Vending Machine Financing: Best Business Loan Options

Costs that come with operating a vending machine business include purchasing and installing the vending machines, keeping them stocked and in full working order, and paying rent or fees to the owners of the buildings where you keep your machines. In general, you can expect to owe anywhere between 5% and 20% of your vending machine profits to building owners.

While a vending machine business can be lucrative and exciting, you will need to find a way to fund it. Vending machine loans can help you get your business started or help cover gaps in revenue and other expenses that arise in this particular small business niche.

When it comes to vending machine financing, there are a variety of options available to you. Since each one is unique, it’s important to consider the terms, rates and fees of each lender. Our experts ranked the best business loans for vending machines with a focus on the potential advantages and downsides and what makes each lender a good option. We also provide a rating methodology you can use to select the best option for your needs. 

Vending Machine Financing: Overview of The Best Options

How To Choose the Best Vending Machine Financing

• Loan Features: We looked at loan terms, loan amounts, and repayment schedules.
• Application process: Ideally, we want the application process to be quick and easy with fast approval and funding.
• Interest rates and fees: Minimum and maximum interest rates and fees vary greatly from lender to lender. In addition, there may be origination fees, late fees, and prepayment penalties. This was a top priority when ranking loans for vending machines.
• Qualification process: While some lenders require good credit, sufficient annual revenue, and at least a few years in business, others are more lenient and willing to lend to startups and newer businesses.
• Customer support: We looked at customer support options, including hours, availability, and methods of contact.
• Online user reviews: Third-party reviews on sites like TrustPilot and Better Business Bureau (BBB) can speak volumes about lenders’ customer service and their reputation among borrowers.
• Perks and Bonuses: It’s not uncommon for some lenders to offer perks such as hardship assistance, mobile apps, and free credit score monitoring. These extras can make a loan product more appealing.

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

A used machine typically will cost you between $1,000 and $3,000, and a new one can be well over $10,000. If you’re planning on owning more than one, these initial costs can add up.

Other vending machine expenses include:

• Restocking vehicle: You’ll need access to a vehicle in order to restock your vending machines. In high-traffic areas, you may need to restock daily. Having a reliable form of transportation should be a top priority.
• Employees: At first you may be able to handle the vending machine business on your own; but as you grow and expand, you may need to hire additional employees to help with keeping the machines fully stocked.
• 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 good amount of money on inventory. Having vendor agreements will ease you into the business, and you'll be able to arrange periodic deliveries and possibly receive discounts.
• 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 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 each year.

Bottom line: starting a vending machine business could cost you as little as a few thousand dollars up to tens of thousands of dollars, depending on how many vending machines you have, whether or not you hire employees right away, what type of vehicle you purchase, and more. A vending machine loan can help cover these expenses while you focus on getting your business up and running.

How to Qualify for a Vending Machine Loan

To qualify for a vending machine loan, you’ll want to have a credit score above 500, be in business for at least six months, and have an annual revenue of $100,000 or more, on average. To increase your chances of approval and land better rates, we recommend the following tips:

• Monitor credit scores: Lenders will look at your credit when they review your application. The higher your credit score, the more likely you are to get approved with low rates and favorable terms. Make sure you know where you stand credit-wise before you apply. Here’s how you can build your business credit.
• Cultivate lender relationships: Ideally, you’d connect to lenders that pique your interest months before you pursue their loans. Personal relationships can go a long way, especially if your credit is shaky.
• Choose secured loans: Since secured loans are tied to collateral or a valuable asset that you own, lenders tend to be more lenient. If your credit isn’t the best, you may want to look for secured options. Equipment financing is a type of secured loan that uses your vending machine as collateral.
• Craft a thoughtful business plan: A business plan outlines who you are, what your goals are, and why you need vending machine financing. Be sure it’s written well, as most lenders will ask to see it.
• Compare lenders: There are countless lenders that offer vending machine loans. If you compare the various solutions at your disposal and only apply for the ones with requirements you meet, you’ll increase your chances of approval.

Other Types of Vending Machine Financing

You may want to consider other types of vending machine financing, including:

• SBA loans: Backed by the U.S. Small Business Administration, SBA loans offer low rates and lengthy repayment terms of up to 25 years. You will, however, need good credit and at least $100,000 in annual revenue to qualify.
• Microloans: If you need a small loan of up to $50,000, a microloan can meet your needs, especially if you’re new to the vending machine business and have minimal to no credit history. Offered by both nonprofits and for profits, microloans usually come with mentoring and other resources for startups.
• Business credit cards: Business credit cards are similar to personal credit cards. You can use them to cover the day-to-day expenses of your vending machine business, such as inventory and marketing. Most business credit cards offer rewards like cash back, airline points, and gift cards.
• Personal savings account: Start-up costs for a vending machine business to tend to fall on the low side compared to other small businesses. If you can swing it, using your personal savings account to get the business up and running is something worth considering.
• Vending machine supplier financing: Vending machine distributors oftentimes offer payment plans and financing options directly to customers. It’s worth looking into this option and comparing rates and fees to other lenders to ensure you get the best deal.

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. Or, you can decide to specialize in one location only.

Pros and Cons of Running a Vending Machine Business

There are pros and cons to any type of small business. Let’s take a look at the pros and cons of running a vending machine business.

Pros

• Low startup costs: A vending machine business can cost as little as just a few thousand to get started.
• Minimal inventory required: You won’t need office space, warehouses, or extensive inventory to get going. You simply need a vending machine and items to stock it.
• Low risk: If you end up not wanting to run the business for more than a few months, you can simply sell the vending machine(s) you purchased and move on.
• Flexible schedule: You can stock the vending machine at any time and on any day of the week, allowing flexibility in your schedule to work another job or run another small business.

Cons

• Low profit margins: You won’t become a millionaire operating vending machines, but you can definitely generate a few hundred a month in profit per machine.
• Not completely hands-off: Vending machines are not a “set it and forget it” type of business. You’ll need to monitor which locations do the best, which products sell the most, and how often you need to restock your machines.
• Difficulty securing prime locations: Your biggest challenge may be finding the best location for your machine, as many areas are already saturated.

Conclusion

The vending machine business brings in billions of dollars every year. To tap into this lucrative market or expand the venture you already have, vending machine financing is ideal. It can provide you with the capital you need to operate efficiently and maximize your profits.

Check out the best vending machine loans our experts have recommended. Our research can steer you in the right direction, no matter where you are with your operation.

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