What You Need to Know About Food Truck Financing
Food truck business is not a new concept for aspiring restaurateurs or food entrepreneurs. They have long served as a flexible and cost-effective alternative to traditional brick-and-mortar restaurants. Low cost to entry compare to opening a brand new brick and mortar store.
Therefore, the appeal of food trucks has grown significantly in recent years due to the high costs associated with renting and operating a full-scale restaurant. High rent and overhead expenses make food trucks an attractive stepping-stone or permanent business model for those looking to enter the food service industry. This trend has been amplified by the increasing popularity and cultural coolness of food trucks, which offer both entrepreneurs and customers a unique dining experience. Below is your option if you’re just starting out or if you’re adding a new truck.
Credit Requirements for Food Truck Financing
Feature | Business Loans | Merchant Cash Advance | Equipment Financing |
Ownership | 50% | 50% | 100% |
Origination, Admin Titling Fees | Low | Low to moderate | Varies |
Monthly Payments | Monthly, Daily, Weekly | Daily / Weekly | Monthly |
Credit Minimum: | 600 | 500 | 650 |
Fund Disbursements | Client | Client | Vendor |
New/Used Equipment | n/a | n/a | Yes |
Maximum Term | 24 months | 12 months | 60 months |
Time in Business | 2+ years | 6 months | Startup Ok |
Interest Rates | Moderate | High | Low |
Application Only | $150K | $250K | S250K |
Funding Time | Same Day Funding | Same Day Funding | 1- 5 days |
Simple Guide to Equipment Financing Program for Food Trucks
- Equipment Financing: Spread the cost of the Food truck over time with fixed payment terms.
- Equipment Leasing: Lease a food truck with off-balance sheet financing options like Fair Market Value (FMV) leases.
Special Financing Program:
- $99 for the First 6 Months: Get started with minimal upfront costs.
- 90-Day Deferred Payments: Pay nothing for the first three months.
- $0 Down Payment for established companies
- Low $0 Security Deposit for start up food truck business.
Key points you need to know if you’re considering Food Truck Financing
- Important Considerations:
- Credit Score: A good credit score increases your chances of securing a loan with favorable terms.
- Detailed Business Plan: Lenders and investors want to see a comprehensive business plan that outlines your market analysis, financial projections, and operational strategies.
- Startup Costs: Understand all the initial costs involved, including the price of the truck (which can range from $30,000 to $200,000), equipment, permits, and initial inventory.
- Legal Requirements:
- Ensure you have all necessary licenses and permits, which can cost approximately $28,276 in the first year. This includes health permits, business licenses, and vehicle registrations (OneHubPOS) (Marketing Scoop). Banking for business is critical so lenders can take you serious, otherwise, if you don’t have a business checking account, you will not be taken serious as it might just be a side-hustle or a hobby, not a business yet. I know everyone has to start somewhere but at least make it look like you’re trying to be corporate.
- Benefits of Equipment Financing:
- Equipment financing is particularly beneficial as it allows you to get high-quality kitchen gear without the upfront cost. These loans are secured by the equipment itself, making them easier to obtain for new businesses.
By understanding these financing options and preparing thoroughly, you can secure the necessary funding to launch and sustain your food truck business successfully.
For more detailed information, you can refer to comprehensive guides on platforms like FoodParks.io, Legion Food Trucks, and OneHubPOS (Legion Food Trucks) (OneHubPOS) (Marketing Scoop).
Tips for Securing Financing
- Build a Strong Credit Score
- A good credit score can improve your chances of loan approval.
- Showcase Profit Potential
- Present realistic financial projections and highlight unique aspects of your food truck concept to attract lenders or investors (FoodParks.io).
Starting a food truck business in 2024 offers a promising opportunity to enter a growing market. By conducting thorough market research, developing a solid business plan, and understanding your financing options, you can increase your chances of success. With dedication and strategic planning, your food truck can become a profitable venture (Legion Food Trucks) (OneHubPOS) (Marketing Scoop).
Starting a Food Truck Business
For startup food service management companies, we require:
- Business license or active business entity registration.
- Personal guarantees from all owners.
- Minimum 625 credit score.
- No bankruptcies in the last 7 years.
- No unresolved tax liens
- Develop a Business Plan
- Executive Summary: Outline your business goals and concept.
- Market Analysis: Research your target market and competitors.
