If you’re a chef looking to share your creations with the world, a food truck is a versatile solution that lets you take your food to the customers instead of the other way around.
Food truck businesses can be profitable and highly successful, and they also require much less capital to start up than a traditional restaurant or café. When you are exploring options for financing, here is what you should consider.
What Is Food Truck Financing?
Food truck financing is a versatile tool that business owners can use to purchase a new food truck, or a used food truck, scale their business, or pay for things like equipment. Many chefs and restaurant owners like exploring the food truck world because it gives them greater freedom to go directly to where their customers are, whether that be at festivals, parties, weddings, catering events, or busy business districts. There are many different food truck financing options depending on your needs and the financial health of your business.
What Are the Types of Food Truck Financing?
When looking for food truck financing, you should keep in mind that every type of financing has its own pros and cons. If you take out a personal loan to fund your business, it will be subject to different terms and availability than a small business loan or a business line of credit. Working with an experienced funding company like Platform Funding will ensure that you get the money that you need and find the right option for your business.
Personal Loans
Because many food trucks are started by individual business owners, personal loans are a popular financing solution. These loans are readily available at many different credit unions and banks, and proof of subject to your personal credit history. While these loans are often easier to get, the interest rates offered are not always favorable and it can be hard to qualify for the amount of funding that you need.
If you do not have the truck yet or any of the equipment to put inside of it, you might need food truck financing for your equipment. Equipment leasing will cover the big costs that you need to, whether you want to upgrade an existing truck or start something from scratch. Platform Funding offers equipment leasing in addition to more traditional types of funding. When applying, remember that good credit standing can lower the interest rate that you are offered.
Business Line of Credit
If you are a small business that is just starting out, it can be hard to get a business line of credit. However, if you are a restaurant expanding into a food truck or have a business history to show, a line of credit could be available. These are extended on an ongoing basis and give you money that you can use at any time. You only need to pay interest and pay back what you use, unlike a traditional loan that gives you a set amount. Business lines of credit typically give you less funding than loans, however, so you might not be able to use them as your only funding source.
Business Loans
Business loans are often the first place that food trucks turn to when they want to get financing, and they are readily available. Business loans are available in a broad range of amounts, and you may get very favorable repayment terms depending on your credit history. These are repaid over a set period of time and can be used for any of your business expenses, including things like equipment or covering payroll when you add a new employee.
SBA Loans
Loans from the Small Business Administration are highly sought after due to their favorable terms and guarantee from the federal government. However, they are also very competitive to obtain due to their favorable nature. SBA loans have specific requirements that might shut out new or small food truck businesses. While they are backed by the federal government, they are given through a lender, so you might be subject to additional terms through the lender.
What Factors Should You Consider When Looking For Financing?
When you are obtaining food truck financing, every funder will have different requirements that you must meet before you are offered a loan or financing opportunity. When you are getting ready to start the application process, you should make sure that you have a good idea of the following:
· What you are going to use the loan for
· Minimum and maximum borrowing amounts
· Repayment terms
· Interest rates
· How fast do you need the funding
· If you meet the minimum requirements for the funding
At Platform Funding, we work with our business applicants directly. This allows us to make sure that you are not wasting your time or effort in applying for something that is not necessarily a good fit for you. For example, if an application has a minimum credit score that you do not meet, there is no reason for you to apply for that type of funding. We will work with your business to help you find the right solution for your specific needs and your specific business situation. We can also help you explore multiple types of financing to help get your business where it needs to be.
What Are the Minimum Requirements for Food Truck Funding?
When you are applying for financing, there are many different factors that a lender will look at when determining whether or not they are willing to extend your funding. Some of these factors include:
· How much experience do you have in the food truck or food service industry
· If you are expanding a current business or starting a new business
· Your credit score
· Your business’ credit history
· Your revolving debt usage
· Your history of bill and loan repayment
At Platform Funding, our minimum requirements include:
· 3 most recent business bank account statements
· 6 months of time in business
· An average monthly revenue of $10,000
When you speak with one of our funding experts, they will be able to provide you with customized advice for your situation.
Why Should You Work with Platform Funding?
Platform Funding connects businesses of every size with the funding that they need to thrive and grow. We have worked with over 15,000 businesses and supplied them with over $1 billion worth of funding. We offer numerous working capital options designed with food trucks and restaurants in mind, and we understand the unique challenges that food truck businesses can face when trying to find the staffing and equipment that they need without the proper funding. To complete your application for equipment financing or learn more about our offerings, call us today at (866) 473-1455 to talk to a live representative or apply now.
Sources
- https://www.valuepenguin.com/small-business/best-food-truck-loans
- https://www.fundera.com/business-loans/guides/food-truck-financing
- https://lendedu.com/blog/food-truck-loans/#equipment
- https://platformfunding.com/the-most-popular-restaurant-equipment-financing-options/
- https://platformfunding.com/what-we-offer/equipment-leasing/
- https://www.nationalfunding.com/industries/loans/food-truck-business/
- https://www.nationalbusinesscapital.com/blog/food-truck-financing/