Taking out a bank loan, working with an investor, and setting up a crowdfunding campaign are three methods used to finance food trucks. Self-financing is also an option for business owners who have personal savings.Continue Reading
Self-financing a food truck is an attractive option because there are no credit checks and no financing forms to complete. Another benefit of self-financing is that the business owner gets to keep all of the profit generated by the business instead of using the proceeds to reimburse an investor or make payments on a business loan. A major disadvantage of self-financing is that it takes time to save up enough money to purchase a truck and all of the equipment needed to store and prepare food safely.
Banks and investors have cash available to finance new businesses, but it's not always easy to qualify for financing. Both types of lenders typically ask applicants to provide detailed financial information and present a comprehensive business plan. If approved for financing, a business owner must use some of the proceeds from the business to repay the debt.
Crowdfunding is another possible source of financing for a food-truck business. Instead of asking an investor for a large sum of money, business owners use crowdfunding platforms to ask for smaller amounts of money from many people. With equity-based crowdfunding, each investor buys a part of the business. In return, the business owner must pay investors a share of the profits. Rewards-based crowdfunding entitles each investor to a reward from the business owner. Donation-based crowdfunding allows investors to donate to business owners without any expectation of reward or repayment. A major disadvantage of using crowdfunding to finance a food truck is that it takes a lot of work to maintain an active crowdfunding campaign.Learn more about Managing a Business