If you run a food truck or have multiple food trucks, then you are part of one of the fastest-growing food and beverage industry segments today. Food trucks are becoming the norm. Especially since the pandemic events, more and more restaurants took to operating out of food trucks in some instances. This then turned into something of a full-time endeavor for many. Today, there are almost 25,000 food trucks in the US alone. And the industry has surpassed over $1 billion. What does this mean for you?
As a food truck owner, you need to ensure that your equipment is up-to-date, that you’re staying competitive in your market, and that you are doing all you can to attract patrons. This is where getting a food truck business loan really can come in handy. In this article, we look at some of the steps you need to take to get a food truck business loan.
There Are a Variety of Food Truck Business Loans
The great thing about commercial financing is that there are so many options, especially for those who own and operate a food truck. You first want to figure out precisely what type of loan would best benefit your company. Some of the loans for which your food truck business may be eligible are:
Equipment financing. Is your food truck outfitted with the latest food preparation, cooking equipment, and technology? An equipment loan could be used for new ovens or any other type of equipment you need to have a successful food truck business.
SBA loans. Particularly as far as an SBA microloan goes, this might be the ideal financing option for your food truck company. A microloan is capped at $50,000. And you can use the loan proceeds for any aspect of running your business that you need. As many traditional banks don’t necessarily like to lend to smaller firms, and in smaller amounts, an SBA microloan could be the best route for you to take.
Business line of credit. The good thing about getting a line of credit for your food truck business is that it is revolving. This means borrowing from the line and then repaying it; that money is again there for you to use. Lines of credit might also be more accessible for some food truck businesses to get versus other loan types. And you only pay interest on what you draw from the line, not on the total amount available.
How to Get Approved for a Food Truck Business Loan
Depending on the loan type, the lender with which you are working, and your current situation, various factors will play into whether or not you get approved for a business loan for your food truck endeavor. What does your credit score look like? If it is less than ideal, this doesn’t necessarily disqualify you automatically. However, you want to do all you can to boost that score. Start by paying off higher-interest debts. Check for any inaccuracies or errors and correct them. Close any old accounts.
Do you have collateral to put down for the loan? If other components of your application are not exactly where they need to be, then you might be facing a situation in which you are required to put down collateral to secure the loan. What assets do you have available for this? Collateral could come in the form of real estate, stocks, bonds, inventory, or machinery; anything that the lender can quickly liquidate and sell is often permissible as far as collateral.
Do you have all your documentation up-to-date and ready to go? Financial statements will be a massive factor in your overall application packet. Ensure everything is updated to include balance sheets, cash flow statements, profit and loss statements. Having these on hand and ready to go when requested will facilitate and streamline the process.
First Union Lending is Here to Help
We offer various fast and flexible loan options for food truck owners. Whether you need an SBA loan, a short-term loan, or a line of credit, among other financing options, we can help. Even if your credit score tends to be on the lower side, we might still have a financing solution for you. Call today, and let’s get started together.