Compare Small Business Loans
Food truck businesses have a wide array of available financing options, whether they’re used for starting or expanding their businesses or covering daily operational needs. We’ve gathered some of the top food truck financing options.
Best loans to start or expand a food truck business
There are small business loans and alternative financing options useful for securing equipment and other costs relating to starting or expanding a food truck business.
Equipment loans or leases
Equipment financing allows food truck owners to finance used or new commercial equipment (such as kitchen appliances and cooking utensils), or even add another food truck to their lineup. This is useful for securing necessary equipment without paying the full price upfront — instead, food truck owners can spread the expense over a fixed term and monthly payments. Typically, the food truck equipment being financed would serve as collateral to secure the loan.
Food truck owners can finance or lease equipment. Equipment loans typically cover at least 80% of the equipment cost, so the borrower will need to cover the difference in the form of a down payment. Equipment leases, on the other hand, require regular payments over a fixed term to use a piece of equipment, only equipment ownership stays with the lender, not the business owner.
Equipment loans and leases are available from banks and online lenders. Lenders are more likely to work with seasoned food truck businesses, and may require a minimum of two years in business and over $250,000 in annual revenue.
Best for: Established food truck businesses that need to add additional or replace existing equipment.
- Rates starting at 3%
- Loan terms from three to seven years
- Strict eligibility requirements
- Equipment serves as collateral
- Down payment up to 20%
A microloan is a small sum of funding that typically targets underserved markets, such as female entrepreneurs or low-income applicants. Business owners with minimal operating history or insufficient or low credit may also qualify for a microloan.
Microloans are available from nonprofit organizations, government agencies and private financial institutions. The Small Business Administration (SBA) Microloan program is a popular financing option that offers amounts up to $50,000. You can use microloans for a wide range of purposes, including working capital, equipment and inventory.
Best for: Inexperienced entrepreneurs or business owners from underserved communities in need of moderate financing.
- Up to $50,000
- Rates from 0% to more than 20%
- Loan terms up to seven years
- Lenient eligibility requirements
Food truck businesses can solicit funds from the general public using crowdfunding platforms like Kickstarter and GoFundMe. Crowdfunding is a form of debt-free financing — you aren’t typically required to repay any funds you raise, even if your food truck business goes bust.
Crowdfunding can be an alternative option for food truck owners who don’t meet the requirements of traditional loans, since many crowdfunding sites don’t carry minimum time-in-business or credit score requirements. However, due to the marketing and outreach needed to convince multiple people to invest in your campaign, crowdfunding can be a significant time investment.
Some crowdfunding sites, like Kickstarter and Indiegogo, will collect a percentage of your funding total and charge credit card processing fees. You should also be mindful of operating on a platform with an all-or-nothing crowdfunding model — if you don't reach your funding goal, the platform returns all your funds to the contributors.
Best for: Business owners with the time and resources to market a crowdfunding campaign.
- Platform fee up to 5%
- Payment processing fees can start at 3%, plus $0.20
- No minimum time-in-business or credit score requirements
- Time- and labor-intensive
Best working capital loans for food trucks
Working capital loans are useful for covering payroll, daily expenses and more.
Business credit cards
Business credit cards offer flexible financing you can use to fund small to moderate expenses, including supplies and inventory. Business credit cards generally carry more lenient requirements and faster funding compared to other types of financing. Some business credit cards even offer useful incentives for food truck businesses, such as rewards on advertising expenses and gas purchases.
Keep in mind that carrying a monthly balance can harm your personal credit score, which could negatively affect your eligibility for a commercial loan in the future. It’s best for food truck owners to pay off their balance each month to avoid hits on their credit report (while also avoiding paying interest).
Best for: Food truck owners that need flexible financing for ongoing small to moderate purchases.
- APRs typically range from 13.24% to 26.99%
- Sign-up bonuses and ongoing perks
- Quick approval process
- Tied to personal credit
Payment-processor working capital loans
Food truck owners may be able to secure a working capital loan from their payment processing company. PayPal, for example, offers working capital loans in amounts ranging from $1,000 to $200,000 that must be repaid within 18 months. PayPal doesn’t have a minimum credit score or collateral requirement, but requires business owners to have at least a three-month-old PayPal business account with $15,000 in annual sales.
