If you’re just starting to break into the food truck business, you’ve likely realized financing is a big part of that process. Finding ways to finance access the equipment and services will go a long way toward ensuring the profitability of the business long-term.
You need more than just delicious dishes and great customer service to keep your food truck running. Now is the time to focus on solutions to acquire equipment to build and retain a successful mobile cuisine operation. While we’ve provided tips for opening a food truck or trailer before, this guide dives deeper into the financing options available to get started.
Ready to get started already? Get started and secure your equipment with Clicklease today.
9 Questions about the food truck/trailer business
The food truck or trailer business is a profitable industry that taps into the culinary desires of the public. But it takes diligence and the right financing solutions to start your business and keep it running smoothly. The following are some questions you might have about operating a food truck, including equipment financing opportunities.
1) What type of financing is available?
You’ll also need to shop around to explore possible options to finance a food truck. One of the most common options is a loan that provides the funds you need with reasonable repayment options. But that’s not your only choice—here are some options for financing a food truck or trailer:
Equipment leasing
Equipment leasing provides the opportunity to obtain your needed equipment, like a specific piece of restaurant equipment with a minimal cash outlay. As the business owner, an equipment lease frees your working capital to cover all your other essential purchases.
The benefit of equipment leasing is that you can customize your monthly payments to avoid unrealistic repayment obligations that put your business in a cash crunch. At the end of the lease term, should you choose to exercise your purchase option, you will own the leased piece of equipment.
Merchant cash advance
With a merchant cash advance, an individual or third-party company provides the funds you need to start your cooking services, taking a percentage of your business’s sales. Think of this option as an advanced payment against the future receipts of your business: You receive cash now and repay your lender over time based on the number of sales you make.
Business line of credit
Think of a business line of credit as a simple credit card designed for small businesses in need of short-term funding solutions. Instead of receiving all your funds in a lump sum, you receive approval for a set credit limit. You can take out money against your line of credit and simply pay back the portion you borrowed.
Business term loans
Business term loans work best for food truck or trailer owners who prefer fixed, regular payments over time. In this case, you apply for a loan, make a down payment, and receive a source of cash needed to fund business expenses. You can use these loans to fund hiring expenses, kitchen materials, and equipment upgrades.
Repayment periods for business term loans can last anywhere from a few months to several years.
Working capital loans
Capital loans work best for borrowers in need of immediate financial assistance for daily operations. Capital loans provide businesses with immediate cash flow that food truck owners can use to cover multiple business expenses, including payroll, supplies, fuel, food, and other necessities.
2) What food truck/trailer financing options are best for your business?
The best options for your business depend on multiple factors, including your business credit history, funding needs, operational demands, and how much you can pay upfront. If you opt for a loan, find a plan with low-interest rates and flexible payment periods with no hidden hassles.
It is important to note that loans are not your only options, so don’t feel obligated to use them to fund your services. As mentioned, equipment financing via leasing is a solid solution if you want to quickly finance your equipment without a pile of old-school paperwork.
Plus, if you want the option to purchase or return your equipment at the end of your term, a lease may be a better option for your business. Lease agreements typically have low initial payment requirements.
3) How much money do you need for financing?
On average, purchasing a food truck or trailer will cost anywhere between $70,000 and $80,000. Even if you have some money saved up for your business, you can still find yourself in a financial pit if you don’t have the proper funds. This can leave your business struggling in a competitive market.
Here are some critical factors to consider when determining how much capital you’ll need.
New versus used truck or trailer
Are you hoping to acquire a new or used truck or trailer? With used equipment, you’ll have to deal with maintenance costs, repairs, and a lower life expectancy.
New equipment—if you can afford it—is more customizable, has a longer life expectancy, has a manufacturer's warranty, and requires little to no maintenance, allowing you to focus on other expenses.
Equipment needed
Acquiring the right equipment is critical to keeping your operation afloat. To complete this step, you’ll need fast funding from the right financial partner that can help you obtain your essential equipment. Take some time to figure out exactly what equipment you’ll need to turn your food trailer or trailer business into a successful operation.
