The food truck business is one of the most growing trends in the restaurant industry. When planning to venture into the business, you must dig deep into your pocket by investing in initial supplies, items, and personnel. It may seem costly, but there are plenty of opportunities to access a food truck loan and start the business efficiently without spending your entire life’s savings.
This article will discuss the different types of loans available, what they are used for, and how to apply for a food truck loan.
Different Types of Food Truck Loans Available for You
If you want to finance your food truck business, you have a few different options. They may differ based on the specifications you need as a borrower, the loan size, and the cost. As a result, it’s wise to explore available loan options to obtain the most outstanding deal if you’re looking for a food truck loan.
You can choose from the choices below if you need a long-term or short-term food truck loan.
An equipment loan is ideal if you need a fast-food truck loan with a cheap interest rate. These loans employ the food truck equipment you’re buying as collateral, resulting in a lower interest rate than some of the other alternatives on the list. In the event of a default, the lender is authorized to liquidate equipment to make the difference.
To qualify for this type of loan, you must have strong credit and maybe make a down payment on the items, ranging from 5% to 20% of the overall cost.
Small Business Administration (SBA) Loans
If you have a vested financial stake in an American-based business, you may be eligible for SBA loans to establish a food truck business. Through certified and verified loan providers, an SBA loan can assist you in avoiding financial risk.
Business Lines of Credit
A line of credit is another alternative for a food truck loan. Unlike a loan, which offers you a lump sum upfront and requires you to pay it back over the loan’s term, a line of credit allows you to draw money out should you need it and only pay back the amount you use. However, small business finds it challenging to get this type of loan because banks require you to have an excellent financial standing.
Business Term Loan
A business term loan is a suitable alternative for food trucks that need to finance a specific expense. It relieves the worry of not being sure how you’ll pay for something by allowing you to take out a lump sum payment that will be reimbursed at the end of the agreed term length.
How To Apply for Food Truck Loan
You can only apply for a food truck loan if you meet some general requirements. For example, to qualify for an online loan, you must have been in operation for at least six months and have a monthly revenue of at least $10,000.
As previously stated, some new businesses find it difficult to obtain bank loans because the conditions may include being in business for not less than two years. Moreover, if you do not meet the minimum criteria, you may be forced to offer collateral for a down payment along with your loan application.
Get Started with Legion Food Truck Financing
Getting a loan may seem complicated for most food truck business owners; however, at Legion Food Trucks, we make your goal of starting a food truck business a reality. We’ll help you find the right loan for your business and even help you with the applications. Get in touch with us to begin exploring your financing options today.