Food Truck Financing: Your Top 5 Options

Secure affordable food truck financing with food truck loans and beyond.
Jump to a section

Food Truck Financing: All You Need to Know

Food trucks allow both professional chefs and anyone with a dream to quickly stand up a business. And a great one, at that—you can be your own boss, have a flexible work schedule, test new products, and grow a loyal following. All without large capital expenditures and huge overhead. Still, you need to finance food truck dreams somehow.

Though food truck financing might require less capital than traditional restaurant financing, it will still come with its fair share of costs. Whether you finance a food truck out-of-pocket or you secure a food truck loan, you’re going to need access to capital to purchase your wheels.

As such, we’ve compiled a comprehensive guide to food truck financing. And though many of your top options are types of food truck loans, there are also a few less traditional food truck financing sources to consider. The top five types of food truck financing are:

  1. Equipment financing
  2. Business lines of credit
  3. SBA Microloans
  4. Business credit cards
  5. Crowdfunding campaigns

We’ll explain in detail just why these options are so well-suited for financing a food truck business. Here’s your ultimate guide to food truck financing in 2019:

Food Truck Financing: Your Top 5 Options

If you think you’re seeing more food trucks lately, your eyes don’t deceive you.

In the US Chamber of Commerce Foundation’s “Food Truck Nation” study, researchers found that mobile food enterprises accounted for an impressive $2.7 billion in revenue in 2017. That’s up from a mere $650 million in 2014—more than a 400% increase over three years.

But how is this growth possible? The short answer is, quite simply, food truck financing.

However, within the broad answer of food truck financing are a lot of different paths an entrepreneur can take to finance a food truck. And some are more affordable and straightforward than others.

Here are the details on the top three food truck financing options for you to consider:

Food Truck Loans

Of all your food truck financing options, food truck loans will be the most systematized and straightforward. Many entrepreneurs have secured loans for food trucks before you, and many will long after you get your food truck up and running. 

That said, you’ll have more than a few food truck loan options to sift through—there are three in particular that will serve your food truck financing needs best.

Paper sheet
Equipment Financing

If you’re looking for a food truck loan specifically to finance the truck itself—or other equipment, like stoves or ovens to go inside the truck—then equipment financing will be the perfect type of food truck loan for your needs.

Equipment financing allows you to access funding to purchase business equipment that will, in turn, act as collateral for that very loan. And from oven financing to auto financing to semi truck financing, equipment financing can cover it all. 

Because equipment financing is, by definition, secured financing, you’ll be able to access lower interest rates. And because lenders typically make the repayment term as long as the projected life of the equipment, you’ll be able to access some of the most stretched out repayment schedules on the market.

All in all, if you need food truck financing, a food truck loan in the form of equipment financing could be your most affordable, easy-to-access option.

Paper sheet
Business Lines of Credit

On the other hand, if you anticipate needing funding for more than just your truck or stove, then you should consider a business lines of credit as your go-to food truck loan.

Business lines of credit will allow you access to a pool of funds from which you’ll be able to draw capital as needed. When you repay your business line of credit, you’ll only owe for the amount you actually end up spending—which means you’ll only pay interest on what you end up spending.

And after you repay what you spent, you’ll be able to draw on your line of credit again and again each time you need to access financing for your food truck—whether you’re upgrading your stove, investing in additional trucks, or getting through the winter months.

For access to sustained, multi-purpose food truck financing, consider a business line of credit your best food truck loan option.

Paper sheet
SBA Microloans

Last but not least, if you need less than $50,000 of food truck financing, then look into SBA Microloans as a top food truck loan option. Through this program, the SBA provides loans of $500 to $50,000 or less to community-based non-profits that, in turn, lend the proceeds to local small businesses. SBA Microloans will also come with loan repayment terms of up to six year. Rates on this type of food truck loan can range from 6.5% to 13%, but in 2017, the average SBA Microloan interest rate was just 7.5%.

If you’re looking for the most affordable food truck loan possible, then we suggest you start your search with an SBA Microloan.

Business Credit Cards

Though the lower credit limits they offer won’t be ideal for full-on restaurant financingbusiness credit cards are viable options for food truck financing. Even if you’re just starting your food truck, this form of financing will be an option—all you’ll need at least an average personal credit score to access spending power through a business credit card.

Even better?  Many business credit cards will offer up an introductory period during which you’ll be able to carry a balance from month-to-month without accumulating interest.

This intro period means you’d be able to make a big purchase—like, for instance, a food truck—and pay it off gradually without accruing interest, so long as you pay your monthly minimums every month and you pay down your debt before your intro period expires.

More Credit Cards for Food Truck Financing

Crowdfunding Campaigns

Finally, consider starting a crowdfunding campaign to raise food truck financing. Since the mobile nature of food trucks makes them almost by-definition community fixtures, crowdfunding is especially useful for food trucks that need to access financing. Through websites like Kickstarter and IndieGoGo, you can launch fundraising campaigns and ask for customers, family, friends, and strangers alike to contribute donations to finance your food truck.

