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6 Tips for Financing a Food Truck During a Pandemic

6 Tips for Financing a Food Truck During a Pandemic What You Need to Know About Food Truck Financing

What You Need to Know About Food Truck Financing

The food truck industry grew steadily between 2014 and 2019 as these mobile restaurants became a trendy way to serve different cuisines to a hungry clientele. In fact, the industry grew 6.8% year over year during that time, peaking at more than $1 billion.

Then the COVID-19 pandemic hit.

Like many industries, food trucks were hit hard by the impact of the coronavirus. While food trucks could continue to operate during the pandemic, the customers they relied on to stay afloat disappeared, especially in urban areas. 

Food trucks have long benefitted from parking in downtown metropolitan areas, feeding lunch to the masses of office workers. With more employees working remotely from home, the lunch crowd vanished. So did the demand for food trucks to attend large gatherings or other well-attended social events, forcing many to close their doors.

The Coming Food Truck Resurgence

Hopefully, for food truck owners the worst is now in the past. With states lifting restrictions and more people returning to normal life, the opportunities that originally spurred massive growth will soon return. Entrepreneurs interested in starting a food truck—or those who stopped during the heart of the pandemic—will soon want to re-enter the market.

Many, however, will require financing, both for the truck itself and equipment used inside. Here are a few things to consider when shopping for food truck financing.

1) Choose a commercial vehicle lender.

Food truck financing can be a little different than getting a loan for another small business. If you have good credit, you should be able to get a loan—but instead of approaching a bank, find lenders that specifically offer vehicle loans. Some companies even offer vehicle financing tailored for food trucks. As with other loans, food truck owners will need to make a down payment, put down some collateral, or include a co-signer.

2) Plan to purchase a truck in good condition. 

It may be tempting to buy a fixer-upper, but many companies will not provide commercial vehicle financing if the truck is not a worthy investment. Plus, there is nothing more frustrating than losing potential income from a lengthy breakdown. It may be worth it to pay a little extra for a reliable vehicle.

3) Consider a business credit.

A business credit card or business line of credit may be required. It can be difficult to start any business, and some creditors may want more information or a history of success in the food business before offering a loan. If you are starting new, it may be difficult to get a traditional loan. You may need to use business credit until you prove your business acumen to a larger lender. If that’s the case, food truck owners will need a good credit score and may have to offer personal collateral.

4) Don’t forget about equipment loans. 

Of course, food trucks require more than just the truck. They house special equipment, like a stovetop or a deep fryer, to cook food on demand; they also need refrigeration to keep ingredients safe. Equipment loans typically use the cooking items you are leasing as collateral, so if you default on a payment they will be taken away.

5) Leverage an SBA microloan. 

Perfect for food trucks, the US Small Business Administration’s Microloan Program provides up to $50,000 to borrowers. Borrowers can use these funds to purchase supplies, equipment, and food inventory. These can be an excellent way to get a food truck off the ground once the vehicle has been acquired.

6) Explore other ways to finance your food truck. 

Crowdfunding can be a viable method as well. Think Kickstarter or GoFundMe. Food trucks have boomed during the time of social media with trucks using Twitter, Facebook, and Instagram to announce their location, share pictures of what people are eating, and even release special deals. Food truck owners can get creative, offering loyal customers a small cut of the profits or a special per—five free meals per month, for example—in exchange for an investment.

The Bottom Line

The COVID-19 pandemic has brought great uncertainty to the food and beverage world, but it’s also time to rethink how things are done. Food trucks have proved to be a solid business for those who can make delicious food and find a market to sell it to. There are multiple ways to finance a food truck, so if you have the desire to get started, you can find several paths to lead you to your dream.

5 Common Tax Myths Debunked

5 Common Tax Myths Debunked

Tax season is here, bringing the usual avalanche of tax-related questions. While truck drivers do not need to be experts in the tax code, certain tips and tricks can make this time of year a little less painful—both for your wallet and your mental health. Let’s look at five common tax myths truckers need to know.

Myth 1: April 15, 2021, is the deadline to file. 

