Food Truck Financing: Best Business Loan Options to Consider
Opening a food truck can be a costly adventure. Between the truck itself, licensing and permit fees, and kitchen supplies, costs can add up quickly. If you don’t want to tap into savings, food truck financing can help you get started.
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
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Getting a food truck up and running is a costly endeavor, with average expenses ranging from $50,000 to $250,000 or more. And because food trucks don’t always operate year-round, cash flow can become an issue once the truck is up and running. Luckily, small business loans for food trucks can help you both get your food truck off the ground and provide financing for the daily expenses that come with operating a food truck.
Our team of financial experts found the best lenders for food truck financing. Whether you’re just getting started or are battling poor credit, we’ve found a food truck loan to meet your needs.
When deciding between food truck loans, there are a few things to consider. Our experts used the following factors to rank lenders:
Loan features - Consider loan amounts and how long you’ll have to repay the loan.
Application process - Look at how invasive the loan application process is, including documents needed and how long it takes to have the funds in hand.
Interest rates and fees - Be sure to look for the lowest rates you can find to save in interest. Inquire about any fees associated with borrowing funds, including origination fees and prepayment penalties.
Qualification process - When looking at how to get a loan for a food truck, each lender will likely have their own minimum credit score, annual revenue, and business history requirements.
Customer support - Look for lenders that are easy to contact via phone, live chat, or email.
Online user reviews - We looked at what other customers had to say on trustworthy review sites such as Trustpilot.
Perks and bonuses - Consider specified service offerings like payment flexibility, advertising transparency, and advanced technology.
Best Food Truck Financing Options for 2022 - Full Overview
1. National Funding - Best For Equipment Loans
National Funding offers equipment loans you can use to cover the cost of new or used equipment for your food truck. Depending on your finances and unique situation, you can secure up to $150,000 for ovens, ranges, grills, freezers, refrigerators, sinks, and anything else you need to run your venture.
National Funding’s equipment loans go up to $150,000 with repayment terms between two and five year years. The pay rate starts at 1.10 and you’ll pay back what you borrow every month. To qualify for an equipment loan, for example to fund a bakery equipment, you’ll need a minimum credit score of 575, at least six months of business history, and $250,000 or more in annual revenue.
The Bottom Line
An equipment loan from National Funding can be a great choice if your food truck earns at least $250,000 in annual revenue and you would like to buy new equipment or upgrade what you currently have. Since you can prequalify without any affect to your credit, you have nothing to lose.
Fora Financial offers both small business loans and merchant cash advance programs for food truck entrepreneurs. Interested borrowers can apply online and receive funds in as little as 72 hours of loan approval. With terms up to 15 months, early payoff discounts and no collateral requirements, Fora Financial can be a solid choice for food truck financing.
Fora Financial small business loans and merchant cash advances range from $5,000 to $750,000. Small business loans have terms up to 15 months, and merchant cash advances have no set terms. To qualify, Fora Financial requires the business to be operating for at least six months and have a minimum of $144,000 in annual revenue. The minimum credit score is just 500, making them a solid option for low-credit borrowers.
The Bottom Line
Fora Financial specifically offers financing options tailored to restaurant owners. They have partnered with over 3,700 businesses looking for food industry financing and have extended more than $154 million in funding, making them a great choice for food truck financing.
Founded in 2007, Biz2Credit has helped more than 225,000 business owners obtain more than $7 billion in financing. The two main types of financing they offer for small businesses are working capital and term loans. However, they also specifically offer restaurant equipment financing, perfect for financing a food trailer.
Biz2Credit offers equipment financing for startups from $25,000 to $100,000. For established businesses, you can get a loan for more than $100,000 but need to be in business for at least 13 months.As new food truck equipment can be used as collateral, equipment financing tends to have lower rates and longer terms. Terms typically extend from 7-10 years, compared to only 2-5 years with unsecured lines of credit.
The Bottom Line
Equipment financing can be very useful for food truck business owners, with Biz2Credit as a top choice for both startups and food trucks that are already established.
Bluevine offers a business line of credit that you can use for food truck financing. A line of credit can be the difference between keeping a food truck or trailer business afloat versus going under. If the truck is experiencing slow months or in an off season, a line of credit from Bluevine can make it possible to afford expenses such as staff, inventory, and truck maintenance until business picks up again. Bluevine also offers business banking to help customers keep more of their banking business in one place.