This is an ideal food truck financing solution, bad credit notwithstanding. Plus, you’ll be able to tap into your pre-existing community support to finance your food truck capital needs.

Granted, this form of food truck financing will take a lot of skill and creativity to be successful. Not to mention, you’re going to need to be pretty persistent about publicizing your campaign for it to be successful.

That said, if you’re working with bad credit, or you’re confident that you’ll be able to run a successful campaign, crowdfunding is an ideal interest-free answer to how to finance a food truck.

Food Truck Financing: 3 Case Studies

Now that you’ve learned the ins and outs of your top food truck financing options, it’s time to see these options in action! Here are three case studies on how three real world entrepreneurs went about financing a food truck business.

If you’re wondering how to finance your food truck aspirations, look to The Tasty Yolk, Mustache Pretzels, or Holyoke Hummus for real-life answers.

The Tasty Yolk

Owner of Connecticut-based breakfast truck The Tasty Yolk’s, Mike Bertanza bought his first trailer using a personal credit card with a high credit limit, which he qualified for because he had good credit and normally doesn’t carry high balances. “We needed money right way, and we used a credit card because it was simple and effective,” Bertanza says.

A credit card can work well for starting your venture, though we’d recommend a business credit card in favor of a personal card. That way, you’ll keep your personal and business transactions separate for tax and administrative purposes, your enterprise builds its own credit, and your company may be eligible for unique perks, depending on the card you choose.

As a reminder, we especially like 0% intro APR business credit cards, because you’ll pay no interest during that introductory period—which can last even more than a year on some cards—and you can pour all your profits into growing your business. After your interest-free months are up, a variable APR will set in at a rate depending on your creditworthiness and the market prime rate. So, you’ll want to make sure you can pay off what you’ve accrued—but with what’s effectively an interest-free loan for several months up front, you should be able to budget to do so if you work closely with a great accountant.

Mustache Pretzels

For his Phoenix-based food truck, Mustache Pretzels, Eric Golden used a mixture of funding options to get his enterprise off the ground. He bought the first truck with his own money, with help from two colleagues who remain part of the business. He also worked with a small startup to pay for added equipment in the truck in exchange for social media exposure. Plus, the seller of the trailer financed the purchase himself at 7% over one year.

Not everyone can snag a corporate sponsor or convince the seller to carry the loan, so consider equipment financing when you’re ready to get your food truck business off the ground. Since an equipment loan is self-collateralized—meaning that the equipment you buy with your business financing serves as collateral for the loan itself—these loans are actually easier to get than traditional term loans. So, even if you don’t have an established concept and customer base, you might still qualify for equipment financing from an online lender—especially if you have a strong personal credit history.

Your lender will want to see your credit score, of course, and an equipment quote, too. Something to think about: According to Forbes, a savvy entrepreneur should consider buying used equipment, particularly from reputable sources like the US government. Check GovSales and the Defense Logistics Agency to get started.

Holyoke Hummus

When spouses John Grossman and Dawn Cordeiro moved from their native Boston to the small city of Holyoke, Mass., they had a son on the way. In search of space and community for their growing family, they joined a pop-up potluck group of passionate foodies who turned out to be aspiring restaurateurs. Ultimately, the group became the test group and cheering squad for Holyoke Hummus Company.

Holyoke Hummus Company used a crowdsourcing campaign to purchase their initial tent, tables, and food processor. Through their pop-up shop, Grossman and Cordeiro met Common Capital, a certified CDFI community lender, which provided the loan for the acquisition and refurbishment of their food truck. Under the Community Development Financial Institutions Fund, or CDFI, a program of the US Department of Treasury, certified lending institutions provide funds for individuals in low-income communities and provide instruction in economic empowerment.

You can take a similar approach with the US Small Business Administration (SBA). The SBA’s microloan program assists business owners with small financing amounts from $500 to $50,000 at low interest rates. Both the CDFI and the SBA advance money to financial lenders which then pass it on to the businesses in question. The SBA often serves traditionally underrepresented populations, such as women, minorities, and veterans.

Apply for Food Truck Loans

Food Truck Financing Next Steps

Now that you’ve made it through our guide to your top food truck financing options, it’s time to start thinking next steps. With all the details laid out for you on your top options—food truck loans, business credit cards, and crowdfunding campaigns—you’re well-equipped to decide which form of food truck financing best addresses your needs and preferences.

Next steps will involve compiling all of your necessary information—and all of the documents to verify that information—you’ll need to apply (or launch your campaign!).

In no time, you’ll be well on your way to securing the food truck financing you’ll need to get things rolling.

Editor's Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone. They haven’t been reviewed, approved, or otherwise endorsed by any of the companies mentioned above. Learn more about our editorial process and how we make money here.