Whether you run a food truck, mobile kitchen, food stall or want to set up one, a business loan can help finance everyday expenses, expand your business, or brand new equipment. We’ve evaluated the best food truck loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
Fundera does not lend money directly but offers a digital marketplace where you can connect with lenders to provide a financing solution for your business.
National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
A food truck loan is designed to help new and established businesses get the capital they need to open or expand their business. This type of loan is usually used for the purchase of equipment, furniture, and other assets that are necessary for the day-to-day operations of a food truck business.
What are the requirements for food truck loans?
If you need money for your food truck, here are the requirements you’ll need to meet:
Collateral: Food trucks are considered small businesses, so you may be required to make a down payment on your loan. A down payment can be as low as 10% of the total loan amount, but it can also be as high as 50%. The percentage depends on how much money the lender is willing to lend you and what type of collateral you provide.
Time in business: Most lenders want to see that you’re a stable business before they give you a loan. If you’ve been operating for less than six months, this may lower your chances of getting approved for a food truck loan. However, if you can show that your business has made significant progress toward reaching its goals, then this could increase your chances of being approved by some lenders.
UCC filing: If you plan on purchasing any equipment or inventory with your loan funds, you may need to file a Uniform Commercial Code (UCC) filing with the state. You may need to file it where the lender is located before they approve your application.
Financial statements: A good credit score is necessary, but lenders also want to see that you have enough income to cover all your business expenses. They will want you to provide them with financial statements that show your projected income and expenses. This can be done through an accountant or financial planner who has worked with you.
Business plan: Most lenders also require a good business plan because they want to make sure that you have thought about all aspects of your business, including how much it will cost, what loans you might need, how much money you’ll make, and how much time it will take for the business to generate profit and more.
What are the types of food truck loans?
Here are some types of food truck loans:
Equipment financing: This loan is used to purchase the equipment you need to operate, including your truck, kitchen equipment, furniture, and more. The loan will be backed by the equipment as collateral.
Working capital loans: Working capital is often used to finance everyday business expenses, such as salaries, and rent while managing cash flows.
Business line of credit: A line of credit allows you to borrow up to a certain limit at any time as needed. For example, if you need $50,000 to purchase new equipment, the line of credit would allow you to take out $50,000 immediately and pay it back over time as needed. If you only needed $10,000 initially, then all that money would be available immediately. You can think of a line credit like a credit card but with a lower interest rate. Business lines are often used as an alternative to traditional loans because they offer lower rates and more flexibility than conventional financing options.
SBA loans: SBA loans are offered through banks and credit unions and usually offer lower interest rates than traditional loans. These loans can be ideal for startups that need quick access to capital until they can establish themselves in their respective industry.
What are the benefits of getting a food truck loan?
Here are some of the benefits of getting a food truck loan:
Tax benefits: You can earn tax benefits from your state and federal governments. The amount of tax deduction depends on how much money is spent on interest, equipment, labor costs, and other expenses related to running your business.
Grow your business: You can use the loan for any expense related to growing and running your business. You can use it for buying inventory or equipment, paying staff salaries, marketing expenses, or even covering operating expenses.
Improves credit score: Your credit score is a number that represents how well you manage your finances, and lenders use it to determine whether or not they’ll lend you money. When you borrow money and pay it back on time, this shows lenders that you’re responsible with their money and can be trusted with larger loans in the future.
Simplified application process: The application process for getting a food truck loan is simple and straightforward. Most lenders have online applications that can be filled out in minutes without paperwork from third parties like banks or credit card companies. You simply need to provide basic information about yourself and your business before submitting your application online through the lender’s website.
How can you use a food truck loan to grow your business?
If you’re ready to take the next step in your food truck business, here are ways you can use a business loan to grow your operations:
Hire additional employees:Â You might need more help if you plan to add new menu items and launch a catering service to add another revenue stream. Additional employees will allow you to focus on other essential tasks, such as the overall strategy required for running a food truck business.
Equipment upgrades:Â A food truck loan can help you purchase new equipment to increase efficiency and productivity. You may need new refrigeration units, for example, or you could use a food truck loan to purchase a mobile point-of-sale system that will allow you to accept credit card payments from customers.
New vehicle purchases:Â Suppose your current vehicle is old or outdated. In that case, you may need to replace it with a newer model that provides better reliability and safety features for employees and customers. A food truck loan can help you buy a new vehicle that fits your budget and meets federal guidelines for commercial vehicles.
New locations for expansion opportunities: Suppose there’s an existing market opportunity nearby with no competitors. You could use the loan to expand into that location.
How to choose the best food truck loan
Here are some factors to consider for choosing the best food truck loan:
Decide how much you need to borrow: The amount of money you need will depend on how much cash flow your business will generate and what type of equipment it needs. The equipment might include refrigeration, heating and ventilation systems, ovens or freezers, sinks, and other items essential for preparing and serving food.
Type of loan needed: Several types of loans are available from banks, credit unions, and other lenders that specialize in financing small businesses. Each type has different rates and terms. You may also consider applying for multiple loans from different lenders. If one doesn’t work out, another lender may be willing to provide financing under similar terms.
Flexible repayment schedules:Â Consider a lender who offers flexible repayment schedules. Keep to note that a longer term will be less stressful on your cash flow since payments are stretched, but the overall interest you pay will be higher. This is the opposite for shorter terms.
Compare interest rates:Â When you compare loans, some loans may have lower interest rates than others, but they may also have higher fees or other associated costs. You will need to understand what the total cost of each loan is going to be before deciding which one is best for your situation.
Application fees: Some lenders may charge an application fee for their loans or even a credit check fee. These can add up over time, so you must consider how many applications you’ll need to make before you decide on a lender.