In order to qualify for a Bluevine line of credit, business owners must have a credit score of at least 625 and be in business for at least six months. Their business must also have $120,000 in minimum annual revenue. Rates can be as low as 4.8% for up to $250,000 worth of funding. Bluevine allows borrowers to take out money through their line of credit and pay back each draw with fixed monthly or weekly payments over the course of six to12 months.
The Bottom Line
Bluevine is a good choice for food truck businesses looking for a line of credit with lower rates than competitors and the ability to pay back the draw within one year. They also allow bills to be paid automatically with a credit card, helping food truck entrepreneurs earn rewards or cash back, a unique feature to Bluevine.
Fundbox offers both term loans and lines of credit for small business financing. Funds are available as soon as the next business day on approved loans, and it’s fairly easy to qualify. Loans can be used for financing vehicles and machinery, making it a great choice for food truck owners.
Fundbox offers businesses term loans and lines of credit up to $150,000. To qualify, you need a minimum credit score of 600, be in business for at least six months, and have $100,000 or more in annual revenue. Term loans have a 24 or 52 week repayment option, and lines of credit offer 12 or 24 week repayment plans each time you draw on the line. Qualified borrowers can enjoy rates starting at 4.66% on lines of credit and 8.33% on term loans.
The Bottom Line
Compared to competitors, Fundbox offers faster funding times and less strict requirements to qualify. This makes it a good option for food truck businesses in need of capital fast but may not yet have strong business credentials.
Credibly offers several types of business loans that can be used to finance food trucks, even if your credit is poor. They include working capital loans, business lines of credit, short-term business loans, equipment financing, and more. Borrowers can apply in just a few minutes, get approved in as little as four hours, and receive funds deposited into their bank account the same day.
You can borrow up to $400,000 with a working capital loan, up to $250,00 with a line of credit, and up to $10 million with equipment financing. Terms range from six to 18 months for working capital loans, with factor rates starting at 1.15. For a line of credit, rates start at 4.8% and terms are open-ended. Credibly’s equipment financing loan does not require a minimum credit score or minimum annual revenue to qualify. This type of loan is typically easier to obtain as the new machinery will be used as collateral.
While qualifications vary from loan to loan, expect to have a credit score of at least 500, be in business for six months or more, and have at least $50,000 in annual revenue.
The Bottom Line
In addition to a fast application and funding process, Credibly offers low interest rates, flexible terms, and a low minimum credit score requirement, making them the ideal choice for food truck business owners with less-than-ideal credit. credit score.
OnDeck has financed more than $14 billion globally, making them a leader in online lending. They offer both term loans and business lines of credit for food truck financing, and give discounts to repeat customers. If you think you’ll need more than one loan over the life of your business, OnDeck is worth looking into.
OnDeck’s term loans give you one lump sum up to $250,000 with repayment terms up to 24 months. A line of credit offers loan amounts up to $100,000 with 12-month terms on each draw.To qualify, businesses need a credit score of at least 600, one year in business, and $100,000 in annual revenue.
The Bottom Line
OnDeck is worth looking into if you need fast funding and think you’ll need another loan or line of credit in the future. They’re also incredibly transparent, allowing borrowers to use their SMART Box tool, which gives a complete breakdown of potential loan offers. This helps potential borrowers understand the loan amount, repayment amount, and the term in one convenient place, making it a solid choice for food truck financing.
Our experts have analyzed the following companies and their lending requirement metrics including minimum credit score, minimum time in business, minimum annual revenue, loan amounts available, and interest rate ranges.
Min. Credit Score
Min. Time in Business
Up to $150,000
Factor rate starts at 1.1
$25,000 - $2 million
8%-30% for equipment financing
Up to $250,000
As low as 4.8%
Up to $150,000
4.66% to 8.933% and higher
Not required for equipment financing
$10,000 to $10 million
Starting at 1.15
$5,000 to $250,000
Starting at 35.9%
How Much Does It Cost to Finance a Food Truck?
Financing a food truck is oftentimes more expensive than people anticipate. According to On the Line, the truck alone can cost $50,000 to $175,000, and there are many other fees, as well. Equipment, plumbing, and design can cost anywhere from $50,000 to $200,000, and permits and licenses will cost an additional thousand, at a minimum.