PayPal charges $1.04 to $1.55 per dollar owed and collects 10% to 30% of your PayPal daily sales, which it puts toward your repayment. Higher percentages usually result in lower fees. If you’re unable to make a payment, PayPal allows you to defer payments without late fees.
Best for: Food truck owners that already use a payment processor, such as Paypal or Square.
- $1,000 to $200,000
- No minimum credit score
- Collateral may be required for higher loans amounts
- Funding time: Minimum of one business day
- Defer payments without late fees
Business lines of credit
Similar to business credit cards, food truck owners can draw against a business line of credit up to $500,000 or more on an as-needed basis. Lines of credit are useful for ongoing expenses (such as working capital, inventory and hiring staff) and emergencies that involve large expenses — repairing your food truck after an accident, for instance. Interest rates can range from 8% to 80%.
Traditional lenders, like banks, as well as online lenders, offer business lines of credit. Food truck owners should aim for a 650 minimum credit score and have a one-year operating history before applying for a line of credit. Some lines of credit are secured, which would require pledging certain assets as collateral.
Best for: Covering emergency or unexpected expenses.
- Credit limits as high as $500,000 or more may be available
- Rates from 8% to 80%
- Stricter eligibility criteria
- Funding time: Minimum of one business day
Best food truck loans for bad credit
The following online lenders offer some financing solutions even if your credit health is less than ideal.
Credibly offers working capital loans up to $400,000 with repayment terms from 6 to 18 months. Credibly’s working capital loan can be used for multiple purposes, including purchasing inventory, paying employees and covering daily operating expenses.
To qualify, borrowers need to meet a minimum credit score of 500 and 6 months of time in business. Credibly charges a factor rate starting at 1.15 — to calculate the cost of the loan, multiply the factor rate by the total loan amount. Notably, Credibly also collects a 2.5% origination fee from the loan balance at the time of funding.
Best for: Low-credit business owners that need quick access to a working capital loan.
- Loan amounts up to $400,000
- Factor rate starting at 1.15
- Loan terms from 6 to 18 months
- Lenient eligibility criteria
- Funding time: Same-day
Fora Financial is a good fit for food truck owners with poor credit and minimal operating history. Applicants will need to meet a minimum credit score of 500 and be at least 6 months in business; Fora Financial will also require a minimum of $12,000 in monthly sales.
Loan amounts can range between $5,000 and $500,000 with short-term funding up to 15 months. Eligible expenses include truck maintenance, marketing materials and staffing. Fora Financial’s starting rate begins at 1.10, and a 2.50% origination fee would also apply for any loan approvals.
Best for: New food truck businesses with low monthly revenue.
- Loan amounts of $5,000 to $500,000
- Factor rate starting at 1.10
- Loan terms up to 15 months
- Lenient eligibility requirements
- Funding time: Within three days
How to find the best food truck financing
Decide how much you need to borrow. Make a list of the expenses you plan to cover with your loan. It may be a significant one-time purchase, like food trailer financing or a commercial oven, or ongoing expenses, like inventory and supplies. The loan purpose and amount can narrow down the food truck loan options best for your needs.
Determine what type of loan you should apply for. Based on your needs, you can choose general financing or specialized financing. As an example, after you’ve determined how to buy a food truck, you learn it may set you back somewhere between $50,000 to $250,000 — a larger equipment loan may be more suitable than a general microloan. If you require capital for general ongoing expenses, like supplies and inventory, then a business line-of-credit may be a better fit.
Organize your business loan documents. Generally, lenders will require a copy of your business plan, your personal and business balance sheet and your income tax returns. Depending on whether the loan is secured, you may need to offer collateral, too. Specialized financing, like equipment loans, may also require an equipment quote from the vendor.
Shop around for the best rates and terms. Banks typically enforce stricter requirements, but will often carry more favorable terms and rates. Online lenders may have more lenient requirements, but tend to charge higher interest rates. Review your qualifications to determine which financing option is best for your situation.