You’ll likely need to invest in:
- Sinks
- Gas stoves
- Fridges and freezers
- Fryers
- Specialized equipment for your business
- Preparation equipment (e.g., utensils, aprons, oven mitts)
- A Wi-Fi system (unless you plan on being cash only)
At Clicklease, we partner with equipment providers who can help you tackle all your to-dos. For example, our partnership with DTG Connection provides access to printing equipment for a low monthly payment.
What menu options are you offering?
Another thing to consider is the type of dishes you plan to offer and whether they require expensive ingredients or specialized equipment. Some menu options bring in more customers and generate larger profits than others. While this translates to more money for your business, take a step back and determine how much working capital you’ll need for the specific cuisine of your food truck business.
As you begin your services, you’ll realize that some options are pricier than others.
4) How to get financing with limited credit history?
You typically need a credit score of 680 or higher to secure financing for your food truck or trailer business. However, you can still obtain the funds you need with a lower score. Some lenders focus on business revenue, current debt, and the reputation of your business.
Plus, you can use your equipment as collateral if you don’t meet typical credit qualifications. If you want to increase your chances of qualifying for financing approval, build a strong case by presenting a strategic plan highlighting your business’s key objectives and standout features.
5) Where can you find financing options for food trucks?
Banks and online lenders can provide you with financing options to get your food truck business started. The benefit of working with alternative providers is you may receive offers with more flexibility in payment plans, plus better terms than what your local bank may offer.
Fortunately, Clicklease is committed to eliminating any barriers that stand between you and obtaining the equipment you need for your food truck or trailer business. With our small business leasing plan, you don’t have to worry about a limited credit history—or finding the right vendors that offer customized payment solutions.
6) What do you need to apply for food truck or trailer financing?
The requirements for a financing application depend on the provider. But when applying for a business loan, you typically need to supply the following documents:
- Business plan
- Tax returns
- Personal financial statements
- Equipment information
- Licenses and permits
- Insurance coverage
Luckily, Clicklease is not in the business of delaying financing solutions for small businesses that need equipment. Just by taking a couple of minutes to fill out a brief application, you can get a decision in seconds for up to $25,000 in leased equipment. Best of all, the Clicklease application does not do a hard credit pull, so it doesn’t hurt your credit to apply.
7) How popular Are food truck or trailer businesses?
As a food truck owner, you’re in a highly competitive market. Reliable statistics show approximately 36,324 food truck or trailer services in the United States. That number continues to climb as the demand for these services increases across food markets, music festivals, and other entertainment venues.
Since most of these venues and attractions depend on audience attendance rates, food trucks or trailers provide consumers with a fine dining experience that elevates the event experience.
8) Are food trucks profitable?
Food truck services generate between $250,000 and $500,000 annually. However, these numbers only reflect average estimates, so they are not exact.
To get an accurate estimate of how profitable your food truck business is, you’ll need to account for:
- Location
- Startup costs
- Permits and licenses
- Operating costs
- Equipment expenses
- Repair costs
- Profit margin
9) What permits and licenses do you need?
You’ll probably need the same permits and licenses restaurants need. However, regulatory demands and legal regulations for food truck businesses vary by state, county, and city. Also, remember that some permits are designed for food truck or trailer vendors only.
Here’s a list of permits and licenses you’ll need to sell food on the road:
- Vendor license
- Employer identification number (EIN)
- Driver’s license
- Food handler’s permit
- Health department permit (issued by the health department)
A health permit for food trucks will cost you anywhere between $50 and $1,000. Always check with your local health department for exact costs.
Lease your food truck or trailer services from Clicklease
As you can see, many financing opportunities are available to keep your food truck business afloat. At Clicklease, we help you find the right solutions you need to turn your business into a long-term success.
Get started today by filling out our brief application (which does not do a hard credit pull), then explore what equipment leasing options are available.
