How to Finance Your Food Truck Without a Bank Loan

how to finance a food truck loans


Unless you’re independently wealthy, starting a new business usually means relying on a bank loan for financing. Applying for a bank loan sounds simple enough, but the long and annoying process of getting these loans is only eclipsed in difficulty by the many requirements and fees that traditional lenders impose — not to mention the long repayment terms that can last a decade or more.

Even trendy food trucks, with their relatively lower start-up requirements compared to their brick-and-mortar restaurant relatives, struggle with financing challenges just as much as any other business. So it’s no surprise that food truck owners have grabbed onto some of the newer, less traditional methods and strategies for gathering the working capital needed to begin on their long road to success. If you’re interested in launching your own food truck, you need to get familiar with some of these alternative funding methods.

But before we cover how to finance a food truck, let’s discuss…

The Problem With Traditional Loans

Banks and other loan offices have provided the bulk of financial start-up costs for businesses nationwide — and the resulting stress and annoyance have united countless entrepreneurs into a siblinghood of financially painful experiences. First and foremost, there are the high costs of paying back the loan plus all the interest that accrues on it over time, as you’re scrimping for cash and struggling to generate revenue from your brand-new business. That’s assuming that a bank will even accept your loan application, and allow you to be in huge debt with them in the first place.

Not only do you need to have a perfect business plan that will prove that your food truck is virtually guaranteed to succeed, but they will squint at your credit scores, your work experience, who you are (and if you’ve had anything ‘edgy’ happen in your past), and any piece of information they can find to provide evidence that you might not be a fine, intelligent upstanding businessperson. If any red flags pop up, no loan for you. If your business plan isn’t presented the right way, they’ll laugh in your face and then deny your loan application.

Of course, bank loans aren’t free money to start with. Besides committing assets to ensure guaranteed payback for lenders, business owners are expected to lay out cash upfront as well — a down payment ranging from 10% to well over 25% of the total amount borrowed, which requires you to give up a significant amount of your start-up cash before you even get the loan. So despite providing the much-needed lifeblood for a business to launch, a typical bank loan can actually impede a business’s early chances of survival.

According to Richard Willis of M&R Specialty Trailers and Trucks in Florida, banks have become more lenient with lending money to food truck startups over the past year due to a greater understanding of the industry. However, the interest rates can be high, and the loans are often still unavailable to entrepreneurs without close to perfect credit. So how can you secure funding for your food truck if a bank loan doesn’t fit your needs?

Need money for your business?


The newest and now most popular way for food trucks and other new businesses to gain access to startup funds is through crowdfunding websites like Kickstarter.com or GoFundMe. Relying on grassroots support from their local community, business owners can take their funding request to the general public, bringing in hundreds (if not more) of smaller donations to combine into a sizable amount. Unique, well-promoted business concepts have a good shot at catching fire, and launching with the help of supporters and future customers.

Don’t equate this to easy cash, however. The crowdfunding route still involves countless hours of labor from start to finish, to maintain your funding page, keep it in the public eye of your community, and develop new offers to appeal to people to make a donation. Which is another caveat: In order to lure donations, you’re usually offering something in return, whether it’s food, discounts, or memorabilia. Distributing these perks to donors will end up costing you time or money.

Still, once you’ve sent out all the gifts and fulfilled all of your promises to donors, you have nothing left to pay back — no loan debt hanging over your head! Plenty of food trucks have built an early buzz in their cities from crowdfunding, which means this method has just as much marketing benefit as financial benefit.

Investment ‘Partners’

Personal investment certainly isn’t a new concept in the business game, but as the fame and success of food trucks has grown, so has the opportunity for seeing a return on investment, giving food truck owners a better chance to catch the interest of those looking to fund promising operations. Of course, the realities of actually landing a good partner, without being socked for an ungodly high share of one’s business, is based purely on luck. That’s why many food trucks have been turning to borrowing much smaller amounts from a larger group of people, whether they’re friends, business networks, or investors who don’t mind letting go of a few thousand bucks for a promised return. Much like microloans, the approval requirements aren’t as stringent as a traditional bank loan, and the modest amounts being borrowed mean that the payment terms are shorter and easier to manage.


It might be a long shot, but it is an option that’s become more available over the past decade. If you’re lucky enough to compete on one of the many cooking competition shows on the Food Network or elsewhere, you might actually win a big chunk of cash to waylay some of your other costs. Of course the chance that you’ll even get on one of these shows, let alone win it, is already minuscule in its rarity. That said, the number of shows have catapulted in recent years, increasing the number of opportunities and chances to appear. Considering that many people owning a food truck usually have (or should have) some decent culinary experience and chops under their belt, it technically counts as a viable option. And of course if you do get on, a national television appearance provides the kind of high-profile marketing that you’d never be able to afford otherwise.


Andrew Steifer is a food truck fanatic. Whether it’s eating and writing about the mobile food scene in the Twin Cities at his blog Reviews on Wheels or contributing food truck business articles to FoodTruckEmpire.com, Andrew is always keeping tabs on the quickly evolving mobile food industry.

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