- Menu and Pricing Strategy: Develop a menu that stands out while being competitively priced.
- Marketing Plan: Use social media and other online platforms to promote your business.
- Operations Plan: Detail your daily operations, including staffing and supplier relationships.
- Financial Plan: Include startup costs, projected expenses, and revenue.
- Choose Your Food Truck
- Options range from retrofitted pre-owned vans to custom-built trucks with new kitchen equipment. Costs vary significantly, from $30,000 for a used truck to $200,000 for a new custom-built one (OneHubPOS) (Marketing Scoop).
- Secure Permits and Licenses
- Common permits include a Food Service Establishment Permit, Mobile Food Vendor License, Business License, and more. The total cost for permits and legal compliance in the first year can be around $28,276 (OneHubPOS).
- Acquire Equipment and Supplies
- Essential equipment includes cooking appliances, refrigeration units, and a reliable POS system for order management and payments (OneHubPOS).
- Hire and Train Staff
- Ensure your staff is trained in food safety and customer service. Competitive wages and benefits can help retain quality employees (OneHubPOS).
- Marketing and Promotion
- Establish an online presence with a professional website and active social media accounts. Engage with customers and promote your food truck through these channels (OneHubPOS).
Top 3 Business Loan Types For Food Truck Business
Top Traditional Business Loan Types |
1. Business Term Loans – Description: A lump sum of cash provided upfront, which is repaid with interest over a set period. Ideal for businesses looking for a specific amount of funding for major purchases or expansion projects. It’s also available for operating capital. – Who It’s For: Established businesses with good credit and a proven track record of revenue. Requirements: Strong Credit, Financials and Healthy Bank Accounts. |
2. Business Lines of Credit – Description: A flexible financing option that allows businesses to draw from a predetermined credit limit as needed, only paying interest on the amount used. Great for managing cash flow fluctuations or unexpected expenses. – Who It’s For: Businesses looking for a safety net to cover short-term cash flow gaps or emergencies. Requirements: Strong Credit, Financials and Healthy Bank Accounts. |
3. Equipment Financing – Description: Loans specifically designed to purchase new or used equipment. The equipment itself serves as collateral, often leading to lower interest rates and easier qualification. – Who It’s For: Businesses needing to acquire or upgrade equipment without a significant upfront cost. Requirements: Strong Credit, Financials and Healthy Bank Accounts. |
Get Food Truck Financing up to $250,000 with "Application Only"
How to get approved for application only? Application only is an internal term to pre-approved clients with just one page application without financials. However, this mainly applies to equipment financing, short-term business loan and merchant cash advance. It must contain all business owners info as well business banking info.
Easier to get than a traditional business loan
Less paperwork
Fast processing time
Less stringent requirements for qualifying
No collateral needed, the equipment is the collateral
May require less credit score for you and your business as well
How to Apply for Food Truck Financing?
Securing commercial truck financing is crucial for business growth and success, especially when traditional banks are not an option.
Liberty Capital, established 20 years ago this year, have seen many lenders, banks and investors come and go. You can always count on us to get you approved for your next truck financing regardless of your credit or business history. We offer financing for startups. With Liberty Capital Group, you can finance with minimal out-of-pocket expenses, preserving your cash flow.
Our process is straightforward to ensure swift approval. Simply submit your online application along with your invoice and recent bank statements. We provide flexible terms and competitive rates, helping businesses of all sizes acquire the necessary equipment. Apply today and secure the funding you need for growth and efficiency with Liberty Capital Group.
For more detailed information and resources, you can visit the comprehensive guides provided by FoodParks.io, Legion Food Trucks
Our small business financing experts are available to guide you through the funding Process.
Despite technological advancements, loans, especially in food truck and restaurant equipment financing, predominantly involve personal interaction with an underwriter to ensure as fraud prevention. Automation may not suffice, particularly when dealing with a third party like the vendor and the complexities of equipment purchase. In such scenarios, business owners are often better served by collaborating with a Business Loans Broker like Liberty Capital Group, Inc., who can steer them in the right direction.
Instant Quote Online
Use our instant online quote calculator to get an accurate no obligation quote.
Apply Online
Complete our quick online application. Application takes 5 mins.
Review Your Options
We will contact you to review your options.
Get Funds
Money will be deposited in your account in as little as 24 hours.
