Trucking Business Loans Explained
Now that you’ve seen an overview of each of the top loan types you can apply for, it’s time to take a closer look at each loan category.
Small Business Administration (SBA) loans are available from financial institutions that work together with government entities. The government entity will guarantee up to 85% of the loan amount. An SBA loan will help you obtain the initial capital outlay you need to get your business started. SBA loans also provide you with education on how to spend the funds wisely in order to ensure that your turnover meets your monthly repayments.
An SBA loan can help your trucking business in its initial months. A loan of this type can provide you with the finances you need to obtain real estate and your initial assets, irrespective of whether you are looking to lease or purchase. If you plan out your business plan well, you may not need to apply for an additional trucking business loan.
SmartBiz is an approved SBA lender, giving you the potential to access government grants. Since truck drivers are in high demand, SmartBiz can easily find the best loan option for you, as they are looking to provide new drivers with funding opportunities.
Equipment financing is one of the most sought-after trucking business loan types in the industry. An equipment financing loan can cover your need for tools, safety gear, and maintenance equipment. Fortunately, financial lenders can cover up to the entire value of the equipment you require.
As an entrepreneur in the trucking industry, you will need to make provisions for storing tools at the warehouse and within your vehicles. You may also need to purchase truck attachments, depending on the nature of your business. Lenders may also give you a lower interest rate for equipment financing than the rate you would get with an SBA loan, so consider your options carefully.
Fundera is a qualified lender for startup loans, SBA loans, and merchant cash advances, but it also has a selection of equipment financing for the trucking industry. You won’t need a track record to apply, as long as you can present a viable business plan.
Also known as invoice financing, these loans are handy when your clients owe you payments. Instead of relying on your capital and operating budgets, a lender can “buy” your invoices from you. The lender will then take a small transaction percentage of the invoice as a fee, this is called a factor fee. When the customer pays, the lender will deduct the fee before you receive your payment.
You may struggle to get clients that consistently pay in the first few months you are in business. If you obtain a contract with a government entity or top-end brand, there may be a clause that reflects a long payment waiting period of 24 working days. Truck factoring can help you claim the funds you need to cover your daily expenses, while you await payment of your invoices.
Fundbox provides small business loans and invoice factoring. Fundbox has a fast application process and you’ll receive funds quickly, as long as you can show them that your clients are reliable. Also, you won’t need a high credit score to qualify.
What do you do when you need instant funds and you don’t want to touch your existing finances? A business line of credit provides the security of operating money that you can draw as needed while only paying interest on what you use. You can view it as a revolving loan, as once you repay a certain amount this amount becomes available again.
Drivers usually receive payment based on how far they drive. It may be hard to estimate what your fuel, payroll, and maintenance costs will be for the month. A business line of credit will let you cover these expenses until you can pay back the money.
BlueVine is our choice lender for a business line of credit. You can use its online portal to manage your funds while enjoying a lengthy repayment period.
Short-to-medium-term loans are helpful if you need funding for your business over several years. You’ll generally apply for these types of loans after you’ve been in business for a few years. Fortunately, you can use your track record when financing your future endeavors.
After a few successful seasons, you may want to buy more trucks and hire more drivers. Maybe you want to open a new garage in a different state and expand your horizons. These loans are ideal when it comes to growing the scale of your operations.
OnDeck is more lenient than other lenders when it comes to credit scores and loan requirements. It also offers repayment discounts if you qualify. Besides term loans, it also offers a business line of credit.
This type of finance can help the trucking business to have ample cash flow available for those unexpected expenses for repairs and fuel. It may also help to hire skilled workers to expand the business and meet current demands.
Fora Financial is recommended for those trucking businesses who want to expand or need money fast for expenses or even breakdowns. You can get $5,000 to $500,000 in as little as 72 hours from approval and there are no restrictions on what you use it for.
There are no set terms for repaying this type of loan and you may also get great discounts for early paying off of the loan. Also, no collateral is needed for getting approved for a merchant cash advance loan. This is a great way to cover short term expenses.