Why Getting a Bank Loan May Not Work for You

Getting a bank to approve your loan application requires a lot of homework on your part. First of all, your chance of getting approval depends a great deal on your credit score. If you have a messy credit history and a low credit score, your chance of getting denial is high. 

Even if you have a good credit score, you still need a lengthy business plan to prove to the bank that you have thought it through and have plans to make your ideas work. If your business plan is not practical or there are some calculation mistakes in it, the bank may laugh in your face then deny your application.

The whole process from preparing for an application to getting the money in your hand can take months, which is time-consuming.

How to Buy a Food Truck With No Money: 3 Alternatives to a Bank Loan

Getting a bank loan is not the only way to get money for your food truck business. Here, we’ll have a look at great alternatives that can get you the funds you need much faster.

1. Crowdfunding

KickStarter and GoFundMe are two crowdfunding platforms that have been gaining traction in recent years. You don’t need to submit a lengthy business plan to get your project in front of the people, however, well-presented ideas and widely shared proposals always work better on these crowdfunding platforms. Small donations add up over time, and you can send each donor a small coupon for a meal at your food truck as a token of gratitude.

2. Microloans

The Small Business Administration’s Microloan program is for people who are looking to borrow less than $50,000. The average loan amount that most people apply for is just around $13,000. The conditions for these loans are much simpler than those of traditional bank loans. Plus, the money will get to your hands faster. 

3. Family Members to the Rescue

You might not have that $30,000 to start a food truck business, however, your rich uncle might. While this option seems like the easiest one, it isn’t. You still need to treat the money your family entrusts you with like a formal loan and not let them down. Maybe make them your business partner. This way, both can work together to make the idea work, and as we all know, two brains are better than one.

Food Truck Financing and Loans

Legion Food Trucks is more than a manufacturer. We help business owners and aspiring entrepreneurs will all aspects of the food truck business. Contact us today to learn more about how to finance a food truck, and the loan options available.

The post 3 Ways To Finance a Food Truck Without a Bank Loan appeared first on Legion Food Trucks.

If you’re wondering about any small business loans Texas offers, there are a few different options available. Here are four small business loans Texas food truck owners can apply for:

1). SBA Microloan Program

The SBA Microloan Program is a small business lending program that helps entrepreneurs with limited access to capital get the financing they need to start or grow their businesses. The program provides loans of up to $50,000, which can be used for various purposes, such as working capital, inventory, or equipment. It is administered by the Small Business Administration (SBA), and loans are made by participating lenders, such as community development financial institutions (CDFIs) and non-profit organizations.

To be eligible for these loans, your business must:

• Be for-profit
• Have employed less than 500 people

2). Bank Term Loans

Bank-term loans are financing options that allow you to borrow money from a bank for a set period. The loan term can vary, typically between one and five years. This type of financing is often used for large purchases, such as food trucks.

When considering a bank term loan for your food truck business, remember a few things: You’ll need good credit to qualify. The interest rate on a bank loan can be higher than other types of financing, so you’ll need to be sure that you can afford the monthly payments. Shop around and compare rates from different lenders before choosing your lender. You can find the perfect loan for your business with a little research.

3). Business Lines of Credit

Business lines of credit loans are unsecured, meaning no collateral is required to secure the loan. The loan amount will also be based on the monthly sales of the food truck business. Their repayment terms are also flexible, and the interest rates are relatively low.

Another advantage of these loans is that you can use them for various purposes, such as buying new equipment, expanding the business, or even covering unexpected expenses. 

4). Merchant Cash Advances

For merchant cash advance loans, you don’t have to put up collateral to qualify. Instead, the lender will review your credit card sales to determine how much money you can borrow.

The great thing about merchant cash advance loans is that they’re easy to qualify for. Even if you have bad credit, you may still be able to get financing. And, because the loan is based on your credit card sales, there’s no need to make fixed monthly payments. Instead, the lender will automatically deduct a percentage of your daily credit card sales until the loan is paid off.

Starting Your Food Truck Business With Legion Food Trucks

After securing a small business loan in Texas, you can be on your way to owning your food truck and running a successful business. Legion Food Trucks can help. We design and build fully customized, cutting-edge food trucks for our customers from idea to completion. Each food truck that leaves our floor has passed every inspection to ensure a smooth business. Contact us now to let us help you. 

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Why Do You Need Financing For A Food Truck Business?

There are various requirements and essential items required before starting a food truck business. With the high competition in the industry, one must have a well-customized truck with the crucial amenities to attract more customers.

The most common items to be on the buying list before starting to operate include;

• Cooking items. Grills and griddles, microwave, Charbroiler, Toaster, Fryer, and toaster.
• Food preparation equipment. Cutting boards, worktable, skillets, and French fry cutter.
• Disposable items. Paper food trays, plastic cups, portion cups, and paper napkins.
• Refrigeration appliances. Countertop glass refrigerator and worktop refrigerator.
• Warming and holding items. Soup warmer, kettles, and fry dump station.

