Small business loan for a food truck (UK): how much you need, where to borrow and how to get approved

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Food truck is a desirable entry point into the food industry: the fixed overheads are lower, time-to-market is shorter, and location and format experiments can be done. But the difference between a smooth launch and cash‑flow stress is good finance planning. This guide gives a lender‑ready roadmap: realistic budgets, the finance products that suit vehicles and kit, what UK lenders actually require, practical application steps, and worked funding examples you can adapt for your own pitch.

1. How much will a food truck cost? Realistic budgets (do not guess)

Costs vary a lot by vehicle type, conversion quality and equipment. Market checks and specialist provider guidance show realistic ranges you should use when planning.

Vehicle and conversion: used converted van All used converted vans cost about £8,000-25,000; most professionally converted mid-spec trucks are priced between 25,000 and 60,000 with bespoke new builds and high specifications being above 60,000. These are get-written quotes of your exact specifications on the market.

Equipment and safety: extraction and ventilation, refrigeration, cooking appliances, water systems, fire suppression, electrical and gas safety work budget for £2,000–£20,000 depending on whether gear is new or second‑hand.

Opening costs and buffer: licences and registrations, insurance, marketing, POS, initial stock, and at least 3–6 months’ working capital. Conservative planning reduces the chance you’ll need expensive emergency finance later. Practical total for a single, viable unit normally sits between about £20k and £80k; premium projects cost more.

Why you must use supplier quotes

Lenders don’t lend to “estimates.” They want supplier quotes, contractor timelines and a clear breakdown of how every pound is being spent. That reduces friction and often improves pricing.

2. Which finance product should you use? Match purpose to product

The best approach is to match the finance product to what you are buying.

Asset finance (recommended for truck + kit)

What it is: lenders advance against the vehicle and equipment; the asset is the security.

When to use it: buying or converting a truck, or when you want to preserve working capital.

Why it works: asset finance often covers a high share of equipment costs, spreads payments over useful life, and is widely offered by specialist brokers who understand catering equipment.

High‑street business loans and overdrafts

What it is: term loans for capital and overdrafts for short‑term needs.

When to use it: if you have trading history or need larger, general purpose borrowing.

Considerations: high‑street banks underwrite carefully; they may require personal guarantees and security for larger sums. The current market dynamics indicate that the high-street lending to SMEs has been growing though the criteria has been stringent.

Government-sponsored initiative (Growth Guarantee Scheme, Start Up Loans)

What it is: the Growth Guarantee Scheme provides lenders with a government guarantee (usually 70%) that enhances the appetite of lenders in term lending, asset finance and overdrafting their limits to scheme limits (which are usually up to 2m). Start Up Loans (expanded in recent UK government programmes) provide unsecured founder loans historically around the £15k average and include mentoring. These programmes broaden access for viable small businesses. Always confirm current programme details and accredited lenders before applying.

Alternative finance and merchant cash advances.

What they provide: they are usually paid in terms of card collections or daily/weekly deductions and speedy and flexible.

When to avoid: as primary long‑term capital they are often expensive and can damage margins if misused.

Supplier or franchisor finance and private investment

Sometimes franchisors, suppliers or investors provide finance or leasing offers. These can be useful for rollouts but compare total cost and any strings attached.

3. What UK lenders will want to see a practical underwriting checklist

Lenders evaluate the applicant and the proposition. Prepare one clear pack that answers both.

Essential documents and evidence lenders expect

• Business plan with 12–24 month cashflow and a credible break‑even month (show base, optimistic and downside scenarios).
• Itemised startup costs with firm supplier/contractor quotes for the vehicle conversion and all major equipment.
• Evidence of the deposit and the source of funds (lenders verify personal contribution).
• Personal documents: ID, recent personal bank statements and credit history.
• If already trading: at least 6–12 months’ business bank statements and historic P&L.
• Food‑business registration with local authorities (mobile sellers must register in every council area they trade with at least 28 days’ notice) and any required local licences.
• Safety and compliance certificates (gas/PAT where appropriate), insurance quotations (public liability, product liability where relevant).
• Evidence of likely revenue: event bookings, market pitches, letters of intent from regular sites or delivery partnerships.

Tip: present the financial model first so a lender sees repayment capacity immediately; then append quotes and regulatory paperwork.

4. How to build a lender‑ready application step‑by‑step

Step 1 — conservative modelling

Produce a conservative 12–24 month cashflow. Show how you survive 20–30% lower than expected sales in months 1–6.

Step 2 — collect firm quotes and a timetable

Get three written quotes where possible: one preferred, one contingency and one independent for conversion, major appliances and key suppliers.

Step 3 — demonstrate revenue sources

Secure event slots, market pitches or delivery platform arrangements and get letters of intent. Lenders treat confirmed customers as strong de‑risking evidence.

Step 4 — choose the right loan vehicle

Request asset finance for the truck and major kit, and a separate small term loan or Start Up Loan for working capital, licences and marketing. This keeps repayment obligations aligned with asset life and cash generation.