Usually, April 15 is the deadline for tax returns to be postmarked to the Internal Revenue Service without facing a possible fine, but that has changed this year. Filers now have until May 17, 2021. Better yet, there is no requirement to be granted the extension; it is immediately given to everyone. Truckers who currently feel rushed to finish their returns—or are figuring out when they will put them together between long trips—have a little bit of extra time. The April 15 deadline is scheduled to return in 2022.

Myth 2: Owner/operators do not need to pay quarterly taxes. 

This is a big misnomer that gets many independent contractors in trouble, regardless of industry. Owner/operators work as their own business and as such must manage their tax payments to the federal and state governments (this is compared to a traditional employee who will have taxes withheld). Owner/operators need to set aside money each quarter—think about 25% of income after deductible expenses—and pay it to the government.

Failing to make these payments can result in penalties but owner/operators also have to make sure not to pay too much. While the federal government will give you a return, an overpayment is akin to giving the government a free loan of any earned income that could be spent, saved, or invested. It may take some practice, but owner/operators need to be cognizant of their income, what existing taxable deductions they can take, and keep track throughout the year for an accurate total.

Myth 3: Truckers need to keep receipts for every meal they eat.

Over-the-road truckers can spend weeks on end without ever going to their permanent home. As a result, they can benefit from the per diem food benefit allowed through the IRS. Truckers with work that takes them away from home overnight are allowed to charge the government on the IRS Schedule C form. This directly reduces self-employment taxes and does not need to be itemized. As long as a trucker eats below $60 to $70 on food each day, they will make that money—and more—back with taxes. 

Myth 4: You can deduct deadhead mileage and days off for illness. 

Sadly, this one is not true. Owner/operators can only deduct actual expenses while working on the profit being made. Things like time off and deadhead miles cannot be deducted. However, some things that truckers occasionally overlook can be. Truckers who travel with a dog can write the dog off as a security expense if the dog is always with the truck. Permits and license fees can also be deducted along with accounting services, repairs, and interest paid on business loans. There are lots of valuable deductions if you know where to look.

Myth 5: More deductions increase your chance of an audit. 

The IRS will closely look at your returns but there is no guarantee you will face an audit. It is best to be honest with all your deductions and only use the ones that pertain to your situation. The IRS knows how to spot potentially fraudulent deductions, so be honest and upfront. 

Take the time to understand the deductions you take and keep detailed records where possible. These records can prove invaluable, ensuring first that you get all the deductions owed but also holding up to the scrutiny of an audit. Owner/operators must face a lot of difficult tax issues to run their business. It may be beneficial to hire a professional or take a course to fully understand how to manage your tax situation. While the IRS does not want to charge penalties and conduct audits, they also want to ensure every person pays their properly owed amount.

Parking Shortage: An Unexpected Problem for Truckers

The COVID-19 pandemic has increased attention on the already growing need for more truck parking as trucking advocates push for federal funding to alleviate the problem. The need for safe truck parking existed before the pandemic, fueled largely by the electronic logging device (ELD) mandate that more strictly regulates the length of time drivers can work. With traditional truck and rest stops filling up quickly, truckers find themselves now parking in abandoned parking lots, on shoulder highways, and other dangerous locations.

A Rapidly Growing Problem

A 2019 survey showed there were about 313,000 truck parking spaces across the country. This included about 40,000 at public rest areas and another 273,000 at private truck stops, numbers that increased from just five years earlier (the number of public rest area spots grew 6%, while private spots were up 11%). However, the same survey found that 98% of truckers interviewed still had trouble finding safe parking at the end of their day.

This was, of course, before the pandemic started. Some private truck stops further curtailed parking to reduce the number of people on their property to limit virus exposure, and public rest stops became crowded as more people traveled in recreational vehicles to avoid air travel and public transportation. Before the ELD mandate, truckers could simply continue to travel until they found a safe location, usually away from a major metropolitan area.

Now truckers must either commit valuable driving time to planning where they will spend their night or drive around in hopes of finding a safe space to sleep. Some truck drivers have resorted to staying in unsafe locations to avoid fines and penalties for logging too much time behind the wheel. While some mobile applications have been created to help solve the problem, the reality is there are simply not enough available spaces for truckers currently on the road.

Is There Help in Sight?

Maybe. There was initial hope that funding could be included in the upcoming $1.9 trillion COVID-19 relief bill but that did not happen. Instead, the best hope for trucks is an infrastructure bill Congress will debate later this year.

