food truck

Best Food Truck Loans for 2021

At first glance, breaking into the food truck industry may appear easy. But not many banks are willing to fund such endeavors. On this page, our experts will provide you with insight into alternative food truck loan lenders.

Financially Reviewed by Thomas J. Brock

At a glance If you have a keen interest in the foodservice industry or are a qualified chef, you may want to consider a food truck business. A small business funding solution could give you the fuel you need to get up and running. But not many banks are willing to fund such endeavors. While you could obtain a short-term loan, they usually have high-interest rates with unacceptable repayment periods. You will likely find that industry-specific food truck loans prove the better option. Our guide will show you which loans to look out for and who the best lenders are.

Quick Overview of The Best Food Truck Loans

There are various kinds of food truck loans currently available on the market. Each loan caters to different business needs. Here is a table summary of the best loan types for the food truck business, and our recommended lender.  

Financing Need

Best Loan Type

Loan Features 

Recommended Lender

Equipment 

Equipment financing

  • Amount: 100% value of equipment
  • Term: Up to 6 years
  • Interest: Between 4.00% and 40.00%
  • Time to get the loan: Up to 48 hours

Fundera

Working capital

Business line of credit

  • Amount: Up to $500,000
  • Term: Typically, up to 18 months
  • Interest: As low as 4.80%
  • Time to get the loan: Up to 24 hours

BlueVine

Initial outlay or expansion

SBA loans

  • Amount: Up to $5 million
  • Term: Up to 25 years
  • Interest: As low as 4.75%
  • Time to get the loan: Up to 2 weeks

SmartBiz

Daily purchases

Merchant cash advance

  • Amount: Up to $500,000
  • Term: Repaid weekly or monthly
  • Interest: Up to 1.50% of sales
  • Time to get the loan: 24 hours

Square Capital

Fund marketing campaigns, buy equipment, service food truck

Short-term loans

  • Amount: Between $5,000 and 500,000
  • Term: Up to 15 months
  • Interest: No interest rate, instead offers one-time factor rate 
  • Time to get the loan: Up to 24 hours

Fora Financial

Best Food Truck Loans Explained

In this section, we’ll delve into each of the food truck loans outlined, in brief, above. This will provide you with a greater understanding of these loan types and insight into the rationale behind our choice of recommended lenders.   

1. Fundera - Best for Equipment Financing

Equipment financing can help you acquire the assets you need to help you run your business for years to come. You may choose to start with basic equipment or to go all out and purchase the latest equipment on the market. Some lenders will cover the entire value of your assets, however, they may reclaim the items if you fail to repay your loan. 

When starting a food truck business, most of your expenses will likely come in the form of equipment purchases. You will need to purchase a vehicle and all the tools you need to create your tasty meals. If you are worried about making it through your initial year, you may want to start by leasing your equipment. 

Fundera has several financial solutions, such as invoice factoring and SBA loans. Fortunately, it specializes in equipment financing, and provides advice on what you’ll need for your food truck business. It is also willing to assist startup companies.

2. BlueVine - Best for Business Line of Credit

The last thing you want to do is to continue paying for an extended loan, while only using part of the loan funds. A business line of credit is an alternative to an extended loan. A line of credit can help you meet your daily expenses, and what’s great is that you will only need to repay what you use. A business line of credit is like a revolving loan, as the full loan amount becomes available again as long as you maintain your loan payments.  

A business line of credit is a great option for anyone starting a food truck business. It can help you make your daily payments and purchase the food ingredients you need from your local market. Once you make money back from your sales, you can repay the loan. A business line of credit can help you when you have a slow period and need money to tie you over. 

BlueVine is our preferred lender for a business line of credit, offering up to $250,000. BlueVine has competitive rates, so you won’t need to worry about repaying more than you can afford. You’ll just need to check if this loan provider is available in your state.

3. SmartBiz - Best for SBA Loan

Some government entities provide grants for struggling food truck companies. Small Business Administration (SBA) loans are offered to approved lenders. However, these lenders use strict guidelines to decide who qualifies for a SBA loan. The government will guarantee up to 85%, however, you may need to make a downpayment, depending on the amount you wish to borrow.

You can use the money from this loan type in two ways. You can use the money as startup capital to purchase all the items you need. Alternatively, you can expand your current business and add, for example, extra vehicles or recruit more chefs.

SmartBiz uses innovative technology to help businesses find the most suitable loan terms for their enterprise. SmartBiz is an approved SBA lender that gives you access to government grants for food truck businesses. SmartBiz has a high approval rate and a fast application process.

4. Square Capital - Best for Merchant Cash Advance

A merchant cash advance uses the latest computer and financial tech. This new technology links lump-sum loans to credit and debit card machines. Whenever you make a sale through the device, the lender takes a small percentage of the sale as payment. A lender will usually require a minimum number of monthly sales from your business.

As a food truck business owner you will be dealing with food sales on a daily basis, so you can expect most of your customers to pay with their bank cards. You can take advantage of this by applying for a merchant cash advance. This loan type offers a quick fix with flexible payment options.

If you’re already a merchant member of Square Capital, you can make use of its merchant cash advance feature. If not, you can register as a merchant member, so that you can receive funds, from this lender, for your food truck business. If you maintain your payments the lender may offer you additional loan types.

5. Fora Financial - Best for Short-term Loans

Keeping a food truck running can be an unexpectedly costly affair and even the best-planned business might need financial assistance on occasion. Short-term loans are ideal for food truck businesses because they’re easy to get and won’t take many years to repay.

 

Fora Financial is a great option when looking for a reliable short-term loan lender with a reliable lending history. They offer flexible payments and good terms that allow quick repayment. If a company needs more financial assistance upon paying off its debt, Fora will provide further assistance.

It’s easy to apply for a short-term loan from Fora Financial - you just fill out a one-page application, submit three months of bank statements, and receive an approval within 24 hours.

Upon approval, the loaned funds will be deposited in the company’s bank account in approximately 72 hours.

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How to Choose the Best Food Truck Loans

There are certain factors you will need to consider when deciding which food truck loan is best for you. 

  • Calculate the budget you will need to cover your initial startup costs: to do this you will need to consider the cost of your food truck and the equipment you will need to fit out your vehicle. 
  • Make sure that the loan amount covers your daily operating costs: operating a food trcuk requires buying ingredients, filling up the tanks, and possibly paying for permits in specific locations. If the loan you are looking at only covers capital and equipment expenses, you may want to reconsider.
  • Make sure that the loan meets your business plan objectives: ensure that the repayments don't cripple your potential turnover, leaving you with nothing to show for your hard work? 
  • Pay attention to the loan requirements: make sure that you don’t waste time applying for a loan you are not eligible for.

How Much Does it Cost to Open a Food Truck Business?

The size of your food truck business and the content of your business plan will influence the type and size of the loan you will need to apply for. You may want to start off small by hiring one vehicle and cooking the food yourself. Alternatively you may wish to have a slightly larger venture, with two vehicles and two chefs. 

Of course, you’ll need cooking tools and ingredients to make your business thrive. There will likely also be unexpected expenses that come your way, such as vehicle repair bills. 

Here are some elements you may need to budget for:

  • Vehicle (rental or purchase)
  • Emergencies and injuries
  • Fuel
  • Ingredients
  • Equipment and tools
  • Business registration
  • Marketing campaigns
  • Driver
  • Repairs and maintenance
  • Licenses and permits

The total cost of running a food truck business can range between $75,000 and $200,000. Your primary expense will probably be the truck you purchase. You can rent a vehicle, and there are even lessors who will let you outfit the food truck as you see fit.

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How to Investigate Financial Opportunities for Your Food Truck Business

There are many ways to make extra money from your food truck. Extra money may mean that you can pay off your loan faster. The following are some ideas you can look into to help you earn extra cash from your food truck. 

Some restaurants look for food truck services to help them expand their business. You could also use your vehicle to promote another company’s brand. Alternatively, you could work together with a nonprofit organization. Charities sometimes pay food truck businesses to deliver food to the elderly or disabled.  Always do your homework to see how you can make your loan vanish faster than planned.

Recommended Reading: Best Gas Station Business Loans

See Our Additional Guides on Industry-Specific Loans

Bottom Line

The food truck business industry is growing rapidly, with more and more people seeking convenient and available meals. While you may have thought that all you need to start a food truck business is a vehicle and your skills, we have seen that much more is involved. 

In this article, we have provided you with insight into the top food truck loans and lenders on the market. Now all that’s left for you to do is to check out the lender of your choice and get started on your food truck journey.