Food Truck Financing: 7 Funding Options (2023)

Food truck business owners are some of the most dedicated business owners on the planet. They know that everyone needs to eat and that Americans love convenience. If you dream of owning your own mobile restaurant, you might need food truck financing.

You’ve come to the right place. We’ll show you how to get a food truck loan with information from food truck business owners, NAV, and National Business Capital. We’ve partnered with them to help future food truck businesses get approved for a food truck loan easier.

We’ll answer questions about food truck financing like:

1. How to Buy a Food Truck?
2. How Much Is a Food Truck?
3. What Are Food Truck Loan Options?
4. How to Get Financing for a Food Truck Business?
5. How to Get Food Truck Financing with Bad Credit?
6. How to Improve Your Credit Scores with NAV?
7. Why Should Food Truck Owners Start with National Business Credit financing?

How to Buy a Food Truck?

There are 48 different ways to buy a food truck. Food trucks range in price depending on several factors including:

• Type of Food Truck: Are you buying a food truck, food trailer, or food cart?
• Condition of Food Truck: Have you found a new food truck or used food truck for sale?
• Buying a Food Truck Business: Are you buying a used food truck business?
• Equipment in the Food Truck: Is the equipment already in the food truck?
• Means of Purchase: Will you buy, rent, or lease your food truck and equipment?

Let’s look at each of these to help you understand how much of a business loan you might need to buy food truck equipment.

Type of Food Truck

There are three main types of mobile food vendors:

1. Food Truck: These are usually a modified box truck, conversion van, or RV.
2. Food Trailer: Connects to the towing hitch of a truck, SUV, or other vehicles. They are normally enclosed.
3. Food Cart: You’ll either have to move these manually or connect them to a form of transportation. Food carts are not normally enclosed.

The type of mobile vending equipment you use may impact the business loan you can apply for because different equipment has different expected life spans and values. Also, trailers and carts would be considered equipment loans, while a food truck might also qualify for an auto loan, which frequently has much lower rates than other lines of credit.

Condition of the Food Truck

The age and condition impact food truck financing because both impact the life of the equipment. Many financial institutions will not offer food truck loans for vehicles more than ten years old. They may also have mileage requirements that impact the ability to get food truck financing.

Buying a Food Truck Business

You might find it easier to qualify for a small business loan if you buy an existing business in the food truck industry. In these scenarios, you’ll be able to use the current cash flow, annual revenue, and business assets from the existing business to help secure small business loans. You’ll want to work with a business broker to help you get the best value.

Food Truck Equipment

Equipment loans are a common type of business loan. You’ll likely be using some type of equipment financing when you enter the world of food truck entrepreneurs. If you are buying new equipment, you can safely get food truck financing for longer periods of time than if you are buying used equipment. If the equipment breaks down, you’ll lose cash flow and still be on the hook for the business loans.

Purchase Agreement

Food truck financing may be impacted by how you choose to get the food truck and equipment. You have three main ways to get equipment:

1. Buy: Most options for food truck financing. The food truck equipment counts as both an expense and an asset.
2. Lease: This is a direct competitor of equipment financing, and the tax consequences can be treated differently for each. These are often offered directly by the food truck equipment manufacturer. You probably won’t be able to use the food truck to secure additional business loans when you lease.
3. Rent: This way of securing a food truck and equipment is likely to be considered under working capital loans or a line of credit, but not equipment loans because you will not own the food truck.

As always make sure to read what you sign. Some lenders are shady.

How Much Is a Food Truck?

Food trucks range in price depending on several factors. We’ve already mentioned these, but it’s worth mentioning again. Consider:

• Type of Food Truck: Are you buying a food truck, food trailer, or food cart?
• Condition of Food Truck: Have you found a new food truck or used food truck for sale?
• Buying a Food Truck Business: Are you buying a used food truck business or just the truck?
• Equipment in the Food Truck: Is the equipment already in the food truck?

The table below breaks out the price of the different price ranges for food trucks and similar mobile food vending options.

Keep reading because there are a ton of loans available for food trucks.

What Are Food Truck Loan Options?

There are a variety of food truck business loans you might qualify for, depending on your situation. Financing a food truck will typically use one of the following types of loans:

1. Equipment financing 
2. Working capital loan
3. Merchant cash advance
4. Business line of credit
5. Business term loan
6. Small Business Administration loan
7. Vendor leasing programs

Let’s look at each of the food truck financing options to better understand which to choose.

Equipment Financing

If you want to become a food truck business owner, equipment financing is the easiest to get when you enter the mobile restaurant industry. These secured business loans provide the funds to:

• Buy or rent a food truck
• Get the initial supplies
• Upgrade equipment 

In fact, National Business Credit makes it super easy to get equipment loans. As long as you have over a 600 FICO score, you can qualify for up to $70K from the online lender to start your food truck business. If you need $75,000 or more, you’ll need $120K annual revenue and 6 months or more in business.

Equipment financing is available or the total amount of the equipment price. You’ll need a small down payment but the equipment acts as collateral for the new business loan. If you don’t make the monthly payment, the lender will repossess the equipment. 

Working Capital Loan

A working capital loan can be used for almost anything. Short-term working capital loans help businesses cover operating expenses during slow periods, purchase inventory, and finance expenses like food and supplies.

Most working capital loans last for 18 months or less. You can get them from traditional lenders or online lenders like National Business Capital.