Peter DeFazio, a Democrat representative from Oregon who chairs the House Transportation and Infrastructure Panel, has vowed to push for truck parking when the discussion begins on a highway bill to replace a transportation bill passed in 2015 that expires this October. DeFazio included $250 million in an infrastructure bill last year to improve truck parking, but that measure never received a vote in the Senate. Other politicians, including Mike Bost, a Republican representative from Illinois, have proposed similar measures to increase parking options for truckers.

Bost, who comes from a family of truckers, introduced a measure for the COVID-19 relief bill that would dedicate $125 million to truck parking this year, a number that would increase each year through the 2025 federal fiscal year. In the end, $755 million would have been provided to help truckers. While this measure was tabled, it provides a potential outline for what relief could look like.

The Federal Highway Administration has taken note of the problem; through the National Coalition on Truck Parking, the agency will seek to obtain initiatives that will improve parking for commercial truck drivers.

Trucking advocacy groups argue that airlines, Amtrak, and other transportation industries have received billions of dollars in aid during the pandemic, truckers have largely been ignored. The goal is for funding to create additional parking areas and forbid rest areas from charging truckers to park.

The Risks of Not Expanding Truck Parking

The trucking industry seemingly has more trucks than drivers these days. While trucking has shown to be a valuable profession, especially during the pandemic, the stressful nature of the work has led to decreased driver retention.

Truck drivers already work long hours, spend days and weeks away from loved ones, and must follow strict workplace safety guidelines to keep themselves and the roads safe. While a driver may be unlikely to leave the profession over the lack of parking alone, the daily stress of finding a spot may contribute to an overall negative feeling for the job.

The pandemic has highlighted the value of truck drivers who have worked in difficult conditions to continue delivering goods. For many, they could not even use a bathroom at their distribution center for fear of spreading the virus.

Lewie Pugh, executive vice president of the Owner-Operator Independent Drivers Association, summed up the increasingly complicated issue from a trucker’s standpoint.   

“All truckers want is a place to take a nap,” he said, according to Roll Call.

How the PRO Act Could Affect Owner/Operators

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In early February, Democrats in both the House and Senate reintroduced the Protecting the Right to Organize (PRO) Act, an ambitious pro-employee and pro-union bill that could dramatically impact the trucking industry.

In what has been called the most “significant [piece of] labor reform” in the United States since the end of World War II, the PRO Act would, among other provisions, increase the number and size of fines against organizations that violate workers’ rights, give employees more power to strike, weaken right-to-work laws, and offer independent contractors increased protections.

The PRO Act passed the House in 2020 but did not receive a vote in the Senate. While this year’s version is expected to again find success in the House, it is unlikely to get the 60 votes needed to acquire a vote in the Senate. Even though it may not immediately become law in its current form, the PRO Act illustrates the Democratic Party’s renewed emphasis on labor issues.

What Impact Would the PRO Act Have on Truckers?

The Owner-Operator Independent Drivers Association has come out strongly against the PRO Act, arguing that it would force trucking companies to abandon the traditional owner/operator model. The bill, if passed, would implement what is known as the ABC test, which was expanded and codified in California under state law AB5.

The test requires all workers be considered employees of a company unless three factors are established:

  1. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  2. That the worker performs work that is outside the usual course of the hiring entity’s business.
  3. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

At odds for owner/operators is section B as they perform the same service as the companies hiring them. OOIDA argues that this broad classification has been created to determine if independent contractors should be classified as employees for the sake of unionization. This law could make it so trucking companies could not hire owner/operators at all.

Looking for a Safe Middle Ground

The trucking industry has fought back against California’s bill, similar state bills in places like New Jersey, New York, Washington State, as well as federal action. Advocacy groups argue that the ABC test unfairly classifies owner/operators who exist in a more nebulous middle ground. While these laws primarily focus on gig economy workers, looking to provide additional workplace rights for independent contractors at companies like Uber and Lyft, they would also impact truckers who operate under a completely different business model.

