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Food-inspired entrepreneurs know that a food truck may help them launch a business: The food truck industry adds over $2 billion to the U.S. economy and operates in over 300 cities across the country. And food trucks have gotten more popular with large events. It’s worth considering adding events like weddings, fairs, festivals, sporting events, and corporate events to your food truck services. But catering events come with upfront costs — which is where food truck financing for large events can help.
Learn about how funding can help your food truck business tackle larger opportunities, ways to find funding, your best food truck financing options, and how to apply.
Why Leverage Funding for New Large Catering Opportunities?
Food trucks can be profitable and adding catering events is one way of expanding your services. The average catering business makes between 7% and 8% in pretax profit. Catering events can bring in more predictable revenue than relying on foot traffic in the area where you park. Instead, you know you’ll have guests to feed — and maybe even a signed contract with a minimum food spend.
Although you’ll have lower startup costs with a food truck than a brick and mortar restaurant, catering large events is not free. Even after you buy a new food truck and all the necessary kitchen equipment, you’ll need to supply things like ingredients, inventory, supplies, and staffing for each event. These expenses can add up, but taking on larger events may help to expand your food truck business rapidly.
Business owners pursuing new business opportunities don’t have to wait to save up enough in their bank account to take on larger-scale events. Lenders may be willing to help your food truck business with its cash flow and funding needs.
What Are Some Ways to Finance a Large-Scale Event?
You can use various types of financing to cover the costs of catering large events. There aren’t financial products that are specifically loans for food truck owners. Instead, you’ll be looking for flexible financing that allows you to pay for what you need ahead of and after the event. You may turn to online lenders or traditional banks, depending on what you qualify for.
Here are the small business loans and other funding options you should consider when looking for food truck financing.
Equipment financing
Equipment loans are term loans meant to be used for funding for materials, machinery, or equipment. Food truck equipment needs like engine repairs or upgraded appliances may be covered by this funding. These loans may be able to cover the entire cost of the needed equipment. You would then pay it back according to the specific loan terms.
Working capital loan
Business owners can use working capital loans to pay for expenses that keep their business running. A working capital loan can allow a food truck business to pay for purchases like restocking your inventory and ingredients before a large event. It can also cover payroll costs for on-site staff.
Business line of credit
A business line of credit offers you a pool of money that you can pull from for business expenses as needed, up to your credit limit. You’ll usually only pay interest (which can be a fixed rate or variable rate) on what you use. There may also be associated fees, and your repayment terms depend on the line of credit you choose.
Merchant cash advance
A merchant cash advance (MCA) is also called a business cash advance. A MCA could be the right option if you’re looking for fast business financing that is often easier to qualify for than other options. Depending on the lender, borrowers can get funding as quickly as the same day as applying. However, a MCA is often more expensive than other small business loans.
Small Business Administration (SBA) loan
SBA loans are guaranteed by the U.S. government and offered by associated banks. These loans may be slightly more expensive to borrow than other term loans, but the interest rates are usually still very good. Although you’re likely to get good terms with an SBA loan, they are notoriously difficult to qualify for.
Business credit card
If you have a high limit or fewer expenses, you may be able to cover the costs with business credit cards. Credit cards are often easier to qualify for than other types of small business financing and offer quick funding. Just be sure you understand the associated interest rates because borrowing using a credit card can be more expensive.
Questions to Consider When Getting Food Truck Financing
As a small business owner who decides to tackle a large opportunity, you’ll want to make sure any financing fits into your overall business plan before applying. There are several factors to consider before determining whether or not securing a food truck loan is the right move for your business.
1. How large is the event?
Decide whether or not your fleet can handle the event as it is currently. You’ll need enough kitchen space to be able to prep and cook the food in a speedy manner. Another consideration is serving the food — you’ll need to have enough staff and supplies on hand to avoid long lines and keep the attendees happy. Also, the more people in attendance, the more your supplies will cost.
2. What is the potential profitability of the event?
It’s important to calculate your budget for the event and make sure you will earn money on your work. Calculate how much you’re likely to make and subtract all your planned expenses. Before borrowing money to pay for upfront costs, make sure the interest rates on your loan wouldn’t cancel out your profits.
3. What additional equipment is needed?
If you can’t manage a large event with the equipment you have on hand, it will cost you to add to your stock. For example, if you plan to cater a festival but usually only accept cash, you may need to add a POS system for credit card sales. If adding kitchen or business equipment is too costly, financing can help you afford it. Also, you could consider equipment leasing or renting.
4. Will this event require additional help?
Think about how much staffing will cost since labor is one of the biggest expenses in catering. Catering companies often rely on short-term servers, cooks, and other on-call staff. Making sure the event goes smoothly requires having the right number of people on staff and ensures you make a good impression on your clients so they want to work with you in the future — or even recommend you to their friends or colleagues.
5. Are working capital loans a good option?
Working capital loans are meant for operational expenses, including the costs that you’ll likely run into when you provide catering services. Whether or not an option like an AmEx Working Capital loan is a good choice for your business depends on the terms you qualify for and the loan amount you need.
6 Best Financing Options for Food Truck Owners Catering Large Events
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Short-Term Loan by Kapitus
Kapitus offers short term loans up to $5,000,000 in as little as 24 hours. The process is quick and easy with limited documentation and offers the best prepayment discounts in the industry.
