How To Get Food Truck Financing

Written by Banks Editorial Team
5 min. read
Written by Banks Editorial Team
5 min. read

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If you are a good cook specializing in preparing unique food that people love, you may be exploring how to get food truck financing. Perhaps you have watched the fast-paced and successful food truck shows and are considering your options to join the food truck industry. But, how much does it cost to invest in a food truck? The answer, however, will depend on the city or cities where you plan to operate and what type of funding you need.

Quick and Easy Small Business Loans

How Profitable Is a Food Truck?

Is buying a food truck a good investment? According to a survey of 300 food truck vendors by Food Truck Empire, more than 85% of them generated annual gross revenue of $100,000 or more, with 21% of those food truck operators producing over $200,000. However, building your truck into a profitable business could take time, but you always have the option of financing. An important step to getting food truck financing is to research what’s required to operate a food truck so that you can create a business plan that can help you be strategic about the decision and show traditional banks and online lenders that you know what you’re getting into.  

How Much Does It Cost to Invest in a Food Truck Business?

If you’re wondering how much it costs to invest in a food truck business, the answer may depend on several factors. Of course, the main expenses will be the food truck itself, fuel for the truck, and perishable foods you will serve. Where you’re located could also be a top consideration if you’re curious how much a food truck business cost.

How Financing Can Help Your Food Truck Business

Ready access to quick financing can mean the difference between success and failure. You may have a good reputation for making the best burgers in town, or your smoothies are second to none, but that doesn’t mean you have the money you need to buy a food truck and be a business owner. Despite this, financing can help you get your food truck business on the streets and at summer festivals. Here are several ways you can use financing to buy a food truck business or improve the menu you’re already offering every week at the farmer’s market:

  • Get Or Upgrade Equipment: With the right small business financing or equipment loans, you can buy or upgrade equipment in your food truck.
  • Repair Your Food Truck: You don’t want to get caught with a flat tire or transmission troubles right when it’s time to rev up your food truck business. Also, think about how the cost of fuel can put a dent in your profits; food trucks often get less than 10 miles per gallon.
  • Hire More Employees: Financing can help you pay more workers. You can keep food truck customers happy with shorter lines and faster service if you have the right number of employees to make it happen. In addition, hiring workers to help with food prep and marketing can give you more time for your responsibilities as a business owner. 
  • Expand Your Food Trucking Business: Some food truck owners use their mobile business as a way to market their catering business or restaurant. If you’re poised for growth in your community or want to expand with more food trucks in several cities, financing may be required.
  • Cover Unexpected Expenses: As a business owner, you always want to be prepared for unplanned supply chain issues or increased costs by your food suppliers. With a business line of credit or other small business financings, you can do just that.

Quick and Easy Small Business Loans

Food Truck Financing Options

Depending on your years in business and sales history, you can find a wide range of food truck financing options. The type of financing you choose will hinge on how you plan to use the money. Terms and interest rates will vary as well. Here are six types of food truck loans you may be considering if you plan to join the food truck industry:

SBA Loans

SBA loans are offered through approved banks and online lenders and are guaranteed by the U.S. Small Business Administration. You need to apply through a bank, credit union, or financial institution, and part of the loan is guaranteed by the SBA. To qualify for SBA loans, you must be in business for at least two years and show a strong sales history. However, a bad credit score may prevent you from qualifying since SBA loans have high eligibility standards. Different types of SBA loans have different loan amounts, interest rates, and other payment terms. Be aware that it takes longer to apply and get approval for SBA loans, and the funding process can be delayed.

Business Term Loans

With a small business term loan, you receive a lump sum of money to pay back based on the terms provided by your lender. You will have to demonstrate that your food truck business is stable and profitable before you qualify for a business term loan, and you may qualify for lower interest rates if you can provide a down payment. In addition, you may find that online lenders offer more flexibility with business term loan qualifications than traditional banks or credit unions.

Business Lines of Credit

Business lines of credit are like cards you can use and repay up to an approved limit. You can take a tax write-off of interest paid with a business line of credit, but you can’t with credit card interest, making business lines of credit uniquely beneficial for business owners. There are two types of business lines of credit: secured and unsecured. Unsecured or revolving business lines of credit are the most common type. With an unsecured line of credit, the lender probably won’t require collateral, but they may demand that you personally guarantee the amount you borrow for your food truck business. If the business fails, you will need to pay the remaining credit line from your personal assets

On the other hand, you may be required to offer collateral, such as equipment, inventory, or your food truck, for a secured business line of credit to use as a guarantee that you’ll pay back what you draw on your credit line. 

Microloans

A microloan may be an option to consider when financing your food truck business when you need to borrow a small amount for a shorter period of time. More traditional small business loans may have minimum loan amounts you don’t need, but interest rates tend to be lower with microloans considering you borrow the money for such a short time. However, collateral may be required, depending on the lender. Common lenders for microloans include nonprofit organizations that have fewer qualifications.

Working Capital Loans

A working capital loan is a frequent choice among seasonal businesses with unpredictable cash flow, such as food trucks. Working capital loans are generally short-term loans funded quickly by online lenders, banks, and credit unions. You can use a working capital loan to cover expenses or purchase equipment and supplies, allowing you to pay back the loan quickly as sales improve. Interest rates and other loan terms will vary depending on many factors, including the type of working capital loan program you select.

Equipment Financing

Equipment financing is funding for the equipment in your food truck business, including the food truck itself. The equipment you are financing can usually serve as the collateral for your loan, which the lender can claim if you cannot make payments. Your personal credit score and time in business can have an impact on your eligibility for equipment loans, just as with other types of small business loans. You may prefer the convenience of using an online lender for equipment loans rather than a bank or credit union since online lenders provide fast funding with less strict qualifications.

Get Financing for Your Food Truck Business

If you want to get financing for your food truck business, look to National Business Capital and its streamlined marketplace of more than 75 lenders. National Business Capital offers a wide range of business financing for food truck owners and other small businesses, including:

  • Small Business Loans to help you grow or if your business needs a boost. A small business loan can help you face cash flow challenges like seasonal slowdowns.
  • Business Lines of Credit make it easy to draw more cash when you need it and use the financing again during the term.
  • Equipment financing may be just the solution you need for your food truck business or virtually any industry.

National Business Capital has experienced business financing advisors who explain your financing options and work with you from start to finish. Apply for financing from National Business Capital today. Their simple online application has no impact on your credit score.

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