Alternative Small Business Funding

Food Truck Financing
Have you dreamed of getting your own food truck? If so, you may have been looking into options for a food truck loan to help you achieve your dreams. From equipment financing to small business loans, there are many options that you can try that will allow you to accomplish your dreams of opening a food truck. This article will help you better understand food truck ventures and your various options to get the funding you need.
How Do You Finance a Food Truck?
There are different food truck financing options that you can consider. Great options that people can consider if they want to open their own restaurant and not having to invest so much money into a brick-and-mortar restaurant is to invest in a food truck. Financing a food truck does come with some challenges and can be costly, but you do have options that are available to you.
Equipment Financing
Equipment financing can be one of the best food truck financing options to consider. This is especially true if you are just starting out as an entrepreneur and need the funds to purchase the food truck. Equipment financing is a type of funding where the items that you are purchasing with this money is what is used as collateral for the loan. This means that if you default on your loan, the lender will take your equipment to pay off the balance of the loan.
What’s great about this option is that you are going to get a lower rate than with other loan options because the equipment can be used as collateral. There’s also the option of leasing this equipment that you can consider, which means that you get lower payments but you won’t actually own the equipment so you can’t use this as an asset for your business.
Business Lines of Credit
Business lines of credit can be such a great idea for businesses. When you get a traditional loan, you get a lump sum of money that you have to pay for even if you don’t use all of it for what your business needs. Business lines of credit offer a different approach. With this option, you only pay back the money that you use. If you get a business line of credit for $150,000 but only use $5,000 of it, you only have to pay back money based on this $5,000 amount. Another great aspect of business lines of credit is that you can continue to borrow from it as you need to, without having to apply for additional loans.
You can also use this money for whatever your business needs. Maybe you need to upgrade the equipment in the truck. Maybe you just need some money to help you make it through those slower periods of business. You just need to take the money you need, repay it, and then you can draw more money as you need to. This is a convenient solution for businesses.
There are varying terms and conditions for business lines of credit, but you will generally be able to borrow between $10,000 and $1 million. Most of the time, these loans will cover 100% of the value of the equipment and the terms will last through the expected lifespan of the equipment. These terms tend to be more favorable than other loans, especially when you only take small portions of money at a time and pay it back before you go through and borrow more.
SBA Microloans
An LLC small business loan can be a great option for financing. There are small business loans with no credit check, which can be an option for someone who may not have the credit they need to get other types of loans. SBA microloans are a great option, particularly if you are trying to get a smaller loan amount. With this option, you can get a loan for up to $50,000 so that you can purchase any supplies, equipment, or inventory. This can also be used as working capital for your business.
Typically, these loans are only around $13,000. The traditional lenders don’t often like to give out loans in this smaller amount. It’s important to know that you will need to provide a personal guarantee as well as collateral in order to get this type of loan. But, if you only need a smaller amount this could be the best option for you.
These loans can be used for practically anything that you need, but you should know that you will need to meet stricter requirements in order to qualify for this type of loan. You also should know that while these funds mean that you get your money faster, it can be a slower and far more involved process to apply for these types of loans.
How Much Does It Cost to Finance a Food Truck?
You can typically apply for anywhere between $1,000 and $50,000 for funding. You should do your research based on the type of food truck setup that you want and any special permitting that you need to help you determine exactly what you need to start your food truck business. The terms of the financing, including your interest rates, will depend on factors such as your credit and if you offer any collateral for your business.
How Can I Buy a Food Truck with No Money?
If you have no money starting out and you want to get established before you go through the process of getting funding to grow your business, you do have options available to you. Do you know someone who owns a food truck? Consider asking them for a leasing or rental agreement to let you use it to help earn some money as you are just starting out. This can be an excellent way to establish yourself in the industry, which helps you find more success starting out when you can purchase your own food truck. They may even let you have theirs for a discount, especially if they are already in the process of looking for a new one.
There’s also the option of buying a more affordable option such as a used cart or trailer. These are affordable choices that help you get established. You can impress people with your food, get those return customers you need for your business, and save up enough money to actually get the food truck of your dreams. Establishing yourself with a solid reputation in the industry is the best way to have an impact and ensure success when you launch your food truck.
If that option is still too expensive for you, another option to consider is selling your food at a pop-up, fair booth, or farmer’s markets. These are places that get a lot of foot traffic, so it will be very likely that you end up with people just stopping by to check out your goods. You may even become popular enough where people attend these events when they know you will be appearing.
How Much Do Food Trucks Make Per Month?
Of course, people want to know how much they can potentially earn from their food truck every month. It is estimated that you could earn between $5,000 and $20,000 a month for your food truck business. This isn’t a guarantee that this is what your business will do. Your business may do much better or worse, depending on several different factors. There’s also the fact that you will not run your business all year, as bad weather can prevent you from opening up such as long, cold winter months.