Step 5 — use a specialist broker for complex or larger deals

Specialist brokers and asset finance firms know which lenders are active and can structure blended facilities; they speed up approval and sometimes improve pricing.

5. Security, personal guarantees and cost expectations

Expect to give some security or a guarantee.

Asset finance: the vehicle and equipment are the lender’s security. Default risks the asset being repossessed.

Bank lending: personal guarantees are common for first‑time borrowers and larger unsecured facilities. Larger loans may require fixed or floating charges over business assets or other security.

Pricing: conservative borrowers with clear security and good credit profiles may access mid‑single‑digit rates on some products; specialist lenders and alternative finance options are more expensive. Government guarantee schemes help lenders but do not remove borrower liability.

6. Practical funding structures three worked examples you can reuse

Example 1 Basic used conversion (total need £25,000)

Personal deposit: £5,000 (20%)

Asset finance: £15,000 (vehicle + equipments, 3 5 years)

Small terms or Start Up Loan: 5000 (working capital)

Example 2 — Mid‑spec professional conversion (total need £55,000)

Personal equity: £15,000 (27%)

Asset finance: £30,000 (truck + kit)

Term loan (or Growth Guarantee backed facility): £10,000 working capital

Example 3 Expansion / two‑truck roll‑out (total need £200,000)

Blended funding: senior asset finance for vehicles; term loan or revolving facility for working capital; potential investor equity for growth capex. Use a specialist broker to structure covenants and staged drawdowns.

7. How to keep borrowing costs down (without taking undue risk)

• Match asset finance to asset life (truck on asset finance, working capital on shorter lines).
• Provide firm quotes and a conservative model lenders reward lower perceived risk.
• Demonstrate compliance and risk control (HACCP basics, staff training certificates, gas/PAT logs) this cuts perceived operational risk.
• Improve personal credit and reduce unnecessary liabilities before applying.
• Shop multiple lenders, including Growth Guarantee accredited lenders if you need a larger facility the guarantee can improve approval probability and pricing.

8. Common mistakes that cause rejections and how to avoid them

• Underfunding working capital sales ramp takes time; budget for 3–6 months buffer.
• Using expensive short‑term finance for long‑term capital (avoid MCAs for major fit‑outs).
• Submitting vague costings lenders reject “ballpark” figures.
• Applying before licences/registration are in place register with local councils at least 28 days before trading.
• Over‑optimistic sales projections without a downside scenario.

9. Quick 7‑day action plan — what to do now

• Day 1–2: Get three written conversion and equipment quotes.
• Day 3: Build a conservative 12‑month cashflow with a downside case.
• Day 4: Register as a food business with local authority(ies) you plan to trade in.
• Day 5: Compile personal documents ID, 3 months statements, proof of deposit and CV.
• Day 6: Contact an asset‑finance broker and the Start Up Loans advice line for indicative terms.
• Day 7: Send your pack to two lenders (one high‑street bank specialist and one specialist asset lender) and review offers with an accountant.

10. Where to find help in the UK (trusted bodies and providers)

• British Business Bank — Growth Guarantee Scheme guidance and accredited lender lists; useful for larger facilities and improving lender willingness to offer asset finance and term loans.
• Start Up Loans — mentoring and unsecured founder loans for early‑stage traders; useful when deposit is limited and you need hands‑on support.
• Specialist asset finance brokers (examples: Holmesdale Asset Finance) — they understand food‑truck nuances and speed up placement.
• Market and industry publishers (Square/Up) for cost benchmarking and practical setup checklists.

Short FAQ (three quick answers)

Q: Can I get finance with no trading history?

A: Yes. Start Up Loans and many asset finance providers lend to first‑time traders if you present a strong plan and a credible deposit, though expect closer scrutiny and smaller maximum amounts.

Q: Will a bank lend for a food truck?

A: Yes, banks will consider food‑truck funding, but asset finance specialists and Growth Guarantee accredited lenders are often more flexible for vehicle and equipment funding especially for new traders.

Q: How much deposit will I usually need?

A: Typical deposits are 10–30% depending on lender and product. Asset finance sometimes allows a lower deposit because the asset secures the loan; however, lenders will still want to see reasonable personal stake.

Closing note

Getting the right small business loan for a food truck is not heroic it’s disciplined. Use accurate supplier quotes, conservative forecasts, the right product for the right purchase and credible evidence of demand. Prepare a clean pack, approach at least two lenders (one bank and one specialist), and consider a broker for larger or more complex facilities. Do these things and lenders will treat your food truck as a bankable small business rather than a risky hobby.

Selected primary sources used for this article (most important):

• British Business Bank — Growth Guarantee Scheme (scheme details, guarantee % and facility sizes).
• British Business Bank press materials / Start Up Loans expansion (programme scale and loan averages).
• Square (UK) — practical cost benchmarks and registration guidance for mobile food businesses.
• Holmesdale Asset Finance — specialist asset finance provider for food trucks (product descriptions and market practice).
• Market and specialist guidance on conversion and equipment costs (UpkeepOne and sector pages).