Do you have a unique entrepreneurial eye? Have you come up with a successful business plan to open a restaurant?
You will probably need several hundred thousand dollars, at a bare minimum, to move your venture from a well-designed business plan, to the grand opening. However, if you are willing to start small, by taking safe and secure baby steps to reach your restaurant ownership goals, consider starting with a concession trailer.
A fully stocked concession trailer (in at least ‘good’ condition) typically costs $20 to $30 thousand. Food trucks cost twice that, if they are bought in a ‘like new’ condition.
Starting with a concession trailer (or their cousin the concession truck) is a great way to a) test your bistro ideas and b) to do so with start-up financing that will only need about 1/10 of the funds needed to open a fully operational restaurant.
Fortunately, there are several options available to help you finance your new concession trailer. Here are viable options for small business owners in search of viable financing options for small businesses.
Of course, if you buy a concession trailer from a dealer, they often have financing options in place, as a courtesy to the buyer and as an additional profit center for the dealer. It is noted that food trailer financing from a dealer requires the borrower to have an excellent credit score. Concession trailer financing from a dealer offers beneficial terms, with interest rates typically falling below the 10% level.
If you choose a) to purchase a concession trailer that is used, or b) your credit score is less than stellar, or c) you have virtually no business experience to support your venture, it is likely that the only place you will find trailer financing is through private financing sources.
The financial marketplace recognized the need for providing an alternative network of lenders who have dedicated themselves to the creation of financing methods for people who have no other option to secure traditional financing for their concession trailers. As such, there is a flourishing marketplace of financing companies who offer financing to small business.
Of course, the borrowers must meet lending guidelines to qualify.
Private financing options include either a lease or a loan. While this type of food trailer financing is a welcome resource for many small business owners in need of financing, it is important to understand that private financing for food trailers will likely be more expensive than if you went directly to a more traditional bank. In other words, each borrower should discover for themselves if this type of financing is the right choice for each of their situations!
This type of financing takes on business financing risks that banks won’t even glance at. As a result, and due to the increased risk, the investors funding these loans reasonably expect a greater rate of return than a rate of return from the financing with limited risk. Wouldn’t you?
But remember, the primary purpose of financing risky business propositions is to provide financing to those who have had difficulty being approved through traditional lending sources. And, to boot, your much-needed trailer financing will fund in a matter of days, not weeks or months.
Concession Trailer Financing relies on a more creative, less rigid underwriting model. There are many permutations of what a concession trailer financing approval looks like. Hear are some generally accepted guidelines to follow.
If you have registered a two-year successful run in business, and your credit profile is not horrific, it is likely that with some finagling, you will find some sort of concession trailer financing to fit your needs. For those who have been employed in the food services industry for a minimum of three years, and maintain excellent credit, there will typically be a financing available for you given these circumstances.
Reasonable credit score borrowers who still have a fair amount reserves left, after the purchase of the concession trailer, are likely to find a financing source to meet your needs. A borrower who can place a 50% down payment on the purchase of the food trailer will typically find concession trailer financing with ease.
And for those who have super low credit scores, food trailer financing is still available if you can collateralize the financing with an asset, such as real estate, or a car. Generally speaking, as noted above by the differing scenarios, the majority of business owners who are seeking financing will find at least some financing options to consider.
Remember, for any financing deal to work, each party to the transaction must be receiving something of value. The borrower receives cash to finance the opportunity to launch their dream. Their responsibility is to generate enough profit to pay the monthly payments on time. However, in addition, the lender must be able to justify the risks they are assuming by lending on a risky financial situation.
Concession trailer financing offers tax benefits with it lease option model. Some small business owners find they can deduct their monthly payments in their entirety. Some leases allow for 100% financing, subject, of course, to a full credit check.
Leasing options have the flexibility of defining longer terms to reduce required monthly payments. And, a lease can minimize capital outlays. Finally, a lease payment is fixed and is therefore, not susceptible to interest rate changes caused by economic conditions.
A monthly payment for any type of financing venture depends upon several variables.
These variable include the cost of the food trailer, the length of financing, the nature of the financing (Is it a balloon loan?) and your creditworthiness when you apply for the financing.
Concession trailer financing is a viable option that has helped many small business owners reach for the objectives and dreams. For those with picture perfect loan scenarios, check out a traditional bank to hopefully receive the best rates and terms. For everyone else, reach out to the private concession trailer financial companies who provide more flexibility. This flexibility is likely the reason you will find several options to choose from. Happy concession trailer financing.