Food Truck Business Loans

Quick Business Loans with No Collaterals

Food Truck Business Loans

The term "food truck loans" refers to a variety of loans that are used expressly to launch or expand a food truck. Food trucks, which are essentially mobile kitchens, are subject to many of the same rules, costs, and startup costs as restaurants, with the additional challenges that come with operating a business from a mobile location. However, owners of food trucks work in a thriving and expanding field. IBISworld, a market research company, reports that the food truck sector has grown annually every year for which data is available, with the exception of 2019 and 2020 because of the COVID-19 pandemic. Additionally, they claim that the food truck industry brings in well over $1 billion yearly.

Food trucks can be a great alternative if you're thinking of constructing, purchasing, or opening a restaurant or food truck. They have a number of benefits over starting a traditional restaurant. Mobility is perhaps the first and most visible. It could be challenging to draw consumers back inside if you start a restaurant and discover that the low foot traffic in the neighbourhood results in low sales. If you own a food truck, all you have to do is go where the customers are. The cost of food trucks is also far lower than that of a restaurant. They are much smaller, don't need any seating, and have a much smaller crew. Finally, they are able to concentrate intensely.

Why Do You Need a Loan for a Food Truck?

It quickly becomes clear that you'll need business loans to assist finance your vehicle once you've made the decision to start a food truck business. However, you should give your company strategy some serious thought before rushing to submit an application. What products will you be selling?

GetCapitalToday offers loans to small businesses that meet these criteria:

  • Business based in the US with 1 year in running
  • Cash flow that is stable or at least $15,000 per month

*Terms and conditions apply.

Food Truck Business Loans

Food Truck Loans

Your truck's size, required equipment, and pretty much every other aspect will be determined by your menu. And take into account all of the costs that are probably associated with operating a successful food truck:

Cooking Equipment:

Then you will require a kitchen. What items you intend to create in your vehicle will determine the exact costs and tools required. Espresso machines and flat top grills are not necessary for taco trucks or peanut butter and jelly trucks (yes, it's a thing!). Your company plan is vitally essential in this situation. To ensure that your truck is equipped with the ideal kitchen, you must have a clear knowledge of your menu.

Cooking Equipment:

Then you will require a kitchen. What items you intend to create in your vehicle will determine the exact costs and tools required. Espresso machines and flat top grills are not necessary for taco trucks or peanut butter and jelly trucks (yes, it's a thing!). Your company plan is vitally essential in this situation. To ensure that your truck is equipped with the ideal kitchen, you must have a clear knowledge of your menu.

Buying new truck:

The most important thing is to get a new food truck. You won't be operating a food truck out of a compact car. You'll need to buy or rent a big vehicle big enough to fit an industrial kitchen.

There are three ways you can purchase the truck. The cheapest option is to purchase a used food truck. This alternative may have a modest initial cost but require significant remodelling and restoration, depending on what the previous owners cooked up in their truck and what you intend to cook up in yours. Second, you may construct a brand-new kitchen and purchase a secondhand truck. By purchasing a truck with some mileage, you can save money while avoiding the high cost of remodelling. The most expensive (though easiest to customise) option is to buy a new truck and add a new kitchen on it.

Regardless of what is new or used, purchasing the food truck will likely be the most expensive part of starting your new business and should account for the majority of your thought as you weigh your financing alternatives.

Licencing, permits, and insurance paperwork:

You may need licences, insurance, permissions, and inspections, depending on your specific location. You will require commercial car insurance in addition to the general liability insurance that every company should have. Additionally, you are running a kitchen. That entails regular permit renewals and health inspections. Are alcoholic beverages going to be available? Perhaps a liquor licence is required. Depending on your menu, your state and city, and your truck, these costs might quickly pile up.


You may need to recruit more staff to drive, cook, or run your point of service system depending on your menu, the size of your truck, the complexity of your goods, and whether you operate a single truck or multiple trucks.


Finally, you will need to spread the news about your amazing new truck. That might be pricey. Are you going to run advertisements in print media? a committed online presence? Will you attend food truck festivals?

Various Food Truck Financing Options

As you can see, even though starting a food truck is less expensive initially than starting many other sorts of small businesses, financing are still probably going to be necessary. Once you are aware of all the requirements for your firm, you should think about the many loan alternatives available to business owners and select the one that will work best for your particular circumstance.

Traditional Lending:

You immediately picture a small company loan when you think of a standard bank loan. A lender will look at the potential borrower's credit history, annual income, and other indicators to determine whether they are creditworthy. The lender will then disburse a specific loan amount, which the borrower repays with interest. Depending on the loan's interest rate, size, length of payback terms, and whether it has a fixed or variable rate, the size of these monthly installments will vary. These loans, also known as term loans, are advantageously very flexible. You may use them for almost anything, including staff hiring, truck purchases, ingredient stockpiling, cash flow augmentation, and virtually everything else.

Remember that applying for a loan is essentially asking a financial institution to wager on your capacity to repay a loan for any type of food truck financing. You'll receive more favourable conditions if the lender has confidence in your ability to repay (you have good credit, a high annual income, outstanding bookkeeping and accounting, and a solid business strategy). If your credit isn't the best, you can pay higher interest rates and get smaller loans since the lender isn't prepared to take a chance.

