Food trucks are relatively cheap to start and maintain as compared to traditional restaurants. However, not everyone can afford to get the required starting capital due to limited savings or if facing a financial crisis. The following is an overview of the available food truck financing options for those aspiring to start the business.
Why Do You Need Financing For A Food Truck Business?
There are various requirements and essential items required before starting a food truck business. With the high competition in the industry, one must have a well-customized truck with the crucial amenities to attract more customers.
The most common items to be on the buying list before starting to operate include;
- Cooking items. Grills and griddles, microwave, Charbroiler, Toaster, Fryer, and toaster.
- Food preparation equipment. Cutting boards, worktable, skillets, and French fry cutter.
- Disposable items. Paper food trays, plastic cups, portion cups, and paper napkins.
- Refrigeration appliances. Countertop glass refrigerator and worktop refrigerator.
- Warming and holding items. Soup warmer, kettles, and fry dump station.
The durable items are usually expensive, and thus there is a need for one to seek financial assistance to purchase them. Other things which need food truck financing include; payroll, fees/licensing, and stock/inventory. The following are a few available financial options for food trucks:
Most banks usually provide these types of loans. Before acquiring the loan, one needs to know the kind of loan to apply for and be decided on what to do with the money if it is approved. It is also wise to deposit an up-front amount as a form of security to increase the chances of the loan being approved.
These types of loans are most applicable if you require a small amount of capital to cater to inventory and any other short-term expense. Microloans are predominantly issued by community lenders that finance nonprofits or small businesses. They are affordable, and their repayment terms are also favorable.
The funding usually works well for those business owners that have a strong connection with the community they serve. It entails pooling funds from the residents to acquire the capital needed to accomplish your business goals. The people funding you want you to succeed, and thus usually ask a minimal amount in return.
Small Business Administration (SBA) Loans
SBA does not precisely offer the loans, but they assist borrowers in locating appropriate lenders whose loans match their strict guidelines. This program lowers the risk to both lenders and borrowers looking for loans to fund or start a small business.
Business Term Loan
This loan option is most appropriate for those business owners who have identified a specific cost that requires financing. Borrowers can borrow a lump sum of funds that they agree to pay at the end of the agreed term length. The familiar lenders are PayPal, American Express, and Bank of America.
Business Line of Credit
This type of loan is a bit hard to acquire for those starting a business. The success of acquiring the loans depends on your financial record of accomplishment as the banks want to ensure if you are in good financial status. The amount issued is also under $50,000 and therefore not suitable for managing long-term financial problems or purchasing expensive items.
Food Truck Financing With Legion
At Legion Food Trucks, we do more than build mobile kitchens. We are true business partners who will do everything in our power to set you up for success, and this includes help with financing. Contact us today or download the guide below to learn more about available financing options.