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Getting a business loan for transportation is an effective way to start or scale your trucking company. There are a diverse range of options to choose from so that you get the best type of trucking financing for your current stage of growth. Explore options for truck startups, growing companies, and mature businesses.
The structure of a trucking business loan largely depends on what type of financing you choose and how you plan to use the funds. When purchasing actual trucks to either start your business or expand your existing fleet, you’re likely to use equipment financing, either as a loan or lease. The new truck itself is used as collateral, which helps to lower your interest rates. Plus, startups are more likely to qualify since the loan is connected to an asset—having that collateral reduces the lender’s risk.
Another type of trucking financing is a business line of credit, which is sometimes referred to as a BLOC. This is an effective way to smooth out cash flow issues and pay for non-asset expenses. For instance, a growing company could use a line of credit to hire more long-haul drivers or invest in better transportation management software.
Transportation business loans can also be used for a mature company to acquire a trucker repair business or buy a commercial real estate property as a way to expand and diversify its revenue streams. And a company of any size could use a business credit card as a way to cover ongoing fuel costs or unexpected expenses as they arise.
Different financing structures make better sense depending on your trucking company’s goals.
An equipment loan helps you overcome the costs of starting or expanding your trucking fleet. A truck can easily cost at least $100,000 so it just doesn’t make financial sense for most companies to pay that out of their working capital. Instead, many owners use an equipment loan to pay for the cost of the truck and use the vehicle as collateral. This is an attractive option for trucking businesses of all sizes. Because there is an asset attached to the loan, approval is often easier than other financing options and interest rates may be lower as well.
A business line of credit gives you access to capital when you need it, rather than delivering one lump sum from a loan. In fact, it’s similar to a credit card in that you have a maximum credit line you’re able to draw from. And as you borrow funds and repay your balance, your credit line is replenished and you can borrow again as needed. One of the major benefits is that interest only accrues on your outstanding balance, not the credit line limit. Using a business line of credit for your trucking financing can help iron out cash flow issues throughout the year, ensuring you always have enough for payroll, truck repairs, fuel, and other expenses that may ebb and flow. It’s easy to estimate payments with a line of credit calculator.
A business credit card is a popular choice to use for fueling up on the road. But this option comes with both pros and cons. The upside is that credit cards are an accessible form of financing for trucking companies of all sizes, whether you’re an owner-operator or the CEO of an entire fleet of trucks and drivers. The downside is that many gas stations charge a higher diesel fuel price for credit card purchases. This can, however, be offset by a competitive credit card rewards program. It just depends on how the extra value compares to any extra costs.
The Small Business Administration (SBA) offers a variety of loans that can help trucking companies in a number of different ways.
Microloans: An SBA microloan is a good option for an owner-operator who is either just getting started or in the early stages of scaling their business. The maximum loan amount is $50,000 and the funds can be used for expenses such as working capital, machinery, and equipment.
7(a) loans: You can apply to borrow as much as $5 million with an sBA 7(a) loan. Depending on how much you qualify for, this option can be used for larger purchases, such as purchasing multiple new trucks and hiring new drivers. The funds can also be used to finance expansion opportunities, like acquiring another business to jumpstart your trucking company’s growth.
504 loan: A 504 loan from the SBA is a type of asset-based financing, and can be used for purchases such as a commercial property for adding a trucking repair service to your business. The maximum loan amount is $5 million.
Lenders use several different criteria when evaluating financing applications for trucking companies.
When you’re evaluating different trucking business loan options, it’s important to compare interest rates, since they directly affect how much you’ll pay over the life of the loan (or line of credit). Factors that impact your loan rate include:
Use a business loan calculator to compare options before you apply for trucking financing.
Truckers know better than anyone that there’s no use in delaying what needs to be done. Our smart application takes just 15 minutes to complete. That’s 28 hours and 15 minutes less than the traditional bank application process. Then you can compare offers with the help of your personal funding manager and receive funds in as little as 24–72 hours.
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It can be hard to get a loan as a startup company with no sales under your belt. When starting a trucking company, you may have better luck with equipment financing, since the truck itself is used as collateral for the loan.
Yes, new businesses can apply for an SBA microloan of up to $50,000 to help start your trucking company. As your business becomes more established, you may qualify for other SBA loans, such as the 7(a) or 504 program.
Truck drivers may be eligible to apply for an SBA loan as a truck driver small business owner. Each SBA program has its own eligibility requirements in terms of time in business, but multiple business structures are allowed to apply, including sole proprietorships, LLCs, corporations, and independent contractors.
Trucking business owners can apply for a variety of financing options, including term loans, lines of credit, equipment financing, and credit cards.
– Daniel H.
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California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans made through Lendio Partners, LLC, a wholly-owned subsidiary of Lendio, Inc. and a licensed finance lender/broker, California Financing Law License No. 60DBO-44694.