The durable items are usually expensive, and thus there is a need for one to seek financial assistance to purchase them. Other things which need food truck financing include; payroll, fees/licensing, and stock/inventory. The following are a few available financial options for food trucks:

Business Loans

Most banks usually provide these types of loans. Before acquiring the loan, one needs to know the kind of loan to apply for and be decided on what to do with the money if it is approved. It is also wise to deposit an up-front amount as a form of security to increase the chances of the loan being approved.

Microloans

These types of loans are most applicable if you require a small amount of capital to cater to inventory and any other short-term expense. Microloans are predominantly issued by community lenders that finance nonprofits or small businesses. They are affordable, and their repayment terms are also favorable.

Crowdfunding

The funding usually works well for those business owners that have a strong connection with the community they serve. It entails pooling funds from the residents to acquire the capital needed to accomplish your business goals. The people funding you want you to succeed, and thus usually ask a minimal amount in return.

Small Business Administration (SBA) Loans

SBA does not precisely offer the loans, but they assist borrowers in locating appropriate lenders whose loans match their strict guidelines. This program lowers the risk to both lenders and borrowers looking for loans to fund or start a small business.

Business Term Loan

This loan option is most appropriate for those business owners who have identified a specific cost that requires financing. Borrowers can borrow a lump sum of funds that they agree to pay at the end of the agreed term length. The familiar lenders are PayPal, American Express, and Bank of America.

Business Line of Credit

This type of loan is a bit hard to acquire for those starting a business. The success of acquiring the loans depends on your financial record of accomplishment as the banks want to ensure if you are in good financial status. The amount issued is also under $50,000 and therefore not suitable for managing long-term financial problems or purchasing expensive items.

Food Truck Financing With Legion

At Legion Food Trucks, we do more than build mobile kitchens. We are true business partners who will do everything in our power to set you up for success, and this includes help with financing. Contact us today or download the guide below to learn more about available financing options.

The post Where To Start With Food Truck Financing appeared first on Legion Food Trucks.

Getting Started With Food Truck Loans

First off, the basics.  Before choosing a financing route and applying for a food truck loan, there are some basic questions that need answers.   What is your product and what is your business plan?  What will set you apart from the rest of the market?  Who is your market?  Answering these questions right away is your first step.  Many lenders will want to know that their loan is a good investment down the line, and it will help inform the ultimate decision of what equipment is needed in a food truck and thus how much financing is needed.

Eligibility

Depending on the type of financing and the specific circumstances, different eligibility requirements may apply to food truck loans.  If you run an already established business seeking to expand operations with a food truck, for instance, financing requirements will be very focused on two years of history from your business.  If you are a new startup seeking to break into the food truck scene, requirements will be very centered on your personal credit, employment history, and qualifications.  Take a good look at your financial records and credit.  A personal credit score over 650 will help, as will detailed plans and projections for how your business will succeed with this food truck investment.

Documentation

Just like any other financing, you’ll need to prepare any documentation that underwriters may need.  You’ll need to compile personal and business financial records, assets, and liabilities. Have tax returns from at least two years available and waiting. That business plan we discussed earlier should be finalized now, ready to hand to lenders. Business licenses, debt schedules, and profit and loss statements are recommended to have available.   A well-written professional resume should be available to loan officers too.  When you get to actually applying for financing, your lender should be able to supply you with a closing checklist indicating exactly what will be required but to avoid stressful scrambling, get everything together ahead of time, or at least learn how to acquire necessary records.

Applying For Food Truck Loans

Do your research about what is best for you and your particular circumstances.  There are many types of food truck loans available, from micro loans backed by The Small Business Administration, to larger conventional loans and more flexible equipment loans. Ask lenders exactly what they can offer you.  Be transparent about your credit scores and financial situation to get the most out of your lender’s expertise.  Though further contact may be necessary, often whether you are applying with an online financier or your local bank a single phone call can be enough to start the application process.  Though it can be easy to get preapproved and apply, don’t rush too much.  Ask about options for loan terms, down payments, and interest rates before you commit to any certain type of loan.  Make sure you can provide any necessary down payment before committing to the terms of a loan.

Closing

After your loan underwriter has all the documentation they require, you need to be patient while the loan is processed.  During this time, it is best to not make any major debt commitments.  Your credit needs to remain stable during the loan approval period.  As the closing date nears, you’ll need to ready the down payment for closing day.  This down payment can be a large range in terms of percent of the loan.  Typically, how much your down payment will be is determined by the type of loan, the term of the loan, and your personal and business credit.  Some loans will require little or no down payment, where some may require a large portion of the loan amount.

No matter how you decide to fund your food truck, you have some great options out there. Don’t be intimidated by the task of financing a food truck- it’s a small matter compared to the benefits it could yield.  Be prepared, be diligent, and ask questions.  If you have any questions about how we here at Legion Food Trucks can help, contact us today.

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