Vending Machine Financing: Get a Loan For Inventory, and Equipment

Written by Brian Huber, updated on 11/03/2021
Financially Reviewed by Gordon Scott, CMT on 6.1.2021

Vending machines are on every corner: schools, malls, office buildings, and hospitals. What’s more, every year the vending machine industry makes billions of dollars in revenue. You may be thinking of getting in on this profitable niche market. All you need is a solid strategy, a bit of background knowledge and reliable financing. In this article, our experts outline the top financing options available for your vending machine business.

Why You Need Financing for Your Vending Machine Business?

The minimum amount of money required to start your own vending machine business is roughly $1,500 - $2,500. This investment will likely be used to buy:

5 to 10 new machines for a bulk vending style business
1 or 2 refurbished machines for snacks and sodas
Products to stock your vending machines
Cash on hand to cover extra and unexpected expenses

If you have a greater amount of money you can buy more machines and products. This may bring with it more risk, but it also gives you a greater chance for larger profits.

Best Vending Machine Business Loans

To cover the starting capital or operating expenses, you'll likely need a helping hand. We've got a few top options you can use to start and grow your vending machine business.

Recommended Lender	Financing Need	Best Loan Type	Loan Features
Fora Financial	Equipment purchases, renovation costs, working capital, inventory purchases, bad credit loans	Short-term loans	Term loans up to 15 months $5,000 to $500,000 amounts Factor rate charged rather than interest rate Funding in as little as 24 hours
Credibly	Working capital, equipment purchases, inventory expansion	Short-term loans, credit lines, SBA loans, alternative financing	Working capital loans up to $400,000 repayable over 6 to 18 months Expansion loans up to $250,000 repayable over 18 or 24 months Funding as quickly as 48 hours
Fundera	Working capital, equipment purchases, renovation costs, real estate purchase	Long-term loans, lines of credit, short-term loans, SBA loans	Term loans of up to $600,000 for 1 to 5 years repayment Long-term financing of up to 100% of equipment cost repayable over 5 to 6 years Lines of credit for 3 to 18 months Real estate loans of up to 100% of the cost for up to 25 year term
Lendio	Working capital, equipment purchases, business purchases, business startup	Short-term loans, credit lines, long-term loans, SBA loans	Terms loans up to $2 million for 1 to 5 years Short-term loans or credit lines up to $500,000 for 1 to 3 years Equipment loans up to $5 million for 1 to 5 years Accounts receivable and merchant cash advance loans Real estate loans up to $5 million for 25 years

Best Vending Machine Business Loans - Full Overview

Here you can read the descriptions and terms of the loans featured in the table above and also get acquainted with a few recommended lenders.

1. Fora Financial - Best for Bad Credit Loans

Fora Financial has funded over $2 billion to more than 25,000 small businesses. The company provides an easy online application and offers quick approval. Funding is typically as fast as 72 hours after applying.

Fora Financial provides short-term financing of up to $500,000 is available for up to 15 months of scheduled repayment. Eligible borrowers should have operated their small businesses for at least six months and should have minimal profitability of $12,000. Fora Financial also has merchant cash advance financing available. This lending avenue provides a lump sum for a short duration in exchange for a percentage of future credit card revenue

Financing costs are based on a factor rate rather than simple interest. In addition, Fora Financial assesses loan origination fees. However, discounts are provided for early repayment. Poor credit history is not an impediment to applying for financing from Fora Financial. The company accepts applicants with credit scores as low as 500.

Read the full Fora Financial review for more details.

2. Credibly - Best for Working Capital Loans

Businesses applying for loans at Credibly provide basic information for prequalification. The lender then uses a data scoring model for determining acceptable borrowers. Credibly assesses an applicant’s credit history, business cash flow, and bank statements, among other factors addressed in a simple 10-minute online application.

A team member with Credibly then applies a human touch to help a small business owner determine the best funding option for meeting short-term needs as well as long-term goals. Long-term business expansion loans for up to $250,000 are available for equipment purchases or expanding locations.

Working capital loans by Credibly help small businesses meet operational costs, such as payroll and inventory increases. These loans are ideal for seasoned companies that simply need to stabilize cash flow. Credibly also has merchant cash advance financing, which provides a lump sum for a short duration in exchange for a percentage of future credit card revenue.

Read the full Credibly review for more details.

3. Fundera - Best for Long-Term Loans

At Fundera, a small business can borrow $5,000 to $500,000 for 3 months to 25 years. The lender has a broad range of repayment terms available. Long-term loans for purchases of equipment are available for up to 6 years. For real estate acquisition, 25 year terms are provided. Fundera will finance up to 100% of the cost for equipment.

The company also has short-term financing options. Terms loans of 1 to 5 years are provided for up to $600,000. A business line of credit is available with flexible terms of 3 to 18 months. Alternative borrowing at Fundera uses invoice factoring and merchant cash advance lending.

Fundera small business applicants should have credit scores of at least 550. But the company does not impose any limit on minimum time in business or minimum annual revenue to qualify for its lending platforms.

Read the full Fundera review for more details.

4. Lendio - Best for Small Business Purchase or Startup Loans

Lendio accepts loan applications for acquisition of a small businesses as well as business startups. Loans to purchase a business are available for $5,000 to $5,000,000 with repayment over 10 to 25 years. Startup loans of up to $750,000 are provided with terms of up to 25 years.