Pros
- Repayment options ranging 6-18 months with fixed rates options
- Competitive discounts for those who payoff early
- Extremely competitive product for higher revenue businesses - retains a higher average funding amount
- Your offers can improve as repayment history continues
Cons
- Longer industry restriction list
- Comes with a wide range of rates and terms.
Funding Amount
Cost
Repayment Terms
Funding Speed
Short-Term Loan by Credibly
As quickly as 4 hours
Pros
- Set payments
- Pre-qualification, which means you can pre-qualify without hurting your credit
- With strong cashflow health, low personal credit scores still have great options here
Cons
- Must have at least $15,000 a month in deposits
- Repayment terms maybe shorter for some users
Funding Amount
Cost
Repayment Terms
Funding Speed
Short-Term Loan by Rapid Finance
Fast access to funding amounts up to $3,000,000
Pros
- Reputable funder with 20 years’ experience in the industry Loan approval within 24 hours Repayment terms up to 84 months*
Cons
- Not ideal for startup or low monthly revenue businesses Requires an established business bank account
Funding Amount
Cost
Repayment Terms
Funding Speed
Line of Credit by Fundbox
Nav recommends this product as a great solution for newer small businesses looking for a fast application process and access to a flexible LOC product. Bonus: When you click 'Apply now," we'll securely pass over your info, making applying with Fundbox a breeze. Only answer a few additional questions on their end and you're good to go.
Pros
- 625 minimum personal credit score
- No impact to credit score to apply (soft pull only)
- No draw fees
- Fast approval and funding, with funds available as soon as the next business day
- Use as much as you need, only pay interest on what you use
- Fundbox reports payment activity to all the major commercial credit bureaus via the Small Business Financial Exchange (SBFE), which can help strengthen a business's credit profile.
Cons
- Must have a business checking account with a minimum balance of $500
- May require large weekly payments (0.4% - 0.7% of the original draw amount per week) due to the short repayment duration.
Funding Amount
Cost
Repayment Terms
Funding Speed
Business Cash Advance by Credibly
Credibly offers flexible repayment plans with fixed rates, based on future receivables. Ideal for seasonal businesses and those with high credit card processing volumes.
Pros
- Fixed payments
- Offers the ability to pre-qualify without affecting your credit.
Cons
- Must have at least $25,000 a month in sales, Max repayment term is 15 months
Funding Amount
Cost
Repayment Terms
Funding Speed
SBA Loan by SmartBiz
For high cost projects with long repayment. No immediate funds needed.
Pros
- APR as low as 11.25% with monthly repayment plans up to 10 years
- Ability to be pre-approved and review terms and conditions before needing to provide a full list of financial documents.
Cons
- Lengthy application process (30-60 days) with lower approval odds
- Requires more documents than other Bank Loan products.
Funding Amount
Cost
Repayment Terms
Funding Speed
How to Get Approved for Food Truck Financing Options
The requirements for food truck financing depend on the type of funding, the loan amount, and your business details like credit score and time in business. Whether you have good credit or bad credit may not matter for some loan options, but many lenders do check your credit before offering you a loan. For advice on how to establish business credit, start with this guide from Nav.
Online lenders usually supply a simple and fully digital loan application. However, if you’re applying for funding from a traditional bank, the application process will likely take longer. You may also need to supply a down payment before you can get funding.
The simplest way to see which loan options you qualify for is to sign up for a Nav account that offers you personalized insights based on your business details. You’re 3.5x more likely to get approved when you apply through Nav.
FAQs
How do I start a food truck business?
Starting a food truck business includes several steps as well as money. Food Truck Nation found that you’ll have to go through an average of 45 procedures required by the government and spend over $28,000 in regulatory fees. That’s on top of buying the food truck, equipment, and supplies. If you don’t have these funds on hand, you may be able to qualify for food truck financing.
Can you get a business loan for a food truck?
Yes, lenders offer business loans to start or maintain food truck businesses. In fact, there may be several types of funding available to you, depending on how much you need to borrow and your business details. Types of food truck financing include lines of credit, term loans, working capital loans, merchant cash advances, and business credit cards. Some of these options may be easier to qualify for than others but may be more expensive.
Is it hard to get financing for a food truck?
Some loans may be easier to qualify for than others. Whether or not you’re eligible for loans for food truck owners may depend on factors like your annual revenue, time in business, and your credit scores. Some lenders have less stringent requirements, but they may charge more for borrowing. So make sure you understand the terms before applying for any business funding.
How do you get financing for a food truck?
To get funding for a food truck, you’ll first need to plan how much you need to borrow. Calculate the costs of borrowing before applying to make sure it’s cost effective to fund expenses associated with a large event. Then research your options — using Nav is the easiest way to see which funding options you’re most likely to qualify for.
Do you need a business plan for a food truck?
Yes. It’s a smart move to create a business plan for any new small business that you start, food trucks included. A business plan can usually be informal, but it serves as your guide to make sure you are tracking your goals and stay successful. Also, you may need to supply a business plan to a lender when you apply for food truck financing.
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Tiffany Verbeck
Content Manager
Tiffany Verbeck is a Content Manager for Nav. She uses her 8 years of experience writing about business and financial topics to oversee the production of Nav’s longform content. She also co-hosts and manages Nav’s podcast, Main Street Makers, to bring small business owners together to share tips and tricks with a community of like-minded entrepreneurs.
Previously, she ran a freelance business for three years, so she understands the challenges of running a small business. Also, she worked in marketing for six years in a think tank in Washington, DC. Her work has appeared on sites like Business Insider, Bankrate, and Mission Lane.