The California Trucking Association has brought temporary relief, winning an injunction in U.S. District Court in January of 2020—just days after AB5 was enacted—to momentarily stop enforcement of the new California law. The CTA argues that the Federal Aviation Administration Authorization Act prohibits states from passing laws “related to price, route, or service of any motor carrier” and would preempt all state laws.

The organization also argues that the California test would impose a significant burden on interstate commerce as an owner/operator theoretically would not be able to drive through California under this ruling, or any other states that pass similar legislation. This would be in addition to other challenges recently put on truckers and the trucking industry.

What is the Current State of Things?

The injunction has put a momentary hold on the law’s enforcement and is awaiting an appeal in the federal 9th Circuit Court of Appeals. While federal passage of the PRO Act still appears a long shot, these state laws, and in particular the CTA’s appeal, will provide insight into how the legal system views the owner/operator system and how it fits into larger labor disputes.

Numerous groups, including the U.S. Chamber of Commerce, the International Foodservice Distributors Association, and Teamsters General have voiced opposition as well. While not mentioning truckers specifically, these organizations argue the PRO Act could hurt job growth, limit self-employment, and serves and overly empowers unions that do not work in the best interest of workers.

Buying vs. Leasing a Semi-Truck: An Owner Operator’s Guide

Owner/operators are in the position to make important business decisions that impact their future success. Your semi-truck can either be the means to your financial gains or a detriment—which direction you go depends on the choices you make around your truck. When it comes to buying versus leasing, there’s not a clear-cut answer. Your unique situation and goals play a large part in your decision to buy or lease a semi-truck. Ultimately, it comes down to the type of truck you want and how you prefer to spend your money. 

Buying a Semi-Truck as an Owner/Operator

The average price of a new or newer truck is well over $100,000. Do you have the capital to make this purchase? If not, take a look at financing. Either way, you’ll start to accrue equity. The purchase can also be used as a tax write-off; talk to an accountant or tax professional before you make the purchase to understand all the tax considerations. Additionally, you’ll save money on insurance as rates are often cheaper than those for leased vehicles. If you have good credit and the truck is not terribly expensive, you may not have to make a down payment, depending on the company issuing the loan.  

With a new truck, you’ll also get the latest in mechanical technology. This may mean saving money on operating costs and fuel, as many are more energy-efficient than older models. It’ll also come with a factory warranty which covers service issues and any problems that come up during the warranty period. 

If you want to purchase, but a $100,000-plus price tag is outside of your investment range, you can buy a used truck for as low as $15,000. Keep in mind that you may end up paying to keep it up and running. 

Leasing a Semi-Truck as an Owner/Operator


If you’re not able to buy your truck or you want to limit your financial risks, leasing may be the best option. A lease contract usually lasts anywhere from three to five years. Once your agreement is over, you’ll return the truck, and you can start another lease on a new truck. If you choose to break your lease before it ends, you’ll pay a penalty; the amount of the penalty is a lump sign that’s stated in the contract. 

Make sure you read the fine print on your lease agreement. Often, there are rules and requirements you must follow while you have the truck. Like a personal vehicle, you may have a limit on your mileage. When you turn the truck in at the end of the lease, you’ll have to pay for each mile you go over it. 

Lease Types

There are two types of lease: conventional or lease-to-own. With either, you don’t need to put down a large amount of money upfront. Oftentimes, you don’t need good credit; some leases don’t even require a credit check.  

A conventional lease has a set period of time in which you make monthly payments. You’ll have the freedom to walk away from your truck when your contract is over. Another benefit is gaining insight into the real-life costs of owning a truck without some of the hassles. Many conventional leases come with a servicing agreement for any maintenance or service needs that the vehicle needs during the extent of the contract. 

A lease-to-own agreement means you have the option to purchase the semi-truck at the end of the agreement. There will be a buy-out price set in the contract which may be negotiated before you sign the lease. With this type of lease, you’ll need to haul enough merchandise or goods to pay the monthly payment. If you don’t, the leasing company can repossess your truck.

What Should I do?

Commitment is the biggest difference between the two options to purchase or lease a semi-truck. A conventional lease can be a short-term commitment that may provide the freedom to walk away from your truck. Though you’ll spend less money upfront, you won’t build any equity. Overall, you may pay more money than if you were to buy it outright. Insurance is typically higher on a leased semi-truck than one that you’ve purchased. You also can’t make it your own by modifying or updating it the way you would if you owned it. 