Borrowing is also provided by Lendio for up to $2 million on 1 to 5 year terms. Short-term financing or lines of credit up to $500,000 are repayable over 1 to 3 years. Lendio also has a borrowing program for a 1 year term that finances up to 90% of accounts receivable as well as a merchant cash advance option. Longer-term loans of up to $5 million are provided for equipment over 1 to 5 years or real estate purchases repayable over 20 to 25 years.

Line of credit applicants at Lendio need credit scores of 560 or more, six months of time in business, and $50,000 of annual revenue. Equipment financing requirements are minimum credit scores of 650, twelve months in business, and $50,000 of annual revenue. Qualifications for startup loans or business purchases vary, but credit scores of at least 680 are necessary.

Read the full Lendio review for more details.

Three Ways To Start A Vending Machine Business

Entering the vending machine business is a path for becoming an independent entrepreneur that doesn’t require a substantial allocation of time and has low ongoing overhead expenses. In addition to starting a vending machine venture from scratch, the other ways to enter this field are buying an existing operation or acquiring a franchise in the industry.

1. Starting from Scratch

The most amount of freedom is, of course, launching your own vending machine business. However, this avenue entails a lot of work. It necessitates acquiring the machines, determining the types of products to offer, and identifying machine locations.

Scouting and landing locations is time-consuming factor for starting a vending machine business. Beginning an independent operation also entails having to experiment with the types of products that sell best at each of the various locations.

2. Purchasing an Existing Business

Purchasing an existing vending machine business is a faster track. This approach delivers instant cash flow from existing locations. A key to deciding about these business purchases is discovering the condition and types of vending machines. Especially important is an assessment of the machine locations and the income they generate.

Another benefit from buying an existing vending machine business is obtaining the seller’s relationships with vendors. Moreover, the seller should have already determined the products that sell best at the machine locations, which eliminates having to experiment as a new startup.

3. Buying a Franchise

The other method for entering the vending machine business is a franchise acquisition. Franchisors provide location assistance and machine customization advice. A franchise opportunity assures that a new business establishes proven administrative and operational procedures from the start.

Beginning in business as a franchisee requires paying an upfront fee along with other startup costs. In addition, a franchisor will charge a percentage of revenue as an ongoing business expense and may place limits on the types of machines and products for a franchise operator.

How Much Does it Cost to Open a Vending Machine Business?

A used machine can cost above $1,200, but a new one will be about 10 times as much.

Some other expenses to consider are as follows:

Restocking vehicle: If you have the machines in a very crowded area, daily refills should be necessary. Sure, you can rent a car to do the rounds and stock the machines, but buying a vehicle should be a top priority.
An employee: When you start out you may only have a few machines. You may thus be able to manage driving around and restocking your machines yourself. However, once you expand your business, you'll have to hire a few trustworthy employees.
Technical maintenance: Vending machines, especially high-tech ones, are prone to technical issues. Periodic maintenance is important and often costly.
Inventory: You will likely spend a lot of money on inventory. Having vendor agreements will ease you into the business, and you'll be able to arrange periodic deliveries and could even get special prices.
Permits and taxes: Each city has its own laws regarding vending machines and the permits you need to have. This bureaucratic layer will probably cost you around a few hundred dollars a year, depending on your location and the number of vending machines you have. You should also consider the taxes your business will need to pay.
Insurance: Vending machines are easy to break - that's why we believe that having insurance on all items is a must. Depending on how many machines you own, this expense might cost you up to a few thousand dollars.

As you can see, a vending machine business may incur many expenses and is only profitable if managed correctly.

How to Choose the Best Vending Machine Business Loans

Establishing a vending machine business may not demand as much startup capital as many other small businesses need. For instance, many small businesses require hundreds of thousands of dollars just to get started.

Nevertheless, we don’t all have a few thousand dollars lying around. That’s why most vending machine business owners look to financial lenders to help them establish their vending machine business or to keep their existing business afloat.

Recommended Reading: Best Food Truck Loans for 2022

How to Recognize New Vending Machine Business Development Opportunities?

Successful vending machine business owners know that statistics are essential. You should be able to present your vending machine business in numbers. Some questions to consider are:

Which of my vending machines are performing the best?
What factors are influencing their top performance?
How can I replicate the success of these machines in other locations?

In addition, let's say that the machines you have located next to schools perform better than the ones you have placed next to bus stops. It would be logical to dig deeper so that you can replicate the success of your school-based vending machines.

You may also wish to consider:

Your best-seller product for each location?
Why is it selling better than others?
Better selling options for another location?

These and other questions will help you keep track of your inventory and help you recognize new business development opportunities in the future.

Recommended Reading: Best Gym Equipment Financing Options

See Our Additional Guides on Industry-Specific Loans

The Bottom Line

The vending machine business is a multi-billion dollar industry. Yet, if you are looking to break into this market you may need a vending machine loan to get you started. You will also need target market research, a great business strategy and fierce entrepreneurial skills. Our experts have provided you with an overview of the best loan types and recommended lenders in the industry.

No matter what the state of your personal finances may be, the vending machine industry provides an opportunity for you to own your own business. A vending machine loan may be all you need to get your vending machine business vision off the ground.

Best Vending Machine Financing for 2022