Food Truck Financing: Best Business Loan Options to Consider

Getting a food truck up and running is a costly endeavor, with average expenses ranging from $50,000 to $250,000 or more. Since food trucks don’t always operate year-round, cash flow can become an issue once the truck is up and running. Small business loans 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. In this review, we highlight the rates, fees and terms of each leder and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best small business loans for your needs.

Best Food Truck Financing Options for 2023 - Full Overview

How To Choose the Best Food Truck Loan?

• 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.

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:

• Business ID
• Personal and business tax returns
• Three months (or more) of bank statements
• Business license
• 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.

Conclusion

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.

*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.