip vans
• Kebab vans
• Cocktail and alcohol Bars
• Mobile juice bars
• Speciality food bars

 

Of course, running a mobile business means challenges. Finding a pitch may be costly. You need high standards of equipment to meet hygiene regulations, and your trailer or vehicle will need regular maintenance. 

You may need to raise finance - and because of the nature of your business, finding lenders to provide the funds you need may not always be easy. At Rangewell we can help. We understand the sector, and can work with you to find the most  appropriate funding solution you need.

 

Funding Options for your catering business

Getting the right kind of finance is essential. Buying a vehicle and converting it, buying a going concern, requipping or refurbishment all present different funding needs..

 

The first step in securing the funding you need is simply to understand the different types of finance available.

They include:

• Setting up a mobile catering business
• Funding for buying a business
• Business loans
• Asset finance - Leasing and Hire Purchase
• Cashflow funding
• Tax funding

 

Setting up a mobile catering business

The cost of setting up a mobile business will centre on the cost of buying a suitable vehicle. You may not need a new van or trailer, but you should be careful to ensure that whatever you buy it is capable of providing reliable service. You might also want to ensure it can go on working for you for years - people who like your food will look out for your van, and might not recognise your business if you change it.

You might buy a vehicle that is already converted, or arrange for suitable equipment to be installed.

In either case, you will be looking at investing several thousand pounds. As a new business venture, it may not prove easy to find a lender prepared to help.

At Rangewell, we know lenders who may be able to take an entrepreneurial approach, and who may be able to make loans to start-up businesses. 

Funding to buy an existing business

Buying into an existing mobile catering business may cost a little more than simply buying a vehicle. As well as the value of the vehicle itself,  you will need to pay for the pitch you have to work, and possibly for the goodwill built up by the previous owner.

However, buying into an an established catering business can present less of a risk than setting up from scratch. The turnover, the costs and profitability can all be better predicted. This predictability means that lenders may be prepared to offer a number of solutions to help you acquire the business.

 

 

Secured loans are often used to borrow large sums of money, upwards of £250,000. They are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your home, or other business assets.

 

You can have longer to repay than other types of loan, and enjoy lower interest rates, meaning monthly repayments can be easier to fit in with your cashflow.

 

A secured loan could let you pay for a successful mobile food business outright. 

 

Unsecured loans can be suitable for smaller sums, from £5000 upwards - although some lenders will not let you borrow more than one month’s turnover with an unsecured loan.  Some lenders can arrange unsecured lending within one working day, and although you will not need to put forward any assets as security against the loan, you will need to provide a personal guarantee.

Unsecured loans have a maximum term of 5 years.

 

An unsecured loan could provide the funds for fitting out a vehicle.

 

 

See how we can help you find the most cost effective funding to buy a mobile catering business <link>

 

Asset finance - Leasing and Hire Purchase for your mobile business

Your mobile food business needs a wide range of equipment, collectively known as assets. A coffee machine, a grille, perhaps an oven, kitchen equipment in general and of course your vehicle or trailer will all mean costs, which asset finance  can help you spread. 

There several types of asset finance:

Hire Purchase lets you hire the assets until you have paid for them.  Agreements generally last between 12 and 72 months and require a 10-20% deposit plus fixed monthly instalments. It can be the simple way to spread the cost of items - such as your trailer or your catering equipment itself -  that you will want to keep for the long term.

At Rangewell, we can often help arrange hire purchase finance at rates that undercut the finance plans offered by equipment dealers. It is also possible to set up finance plans for pre-owned equipment and vehicles - giving you a low cost way into the business..

Leasing is much like a rental agreement. You pay a monthly charge to use the asset. With some arrangements maintenance, repairs, registration will be the owner’s responsibility.  It’s common for equipment which will have a limited life – it means you can easily update it when you need to.

Contract hire is often used for business vehicles, such as a van you use to pull your trailer, or your catering truck itself.  Payments are calculated on the purchase value less the estimated value of the vehicle at the end of the agreement. This helps keep monthly repayments down..

 

Our asset funding team can help you lease or Hire Purchase almost any type or value of asset, new or used. Find out more here <link>.

 

Working capital and cashflow for your mobile business

Providing sufficient working capital and dealing with cashflow fluctuations is a major challenge for every business, especially when your trade is  likely to be seasonal. Solutions include:

Revolving credit facilities. These can work like the old-style bank overdraft, and offer a line of credit, with an agreed limit that you can call on when you need it. You only pay for the money you take out, so it can be a cost-effective way to raise funds for the short term.

Merchant cash advances can provide funding if you take payments through a card terminal or PDQ machine - which is increasingly becoming essential for businesses of all kinds.  The lender works with your payment company, and can advance you the equivalent of up to one month’s turnover. This advance is repaid by automatically by deducting a proportion of the payment every time that a customer uses a card to pay.

We can work with you to help you find the finance you need to smooth your cashflow |<link>

 

 
 

Insurance cover for your mobile catering business
Insurance is essential for almost every business, and as a mobile caterer, you will need to arrange several different types of cover.

Cover for your vehicle is a legal necessity. Premiums may be high for a catering vehicle.

Cover for your staff is also legal requirement  and you must have employers’ liability insurance up to the value of £5m to protect you against the cost of a claim if an employee is injured or becomes ill as a result of working for you.

You will also need insurance for your for your liability to customers and the wider public. Providing food can mean higher liabilities than other types of work.

A specialist insurer  with experience of mobile catering may  offer more suitable policies than mainstream insurers, but cost may still be high. Find out more about funding for the premiums of insurance cover  for your bar.

 

Tax loans for bar businesses

You will be liable for VAT - and a  large quarterly VAT or annual tax demand can cause problems with your cashflow, particularly if it falls at a time when business is slow and  your cashflow is barely covering your outgoings.

A tax loan could cover the cost of your tax demands by splitting them into affordable monthly payments. It would mean  better control of cash flow, predictable monthly payments and avoid problems and penalties from HMRC.

Find out how a tax loan could support your cashflow <link>

 

Helping mobile businesses with problems

Any business  can run into financial difficulties. A cashflow problem that meant that you cannot bring in the supplies you need, or pay for a pitch  might mean your business cannot continue to trade.

At Rangewell, we know the solutions which can help your business deal with this kind of challenge.  We can provide funding solution if your business has run into difficulties - and even if you have a damaged credit history or CCjs, we know the lenders which can help.

Find out more about finance for mobile businesses facing financial difficulties.

 

 

How we help

At Rangewell, our expertise works for you.  We work across the entire lending industry, and we have finance experts with personal experience in the needs of the restaurant, cafe and takeaway sectors.

 

That means we can provide a unique service. We will help you to find the most appropriate funding from lenders across the market – from established high street banks to alternative funding suppliers. We offer every type of finance including Unsecured and Secured Loans, Invoice FInance, Asset Finance, Merchant Cash Advance, Commercial Mortgages, Bridge Loans, Property Development Finance, Growth Finance and more.

 

We know the lenders who understand the needs of the catering industry and the most competitive rates for all types of lending. Our promise is simple, We can work with you to cut the cost of investing in and running your mobile catering business. Call us to discuss the help you need.