Do you love to cook or know someone that does? The food truck industry is rapidly growing - currently being valued at over 1 Billion dollars and growing 6.6% year over year.
Opening and running a food truck business is more affordable than taking out a lease on a brick-and-mortar restaurant. However, going to your local bank for financing may be a challenge for new owners looking for funding.
Fortunately, Capital Funding Partners has the solutions you need to get the working capital and equipment financing you need.
How to Find the Right Financing for Your Food Truck
Unless you're independently wealthy or recently came into a large sum of funds, you're going to need outside financing to bring your food truck dreams to light.
What type of funding is best?
Well, the answer to that question depends... The best route
to go starts with you doing the research on the amount of capital you need. After establishing your budget for equipment, marketing, menu creation, and any miscellaneous costs you can then begin to explore which capital options are best for your business.
If you’re looking to capitalize on a growing trend in the restaurant industry, consider starting a food truck business. The industry is valued at $1 billion currently and is predicted to grow 6.6% over the next five years.
Though running a food truck business can be more affordable than taking out a lease on a full-fledged restaurant, there is still a significant cost associated with this type of small business. Securing a traditional business loan may be a challenge for food truck business owners.
Fortunately, there’s a solution: food truck owners looking to have working capital and smooth cash flow may qualify for food truck financing. A food truck loan can give you the money you need to buy a food truck or food trailer and inventory as well as invest in marketing to attract more customers.
Loan Options for Your Food Truck Business
When it comes to financing your venture, you have a few options... The benefits and drawbacks of each differ for each lending product, but each has a purpose and we're going to quickly run down the pros and cons of each funding option available to you.
Equipment Loans
Best for: Fast funding and low-interest rates.
If you’re looking for money for equipment purchases like a deep fryer or an oven, you may want to consider equipment financing. These loans use the food truck equipment you’re buying as collateral against the loan, which may help you get a lower rate than some of the
other options on the list. Should you default, the lender might take that equipment to sell to cover the remaining balance.
Also, consider commercial vehicle loans if you’re looking to finance the food truck itself.
You can also consider leasing the food truck or equipment. This may give you lower monthly payments, but depending on the lease structure, you may not have the equipment as an asset you can sell at the end of the lease.
Click Here for more information on your equipment financing options...
Business Lines of Credit
Best for: Accessing working capital when you need it, rather than in a lump sum.
Another option for food truck funding is a line of credit. Unlike with a loan, which gives you a lump sum all at once that you’ll make payments on over the term of your loan, you can take out money against a line of credit whenever you need it and just pay that portion back.
Say you are approved for a $100,000 line of credit. Maybe right now, you need $5,000 to buy a new dishwasher. You borrow the money and start paying back that amount. Then in six months, you need an additional $17,000 for various expenses. Your lender would roll those two draws on your credit into one monthly payment.
Line of credit terms will vary, but typically you may be able to borrow between $10,000 and $1 million.
Click Here for more information on your Business Line of Credit options...
SBA Microloans
Best for: Smaller loan amounts.
The Small Business Administration (SBA) has a microloan program that provides loans up to $50,000 for borrowers to purchase inventory, supplies, or equipment, or to use as working capital loans. You don’t apply for this microloan directly through the SBA; instead, you will need to apply through a microloan intermediary.
The average microloan is $13,000. Most banks prefer not to lend such small amounts, so if you don’t need more than $50k in food truck financing, this might be a good fit.
Generally, you will be required to provide collateral as well as a personal guarantee for the SBA loan.
Click Here for more information on your equipment financing options...
Ready to discuss the best options for your business?
Give us a Call at 281-800-8873 or CLICK HERE to Book a Consultation...