Starting a food truck business isn’t unlike starting a restaurant business – you still need specific types of equipment, advertising efforts, staff, vehicles, and working capital to get the business off and running. And once the business is in operation, a constant inflow of cash is still needed to keep the business running smoothly.
Getting that money from a conventional bank is a tough proposition for many food truck business owners, especially when credit is bad, collateral is short, and business is new. In these cases, getting the financing you need can be a challenging effort.
But it doesn’t have to be. There are plenty of alternative business loans for food truck business owners. Many of these solutions are ideal for food truck business owners who don’t necessarily have the ability to meet the stringent criteria from commercial banks.
Food Truck Businesses Can Benefit From Small Business Financing
Sometimes the upfront lump sums of business cash just aren’t enough to cover expenses. When it comes to the food truck industry, there are a host of expenses that need some working capital to pay for:
The food truck itself
Advertising and marketing
Staff and payroll
What Alternative Options Do You Have for Financing Your Food Truck
There are plenty of available business loans for food truck business that you can take advantage of without having to rely on the bank’s strict requirements.
Short term loans for Food Truck
During those times when cash is a little short you may worry about how you can stock up on food inventory or even the cost of gas mileage; a short term loan can be the answer. These programs are designed to cover cash flow gaps and provide funds to deal with emergency situations.
Similar to a traditional term loan, a certain amount of money is provided by a lender to help you cover specific expenses. In return, you pay back the loan with a certain interest rate added on top of the principal amount. This loan arrangement is much shorter-lived compared to a long term loan, and the amount loaned out is usually much smaller as well.
Food trucks obviously require some level of equipment, just like most other types of businesses. While leasing the equipment is an option, with that arrangement you don’t ever gain ownership over the equipment. Instead, equipment financing provides you with the funds to pay for necessary equipment. You then make regular payments back to the lender, along with lender fees, until the entire loan is paid off in full.
At that time, you outright own the equipment. This arrangement also entitles you to be able to take advantage of tax benefits on your annual taxes, much like when taking out a capital lease. You can claim tax credit on the purchase price without having to pay for the equipment up front.
SBA loan Food Truck
The Small Business Administration (SBA) is a federal agency aimed at helping entrepreneurs improve their small businesses and get access to small business loans. Lenders who participate in SBA financing can offer you such loans to help you capitalize on business expansion opportunities and pay for additional expenses that you don’t have the funds to pay for yourself.
The SBA essentially guarantees a percentage of these loans to lenders, so they have more of an incentive to lend you the money you need, even if you don’t meet strict credit criteria. During the application process, your credit history will be reviewed, as well as your business history. You’ll also need to provide financial statements, information about your collateral, and a statement of how you intend on using the loan proceeds.
Business line of credit
One of the lesser-known funding options out there is a business line of credit. This financing option can help your food truck business meet working capital needs and even take advantage of investment opportunities.
A business line of credit is essentially a flexible loan from a lender that works very much like a credit card – you’re offered a limited amount of money that you can access when, if, and how you like. You then repay the money withdrawn as soon as you can. Until then, you’re charged interest on the portion withdrawn until it’s deposited back into the account. Once you’ve paid back the money, you’re free to use the full amount over and over, as long as you stay within the credit limit.
How to Get a Loan for a Food Truck?
The financing process all starts with a simple application form. Unlike the banks’ application forms which tend to be lengthy and cumbersome, non-bank lenders’ application forms are much shorter and easier to fill out.
Once you’ve filled out the application form and inserted specific pieces of information – such as the loan amount requested, length of time in business, credit score, reason for funding and gross revenues – it’s sent in for review. If all goes well, you can be approved for a loan in as little as 48 hours, with the money advanced to you shortly thereafter.
It really can be as simple as that. You don’t have to stress about your credit score or your available collateral. Alternative lenders are in the business to make it easier for you to get the working capital you need, instead of you having to overcome the numerous hurdles that banks typically throw your way.
Get Started with Credibly
The process of solving your working capital issues has never been easier than with Credibly. With our help, you could be on your way to getting the funds you need for your food truck business sooner than you think.
For all your modern food truck business capital needs and solutions, contact Credibly today!