Buying or leasing a semi-truck is ultimately a financial endeavor. But it doesn’t end there; it also comes down to your goals and long-term vision for yourself as an owner/operator.

Looking Ahead: The Possible Changes in 2021 Resting Hour Requirements

It’s looking like 2021 could be a year of significant change for the trucking industry. New presidential leadership, advancements in technology, and a shortage of drivers create a unique landscape conducive to exciting industry updates. The start of these changes began in early January, when the Federal Motor Carrier Safety Administration launched a pilot program to study the impact of new updates to long-haul driver resting hour requirements. Not sure what this means for you as an owner/operator? Find out below.

What is a Sleeper Berth?

For drivers who are new to the industry, “sleeper berth” refers to the amount of time a driver must be off-duty or not driving within a specific work period. Simply put, sleeper berths are the mandatory daily rest periods for long-haul drivers. Currently, truckers can drive for 11 consecutive hours during a 14-hour working period. Once drivers have reached their 14-hour working limit, they are required to take a mandatory 10-hour break. To increase flexibility, the Federal Motor Carrier Safety Administration (FMCSA) allows drivers to break up their sleeper berths into two parts, providing drivers with various options for scheduling their required rest breaks:

  • 10-Hour Sleeper Berth: Following 14 consecutive hours working, drivers must have a 10-hour rest period.
  • 8/2 Sleeper Berth Split: Drivers can rest for eight hours during a 14-hour working shift and two additional hours at the end of the shift for a cumulative total of 10 resting hours. 
  • 7/3 Sleeper Berth Split: Drivers can rest for seven hours during a 14-hour working shift and three additional hours at the end of the shift for a cumulative total of 10 resting hours. 

The added flexibility gives drivers the ability to better plan and schedule their time on the road to meet their individual needs. 

Proposed Changes to Rest Requirements

The FMCSA recently proposed a pilot program to study the impact of new sleeper berth scheduling. The proposal will allow drivers to split their resting periods up, requiring both rest periods to be a minimum of four hours long. This means drivers will have the ability to break their resting hours up into either 6/4 or 5/5 split segments. Former Deputy Administrator of the FMCSA Wiley Deck stated the proposed pilot program is designed “to explore ways to provide flexibility for drivers while maintaining safety on our roadways.” 

Not everyone is on board with the proposed changes, though. The Advocates for Highway and Auto Safety expressed concern that reducing the mandatory number of consecutive rest hours would lead to increased driver fatigue. Cathy Chase, president of the advocacy group, asserted the pilot program is a “continuous effort to cripple minimal safety measures [and] is antithetical to FMCSA’s mission of implementing countermeasures that will reduce truck crashes and fatalities.” The FMCSA disputes this idea, citing research that suggests “the total amount of sleep in a 24-hour period is more important than accumulating sleep in just one period for mitigating fatigue.”

Benefits of Breaking Up Rest Periods

While the industry may be divided on split sleeper berths, the ability for long-haul truckers to break up their mandatory resting period provides many benefits. Drivers can avoid wasting valuable driving time and paid working hours by using a sleeper berth break during long delays at shipping and receiving locations. During inclement weather, long-haul drivers can pull into a safe location and use part of their rest period to wait for safer driving conditions. Drivers can also use the split to circumvent peak traffic hours, avoiding sitting in traffic or creating traffic in already congested areas. 

One of the most beneficial aspects of the proposed sleeper berth split is drivers can use the splits to plan out safer routes. For example, if a driver’s receiving destination is 10 hours away but a preferred rest stop is six hours into their route, they can plan their journey using one of their sleeper berths to stop at their preferred location. Under existing regulations, the driver would have to either stop eight hours into their route in an unfamiliar location or push through the fatigue for two more hours to reach their destination. 

Changes in sleeper berth schedules are certain to have an impact on the trucking industry. Although the long-term effects of splitting mandatory rest periods have yet to be fully studied, proponents of the FMCSA pilot program believe the increased flexibility and control over driving schedules can be incredibly beneficial for long-haul drivers. Make sure to check back here for updates on the results of the pilot program and the future expectations of sleeper berth regulations.

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