Plan on spending between $50,000 and $250,000 or more just to get your food truck up and running, and then account for long-term expenses such as truck maintenance, inventory, and payroll expenses.
How Can You Use a Food Truck Loan?
Food truck loans can be used for a variety of expenses, such as:
Purchasing a food truck or trailer - Buyers can decide whether to use the funds for a new or used truck or trailer.
Maintaining a food truck or trailer - Owners can use money to keep up with the repairs and maintenance required to keep their truck or trailer in running condition.
Obtaining food storage systems - Setting up the truck or trailer with equipment and systems is one of the ways borrowers can use funds.
Marketing and advertising materials - Another way to use the money is to help promote the business through marketing and advertising materials.
Staffing and payroll needs - Especially during times of growth, business owners may need funds to cover staffing and payroll needs in order to keep up with expansion.
Food inventory - Stocking inventory is something every food truck or trailer business needs and a business loan can help cover these expenses.
Business expansion - When a business owner experiences success and wants to open another food truck, business loans can help get the expansion started.
Unexpected bills - Whatever unexpected expenses come up, food truck financing can help cover the gaps and keep your business up and running.
How Does Food Truck Financing Work?
After filling out an online application form, a customer service representative may contact you to get further information and discuss loan options. From there, companies will require financial records either by linking your bank accounts to your application or submitting them after applying. Most companies will also do a hard pull on your credit after initial approval.
Once approved, some lenders will offer same-day funding, while others may take up to 72 hours to fund your loan. These funds will transfer to your bank account, or if you have a line of credit, you will have a card you can use to access the funds as you need them.
How to Qualify for Food Truck Financing
The ability to qualify for food truck financing depends on the lender’s requirements. Each lender will look at your credit score, your time in business, and your annual revenue. Some lenders have stricter qualification criteria than others, but will oftentimes offer lower rates. We recommend applying to a few different lenders, since applying usually does not affect your credit score. You can then compare your loan options before moving forward.
How to Apply for Food Truck Financing
Most online lenders usually have a a straightforward application process. The first step is to go through a prequalification process to see if you might be approved for the financial product you’re requesting. The prequalification process does not affect your credit score. Information requested during this process includes
Basic personal and business information
The amount you want to borrow
The purpose of the loan
The repayment term the borrower would prefer
Once you’ve been prequalified, you’ll need to submit additional paperwork. Documents include, but are not limited to:
Personal and business tax returns
Three months (or more) of bank statements
Business lease, if applicable
We recommend having these documents on hand to ensure financing is as quick and seamless as possible. Once everything is submitted, you’ll receive an official decision and funding shortly after.
What Credit Score Do You Need to Buy a Food Truck?
Most companies require a credit score of at least 550-600 to qualify for food truck or food trailer financing. However, some equipment financing loans don’t require a credit score, making food truck financing with bad credit a possibility. For lenders that do require a credit score, you’ll receive a better rate on your loan if your credit is in good condition.
Although starting a food truck can be an expensive endeavor, financing a food truck can make it doable. Traditional banks, credit unions, and other small business loan providers may be hesitant to provide lending, but there are several online lenders that will extend credit. If you are considering taking out a business loan for a food truck purchase, be sure to weigh all of your options. Your credit score, annual revenue, time in business, as well as other factors will determine how much of a loan you can take out, as well as the interest rate you’ll receive.
Frequently Asked Questions(FAQ)
What is the best business structure for a food truck?
You can choose between a sole proprietorship, a partnership,
and a limited liability corporation (LLC). All have advantages and
disadvantages, but the most popular option is the limited liability
corporation. This is due to low start-up costs and the business owner’s
personal assets being kept separate from the liabilities of the food truck.
What are the best cities to own a food truck?
According to Bloomberg, cities that are the most food
truck-friendly include Portland, Denver, Orlando, Philadelphia, and
Indianapolis. Cities were ranked on obtaining permits and licenses, complying
with restrictions, and operating a food truck. Highly regulated cities - such
as San Francisco and Boston - are some of the hardest places to own and operate
a food truck.
What is the most profitable food truck business?
Street Food Central found that burgers are the most
profitable food truck business. Not only are they tasty, but they’re fairly
cheap to make. Other profitable food trucks include Indian street food, pizza,
grilled cheese, and Greek food. We found that with food trucks, simple is best.
Rather than serving a complex menu, stick to just a few items - and do them