Merchant Cash Advance

Most people think merchant cash advances are for retailers or wholesalers, but food trucks can use this financing, too. A merchant cash advance lends you money you need quickly and takes a percentage of your business’s future sales. When you get food truck loans that are a merchant advance, your business will be judged based on its cash flow.

Hear how Joe Camberato explains merchant cash advances below:

Your food truck qualifies for this type of repayment terms as long as you have been in business for over 6 months and make at least $120K in annual revenue. NBC uses an example of repayment terms that take 15% of credit and debit card sales. That means if you want to pay off the financed food truck in a year, you’ll probably only qualify for around $10,000 per $120K of revenue. They offer food trailer financing of up to $5 million using merchant advances.

Business Line of Credit

A business line of credit is basically a business credit card with lower interest and higher limits. Business lines of credit are the best food truck loans if you meet the income and credit score requirements. You only have to pay for the outstanding balance and interest, plus you can use a line of credit to fund most business expenses.

You can assume business lines of credit will require at least:

• 600 personal credit score
• 2 years in business
• Meet specific financial requirements
• Cash flow for up to $250,000
• B2B accounts receivable for up to $10 million

Hear more about why Joe says right now is one of the easiest times to get a line of credit.

Business lines of credit are incredibly flexible because you can get a secured or unsecured loan. A secured line of credit tends to be less expensive. These are even available backed by the Small Business Administration. Learn more about NBC loan terms for revolving credit lines.

Business Term Loans

Food truck business owners might also be interested in business term loans. Business term loans work similarly to a mortgage. You apply for a loan, put down a down payment, and receive a lump sum of cash upfront. Then you repay the term loan according to the loan terms for a period of 6 months to 10 years.

A term loan might be a better option than a line of credit if you prefer consistent repayment terms. Term loans can help you finance food truck business expenses including:

• Financing food trailer upgrades
• Hiring workers
• Refinancing debt
• Purchasing materials

Talk to National Business Capital to find out how to finance a food truck based on your small business needs. While most banks require a 680 minimum credit score and two years in business for food truck financing options, NBC will finance a food truck business as long as you have:

• A year in business
• $10,000+ monthly revenue
• 580 credit score

These term loans are one of the best term loan offerings on the market for businesses with low credit scores.

Small Business Administration Loan

If you qualify for loans backed by the Small Business Administration (SBA), they are some of the best loans you can get. SBA loans typically require:

• A 680 credit score
• Personal guarantee 
• 2 years in business
• Down payment
• Business plan

SBA loans are available as a lump sum payment or revolving line of credit. When you get an SBA loan, you get some of the best interest rates on the market and longer loan terms. These small business loans are available at local banks, credit unions, and alternative lenders. 

It can take over 180 days to get loans for food trucks with most vendors, but National Business Credit has found a way to provide an SBA loan for food truck businesses in less than 45 days with their Hybridge® SBA Loan program.

Vendor Leasing Programs

A vendor leasing program like Roaming Hunger is one way to cover the food truck cost that is managed by the vendor. They may offer terms for good credit for a:

• Small food truck
• Small food trailer
• Used food truck 

Food truck business operations may be able to get this financing for lower costs upfront, but you may not actually own the food truck. You’ll normally pay a deposit that is at least the first and last month’s payment. When the lease terms expire, you’ll have the option to buy the food truck for the remaining balance or get a different food truck. 

How to Get Financing for a Food Truck Business

Before you get a loan for food truck business expenses, there are a few things you’ll need to do:

1. Create a business plan.
2. Choose a business structure. (Corporations get the highest Dun & Bradstreet ratings because they disclose the most. LLCs are second best.)
3. Register for an EIN number.
4. Get a business bank account.
5. Get a DUNS Number (not necessary at National Business Credit).
6. Meet the minimum requirements.
7. Choose a lender.

How to Get Food Truck Financing with Bad Credit

If you have bad credit, your options aren’t as good (but still possible). Many online lenders will loan to people with bad credit, but you’ll be paying higher interest rates or be forced to accept secured loans. You might consider finding used food trailers for sale to get your new business started. Then build your credit score before you try to finance food trailer options. 

Once you have revenue and meet the minimum credit score, online lenders will be happy to help you with equipment purchases through an equipment loan or merchant advance. You can also look for food trailer finance options like:

• Borrowing from friends and family
• Taking out a secured loan
• Borrowing from your retirement accounts

For those wondering how to buy a food truck with no money, you’ll want to consider the same options.

How to Improve Your Credit Scores with NAV

NAV is like Credit Karma for businesses. It helps you find business solutions, monitor your finances, and suggests the best credit cards or loans for your financial scenario. For $59.99 (rate subject to change), you can use NAV’s business credit builder to report trade lines directly to credit agencies. Better credit means better business funding options.

Nav will help you build both. Sign up now.

Why Every Food Truck Should Consider National Business Credit Financing

Whether you’re looking for a taco truck for sale or dealing with unexpected expenses, National Business Credit has fast funding for food truck owners. You just:

1. Apply online.
2. Have a consultation call to establish what your small food truck business needs.
3. Get the best offers for secured and unsecured lines of credit from more than 75 lenders
4. Get the money in a couple of days.

You’re more likely to get approved than if you go to a local bank because they have a 90% approval rate as long as you meet the qualifications. Skip the bank loan and get national funding for your food truck business.

What type of business loans have you applied for? Did you get approved? If not, why were you rejected?