Starting a new business is always hard, but the results of such a decision depend entirely on your preparedness. Entrepreneurs who want to buy a food truck should realize that financing is the basis for commercial highways. You can find out what the experts at Golden State Trailers advise about food truck financing. To do so, explore or read a brief introductory overview. Both options will be useful for aspiring truck owners.
How Lucrative is the Mobile Food Trailer Business?
The profitability of your startup depends on various factors that are not always convenient and easy to manage, but there are some things that you can control as soon as you begin. When talking about the amount of profit thanks to the work of a food truck, it is worth mentioning a few studies:
- Average profit per month. The profitability of the business depends on the number of customers and can be very difficult to determine the exact amount. According to research, it is possible to establish a range from $5,000 to $16,000. At the same time, popular mobile kitchens bring up to $50,000 per month.
- The size of the profit per year. Simple arithmetic operations will help to determine that the annual profit is from $250,000. The preliminary maximum is $500,000, but this amount cannot be considered accurate.
- Business operating expenses. Regardless of the profit made, food truck financing includes the cost of maintaining the kitchen, which is affected by the choice of utensils, menu features, wages and more.
Given that the profitability of the business depends on the right decisions, it’s worthwhile to carry out preliminary budget planning. Thanks to such preparation, it will be possible to assess your expectations, opportunities and ways of obtaining capital. Additionally, a preliminary analysis will allow you to choose a suitable lending option.
What can Food Trailer Financing be Used for?
The best financing offer selection is based on the plan previously drawn up. It should include the type of goods, the availability of the necessary equipment, and the payment of labor. As for the funds received for the launch of the business, they can be used for the following purposes:
- Buying a truck. The cost varies from $50,000 to $175,000. A wide range of prices allows you to choose the offer that fits your marketing plan.
- Equipment selection. This is a global cost in business. Reducing the cost of the equipment will allow you to secure a lease agreement with the possibility of subsequent purchase.
- Arrangement of a mobile kitchen. Comfort during work is another important thing to consider and includes the choice of devices for cooking hot dog, food and beverage, and the arrangement of the workplace.
- Obtaining all licenses and permits. To provide services in your area of business, you need to obtain the appropriate permits. The cost depends on where you operate.
- Marketing promotion. Advertising a food truck will allow you to attract more customers and offer them your services. You’ll need to prepare a strategy and consult with a marketer in order to promote your business.
The costs associated with maintenance, organization and setting up are considered first. Based on the estimates you have made; you can choose a lending method that takes into account the specifics of your business.
What Investment is Needed for a Food Truck?
When considering the costs of starting a food truck, the question arises: how much guaranteed investment is needed to get started? There is no exact answer, as the cost of starting a business involves many factors. However, a preliminary estimate is still possible, and it shows that a significant part of the costs is related to the truck. The cost of a mobile kitchen can range from:
- $50,000 to $175,000 to purchase a new food truck;
- $30,000 to $70,000 to purchase a used truck;
- $2,000 to $3,000 per month if leased.
Other items such as equipment, setup, marketing and licensing add up to a solid sum. Usually, these expenses require from $75 to $150,000.
What Credit Score is Needed to Buy a Food Trailer?
There are several ways to find the funds you need to get started, but concession trailer financing is the most interesting. You can apply for a loan from banks, microfinance organizations and online lenders.
Approaches to determining whether to give a loan to an applicant will include a credit history check. Bank officials want to make sure that your credit score is above 680. If the score is lower, the applicant falls into the category of customers with bad credit history and is highly likely to be rejected.
Additional services are available for entrepreneurs who meet the bank’s requirement. Preparation of a convincing business plan will allow you to get a loan with loyal repayment terms. Also, clients with good credit history are offered an optimal interest rate and a reduced size for the first instalment.
Can I Get Food Truck Financing with Bad Credit?
Today there is an opportunity to take a financing even for those who cannot boast a good credit history. In this case, the entrepreneur can choose one of the following solutions:
- Online lenders. The advantage of online lenders is that credit history will not prevent you from obtaining a loan. Since the range of offers from departments is quite wide, it is possible to find favorable credit terms.
- Fintech companies are a modern provider of credit services that offer good conditions. A budding entrepreneur needs to send an online request to get credit. In this case, the funds are received on the specified bank account, and you will not need to visit the branch of the company.
The variety of offers suggests that the choice of a lender should be approached wisely. Studying the terms and conditions, assessing the risks and working out a detailed strategy for repaying the debt will help you use the credit funds to your advantage for your business.
How to Get Financing for a Food Truck
Finding financing options for a new business does not have to be complicated and time-consuming. Various sites for online search of offers allow you to get rid of difficulties. Thanks to such services you will be able to:
- form a list of requirements taking into account the required amount of investment;
- compare dozens of proposals based on personal needs and preferences;
- choose the type of financing that meets your goals.
Among the popular solutions available on the market are agreement with a bank, an online lender and fintech companies. Their offerings differ, so the borrower needs to do a little research. Often the analysis consists of:
- Borrower requirements. Tenure, a business plan, and a good credit history are some of the characteristics that need to be met. By paying attention to the key requirements, it will be possible to select the preferred options.
- Credit terms. The term of repayment, the consequences of overdue payments, the established interest rate—all this will affect your final decision.
- Methods of obtaining. Lending in banks involves visiting them to apply and receive funds. Online lenders charge funds to the specified bank account or card.
It is possible to study the details of lending online. Financial organizations that can be trusted offer to open the official website and get advice. Preliminary familiarization with the main provisions will greatly facilitate the conclusion of contracts.
What Documents Do I Need to Apply for Kitchen Trailer Financing?
You can apply for financing by preparing the required documents in advance. Since lending organizations have different requirements, it is worthwhile to familiarize yourself with the current list on the official portal. Despite the differences, there are documents that need to be provided to any lender. This list includes:
- information on financement including declarations for the last years of work, statement of indebtedness, report on profits and expenses;
- business documentation including your business plan, certificates, permits, license, insurance and others;
- information about the owner of the business.
You can submit documents using copies or scans. Other requirements about the presence of stamps, seals and signatures of the certifier may be provided by the company. To clarify all the current conditions is worth before making a request for credit. Contact a counselor and other staff members.
short url:
