Food trucks are a popular type of business for entrepreneurs who love food. They can be less expensive to start than a bricks and mortar restaurant, and can provide owners with a creative and flexible way to reach customers. 

Starting and running a food truck requires capital, though. If you’re looking for financing for your food truck business, here’s a guide to your options. 

Start Up Costs for a Food Truck

How much you’ll need to start a food truck depends on a lot of factors, including whether you are able to buy your truck used, how much retrofitting or customizing is needed, the cost of licenses and more. 

Food truck startup costs may include:

• Truck
• Renovations, repairs and/or retrofitting
• Wrapping
• Equipment
• Business formation costs
• License and permits
• Fuel 
• POS system
• Commercial kitchen costs (if needed)
• Equipment
• Food & beverages
• Paper products
• Initial labor costs
• Website
• Advertising
• Social media marketing

Each of these costs can add up quickly. Food Truck Nation reports, for example, that the average food truck operator spends 37 days dealing with business regulations, at a total average cost of $28,276 in average cost for permits, licenses and compliance.

FoodTruckEmpire.com offers a helpful free spreadsheet for estimating food truck costs. 

Is Buying A Food Truck A Good Investment?

A food truck can be a profitable business, but it’s certainly not guaranteed. According to IbisWorld, the market size of the food truck industry in the US grew 7.9% per year on average between 2017 and 2022.

While there is certainly potential to make a good return on investment from a food truck, as with any small business, some will do well and others won’t. A lot of different factors can go into determining whether a food truck will be profitable, including the menu and the cost of ingredients, the location and competition, labor costs and availability of labor, advertising and more. 

One way to help ensure your food truck is a success is to create a solid business plan. There are several sources of information on how to create a food truck business plan. 

Two great resources are: 

• LivePlan: This highly regarded business planning software is comprehensive and adaptable for your food service business. 
• SBA Resource Partners: You can get free help with your small business plan and other services from SCORE and Small Business Development Center (SBDCs). Find local help here. 

What Are The Business Loan Options Available For Food Trucks?

Food truck operators may find they need to explore several types of financing depending on the stage of their business and qualifications. These may include:

• Equipment financing
• Working capital loans
• Lines of credit
• Business credit cards
• Merchant Cash Advances
• SBA loan
• Crowdfunding

We’ll explore each of these in more depth, but it’s important to understand that your financing needs will be different at various stages of your business. It’s unlikely that a single loan will cover all your needs, so be prepared to be flexible and creative as you explore food truck financing options. You may need to piece together several options to get to where you need. 

Keep in mind that many lenders will require a combination of good credit (personal credit scores and/or business credit scores may be checked), strong revenues or cash flow, and at least two years in business. There are fewer options for startups, and we’ll mention those in a moment. 

Make sure you open and use a business bank account from the beginning. Many lenders will require business bank statements to verify annual revenues.

Best Loans for Food Truck Financing

Here are some of the best best food truck financing options to help you start or grow your food truck business: 

Equipment Financing

Equipment financing can be useful for acquiring new equipment or upgrading existing equipment without a lot of money out of pocket. Equipment leasing may have significant tax benefits as well. 

Working Capital Loans

Working capital refers to the day-to-day expenses of your business, whether that’s supplies, payroll or fuel for your truck. Working capital loans are short-term loans that help business owners finance those immediate needs. Offered by traditional bank lenders as well as online lenders, they are sometimes referred to as cash flow loans. 

Lines of Credit

A business line of credit gives your business access to a certain amount of money when you need it. You can borrow up to your credit limit, pay it back, and borrow again. This is one of the most popular types of financing for small businesses, and can be especially helpful for food trucks where seasonal changes in business or unexpected expenses like a costly repair must be handled quickly. 

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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

$1,000 - $150,000

Cost

As low as 4.99%*

Repayment Terms

12 or 24 weeks

Funding Speed

If approved, funds arrive as soon as the next business day.

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Term Loans

With a term loan, you borrow a lump sum of money and pay it back over a specific period of time. Often that means making monthly payments for anywhere from a few months to several years. 

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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

$5,000 - $5,000,000

Cost

1%-1.25% per month

Repayment Terms

Daily or weekly payments for 6 to 18 months

Funding Speed

1- 2 days ($200,000 or less can be wired same day)

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Term Loan by OnDeck

This is a great option for businesses with consistent revenue, seeking competitive pricing working capital products. OD is known in the industry for their transparency and speed to fund. OD is the largest online lending company, which provides confidence to users with finding the right long-term partner to help fuel their company's growth.

Pros

• One application, two paths to finance your business - applicants are reviewed for both a Term Loan and Line of Credit
• Minimal paperwork
• Fast approval time
• Transparent pricing
• “White Glove” customer service
• Access to multiple lending options.

Cons

• Need a minimum of 1 yr time in business
• $250,000 maximum loan amount
• Not available in all states.

Funding Amount

$5,000 - $250,000

Cost

As low as 29.9% APR

Repayment Terms

Daily, weekly up to 24 months

Funding Speed

48 hours

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Business Credit Cards

Business credit cards can be essential for a business that needs access to financing but is having trouble qualifying because the business is too new or doesn’t have sufficient revenues yet. Most business credit cards are approved based on the owner’s personal credit score and income from all sources (not just the business). They are available to startup food truck owners who qualify. 

Merchant Cash Advances

Most food trucks accept credit and debit cards for payment. Merchant cash advances (MCAs) offer an advance against future sales, based on past sales history. A portion of future credit or debit card transactions will then be deducted to repay the advance. This type of financing can be very fast, and good credit is not typically required. Costs can be high though. 

SBA Loans

There are several types of small business loans that are guaranteed by the Small Business Administration (SBA). These include 7(a) loans and SBA microloans, both of which can be helpful for food truck businesses. SBA loans may also be used to purchase an existing business. Lenders will require good credit, though specific minimum credit score requirements vary, and a personal guarantee is often required. The loan application process for an SBA loan can take several weeks to a few months. 

Crowdfunding

If you have loyal customers, they may help you fund your business through crowdfunding. There are several types of crowdfunding that have been used successfully by restaurants and food trucks, including rewards-based crowdfunding and investment crowdfunding. 

Frequently Asked Questions About Food Truck Financing

If you need equipment for your food truck business, an equipment loan or leasing can help you finance it over time. Equipment loans and leasing help food truck business owners preserve cash flow so you can save it for other purposes. 

Are There Food Truck Equipment Loans?

If you need equipment for your food truck business, an equipment loan or leasing can help you finance it over time. Equipment loans and leasing help food truck business owners preserve cash flow so you can save it for other purposes.

Are There Food Truck Payroll Loans? 

One of the current challenges for established food trucks is hiring and paying workers. Payroll loans may be helpful for times when cash flow is temporarily tight though they are not designed for long-term borrowing. 

Note that payroll loans can come in various forms. Most commonly, lines of credit,  working capital loans and business cash advances are used for payroll.

Are There Food Truck Inventory Loans?

Inventory can be tricky. You want to have enough supplies on hand to meet your customer’s demand, but not too much. Storage can be expensive, and inventory may include a lot of perishable food items. 
Similar to payroll loans, you’ll often use lines of credit, working capital loans or business cash advances for these types of purchases.