Over the last few years, food trucks have been sprouting up in popularity all over the United States. While they used to be associated with generic, pre-wrapped, food, they’re now a crazy food experience enjoyed by millions. And it’s not a surprise why. They provide unique food at cheap prices and can be eaten on the go.
And if the predictions are right (and they look like they will be), the food truck industry will continue to grow exponentially in the next few years. However, since you’re here, it’s safe to assume you’re looking to start your own food truck business. Congratulations, it’s an awesome and exciting thing.
So, while it’s amazing, exciting, and every positive emotion in between, you also will need money to fund it. Running a food truck can be a heck of a lot cheaper than a traditional restaurant, but it’ll still take quite a chunk of change. And the food truck industry is pretty lucrative right now; however, you’ll need to first spend money to make money. You’ll have to pick out your truck or van, install the appliances, install the wiring, reinforce the interior, cut out windows. and– well, you get the gist of it.
If you’re a restauranteur looking to make your own food truck, getting the right loans is an absolute must.
The 4 Best Loans For Your Food Truck
- Startup Funding
- SBA Loans
- Business Credit Cards And Lines Of Credit
- Equipment Financing
Startup Funding For Your Food Truck
When it comes to startup funding, you’re going to choose this option if you’re starting from zero. Startups loans can give you funding of up to $350,000 in unsecured loans– which means no collateral at all. However, in order to apply, you’ll need to have one guarantor with a credit score between 600 and 800. Outside of that, your interest rates will be 0% for up to 21 months.
SBA (Small business Administration) Loans For Your Food Truck
As for SBA loans, you’ll need to have an established business that’s at least 2 years old before you can qualify. However, it’s one of the best loan options out there for entrepreneurs looking to expand their food truck business. SBA loans provide the most money at the best rates, but you’ll have to provide quite a bit of financial documentation during the application process. When it comes to rates, you’ll be looking at anything between 6.50% and 8.75% with repayment periods of 10 – 25 years. You can also get your food truck funded in as fast as 14 – 60 days.
Business Credit Cards And Lines Of Credit
For business credit cards and lines of credit, the application process is a lot like a traditional credit card. The benefit of them is that they allow you to separate your personal credit from your business credit and can be used as “rainy day” funding. As with SBA loans, business credit cards and lines of credit require you to have an established business with provable revenue. You can get a credit limit of anywhere between $25,000 and $250,000. And as long as you payback what you’ve taken out on-time, you’ll never have to pay for more than what you’ve used (plus interest). Business credit cards and lines of credit are crazy flexible and can be used for just about any of your business expenses.
In order to run a successful food truck, you’ll need quite a bit of equipment and appliances. Luckily for you, equipment financing can cover vehicles, tools, utensils, supplies, appliances, ingredients, and– well, everything you’d need really for a food truck. Equipment financing is the easiest type of loan to qualify for because the equipment is the collateral. So, in the case of a default, the equipment is what would be taken away.
The Three Cs And How to Qualify For Food Truck Entrepreneurs
In order to determine whether you qualify, Finance Factory looks at the Three Cs: Credit, Cash Flow, and Collateral. Although the ideal credit score is 680+, they’ll look at anything between 600 – 800. As for cash flow, they like to see account balances of $1,000 – $5,000, minimum, but also look at monthly and annual revenue. And when it comes to collateral, Finance Factory primarily focuses on providing unsecured loans; however, they will accept collateral. It’s important to know that you only need to provide one of the Three Cs in order to qualify.
Finance Factory Helps You Find The Best Loans For Your Food Truck
Interested in finding funding for your food truck? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days and have a credit score of 600 or better, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!