Small Business Administration (SBA) Loans :

The United States Small Business Administration, or SBA, provides loan guarantees. This means that they can function similarly to a typical loan, but with substantially lower risk to the lender because, in the event that the borrower is unable to repay the loan, the lender will cover a sizeable portion of it through the federal government.

These loans depend on that guarantee, which is both advantageous and disadvantageous for potential borrowers. These loans are extremely tough to qualify for because of the government's guarantee; the government doesn't necessarily want to hand out hard-earned taxpayer money at random. SBA loans, however, are probably going to offer lower interest rates and longer repayment terms than a standard loan, if you're able to qualify for one. Additionally, the loan applications for these loans will be more difficult and time-consuming.

Food truck entrepreneurs need to be aware of the two primary types of SBA loans. There are SBA 7(a) loans first. A 7(a) loan, the most popular type of SBA loan, can be for up to $5 million and has a repayment term of 10 or 25 years, depending on the loan's purpose. Additionally, because they have variable rates, your interest rate will fluctuate according on your creditworthiness and the prime interest rate at the time.

Additionally, there are SBA 504 loans, which are $5 million fixed-rate loans. The main distinction is that 504 loans must be utilised to fund assets that are meant to expand businesses or generate employment. 7(a) loans can be used for inventory purchases or as working capital loans, whereas 504 loans, which often have longer repayment terms, must be utilised for things like landscaping, constructing new facilities, or modernising roadways.

The SBA also has a microloan programme. They provide money and serve as a middleman for neighbourhood organisations that provide loans of up to $50,000. Although SBA microloans typically have shorter repayment terms than other SBA lending options, given the reduced upfront expenditures connected to the food truck industry, they can be a great choice.

Sophisticated factoring: Individual or small bundles of invoices, as opposed to big sums or the full sales ledger, are factored in selective factoring.

Business Credit Cards :

Business credit cards function exactly like personal credit cards, only they are issued to your firm rather than to an individual. A bank will give you a card with a credit limit based on your credit rating, income, and other variables. You pay interest based on the purchases you make for your food truck. Even the best food trucks occasionally run out of ingredients, require an urgent vehicle repair, or incur other minor unforeseen expenses.

A company credit card can ensure that you always have a choice. Additionally, similar to personal credit cards, business credit cards frequently offer benefits. Therefore, if you have a recurring expense (gas? ), you may use a business credit card to pay for it, then pay off the debt each month to build credit and get rewards on a cost that you will incur every month.

Equipment Loans :

As its name suggests, equipment loans are intended exclusively to assist in financing business equipment. Additionally, the food truck industry depends heavily on its equipment, including the truck itself, POS systems, and kitchen supplies. The equipment for food trucks can be quite expensive and highly specialised.

This is how equipment financing operates. Making a down payment on the equipment will entitle you to a loan from a financial institution to cover the remaining balance. The newly acquired equipment will thereafter be held as collateral by the lending institution. As a result, the lender's risk is decreased in the event that the borrower is unable to repay the loan. Instead, the lender can simply seize and sell the new equipment.

While these loans don't offer as much operational flexibility as conventional or SBA loans, having the equipment as security helps to keep interest rates down. These loans are even more helpful in a sector where the office block itself is a piece of equipment.

Credit Lines :

Similar to business credit cards in operation, but frequently on a bigger scale, are business lines of credit. A financial institution grants a borrower's request for a specific credit limit. Only funds used up to that amount will be reimbursed by the company. When unforeseen expenses arise, lines of credit might be useful. If you run a coffee truck and your espresso machine breaks down, you'll be out of business. With a line of credit, you might swiftly replace it and resume operations.


Do you already have a regular clientele as a restaurant? Many food trucks are funded through crowdfunding and developed from already-existing restaurants. Your devoted clients might be eager to contribute to the cost of a food truck so that you can take your much-loved goods out on the road. Entrepreneurs frequently provide incentives in exchange for donations to crowdfunding campaigns. For example, donate $10 and receive coupons good for 20% off, and you'll have enough money for a new vehicle.

Cash Advances:

There are also cash advances. A lender will buy a part of upcoming credit card sales; these are not loans. Cash advances work with what's known as a factor rate, which is typically a figure between 1 and 2, rather than interest rates. For instance, you could receive a $10,000 merchant cash advance at a factor rate of 1.2. You must pay back the amount of the advance multiplied by the factor rate, or in this case $12,000. Daily payments are made based on a portion of all credit card transactions.

The payments change depending on your transactions, cash advances are advantageous. You'll make smaller payments if you're going through a lean time. The inverse is also true: you'll be making comparatively significant payments when your business is operating at its peak. Even though they are a relatively speedy kind of financing and are available to business owners with negative credit, cash advances are frequently one of the most expensive ways to obtain quick cash.

Which Loan Type Is the Best? It varies!

Consider yourself, the business, and your demands now that you are aware of all the numerous loan options and all the ways the food truck sector will require that money. Your credit is how? What are you doing with the money? How soon do you require it? Are you opening a brand-new food truck or expanding your current restaurant?

You'll be able to determine what loan you need, how big it has to be, and exactly how you're going to use it after you have a clear understanding of your wants and ambitions. This will allow you to establish a successful food truck business in a dynamic and expanding sector.