As the owner of a trucking business, you’ve had to consider multiple ways to grow your business. One way to begin growing your business is through a business loan. We’ve evaluated the trucking best business loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
Fundera does not lend money directly but offers a digital marketplace where you can connect with lenders to provide a financing solution for your business.
National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
A trucking business loan can be used for almost anything you need from purchasing vehicles to acquiring another business, but check with the loan provider if there are exceptions. Most trucking business owners use business financing to help buy or refinance commercial vehicles and equipment to support their business.
How do trucking business loans work?
Trucking businesses are unique because they often have to purchase their trucks and equipment. These can be very costly, especially if you’re just starting. A trucking business loan from a bank or credit union can help you get started with your business.
To get a trucking business loan, you’ll need to apply for one with the lender of your choice. You can typically qualify for these loans if you have a good credit score and sufficient collateral, such as real estate. Once approved for an amount and terms that work for you, the lender will issue a check or put money directly into your bank account.
Trucking business loans usually come with a fixed interest rate over two to five years. You’ll make payments on this loan every month until it’s paid off in full. Some lenders will allow you to pay extra each month without penalty. This can help reduce the amount of time it takes to pay off your loan.
What are the requirements for a trucking business loan?
There are many factors that lenders consider when evaluating a loan application. Some of the most important factors include:
Personal and business credit scores: Your personal and business credit scores provide lenders with an indication of how you manage your money, including whether you pay your bills on time and if you have any past-due accounts. Lenders do not look at your score directly; instead, they use it to determine the interest rate on your loan. However, having a very low personal or business score can affect your ability to secure financing.
Annual revenues: Annual revenues represent how much money a business brings in during a given year. The financial reports are used by lenders to gauge how much risk they are taking on by lending money to a business owner who has little or no assets other than their trucking company’s operating assets (trucks).
Length of doing business: Most lender wants to see that your company has been in business for at least three months before they approve a loan application. This shows that your business is stable and established.
What are the types of trucking business loans?
Here are some of the common types of trucking business loans:
SBA loans: These are government-backed loans offered by the Small Business Administration (SBA). They’re designed to help small businesses grow and succeed. SBA 7(a) loans are typically used for purchasing equipment or real estate and come with an interest rate that is fixed or variable over the life of the loan.
Equipment financing: Equipment financing is a powerful way to buy new trucks, trailers, vehicles, and other equipment necessary for a successful trucking company. Depending on your needs and goals, leasing companies or banks may offer equipment financing.
Business line of credit: A business line of credit is a short-term loan that offers you a revolving line of credit. You can draw money from this account and pay it back when ready.
Business term loans: This type of loan allows you to borrow a lump sum of money and repay it over a fixed period of time with, usually, monthly payments.
Merchant cash advance: A merchant cash advance is a type of short-term loan used by businesses to provide quick cash for day-to-day operations. You’ll be provided a lump sum payment in exchange for an agreed upon percentage of future sales. Usually, you sell your account receivables.
What are the benefits of getting a trucking business loan?
There are many benefits to getting a trucking business loan, including:
Payment period can be long: A common misconception about business loans is that they must be paid back within a short period. This is not always the case for trucking financing because lenders understand the importance of having enough time to make payments without negatively affecting your cash flow.
Easy application process: The process for a trucking business loan is very straightforward, so even if you don’t have much experience with finances or paperwork, you should be able to complete the application in less than an hour. Most lenders also offer 24/7 customer service so that you can ask questions when they arise or complete your application anytime, day, or on weekends.
Grow your business credit score: With a stronger credit score, you can get approved for more loans with lower rates.
Expand your trucking empire: The extra capital can help expand your trucking business.
How can you use a trucking business loan to grow your business?
A trucking business loan can be used to fund a variety of operational expenses, including:
Hire new operators: If you’re short on drivers and need extra help, a business loan can help you hire new employees. This will allow you to keep up with the demands of your business and ensure that your vehicles are always out on the road.
Maintain day-to-day operations: The loan can be used to cover day-to-day costs like fuel, maintenance, insurance, and taxes. These expenses may vary depending on the size of your fleet, but they’re often unavoidable when running a transportation company.
Add more trucks or trailers: If you’re looking to expand your fleet, the loan can help you purchase new equipment or vehicles.
Invest in better technology: Investing in better technology can help you grow your business. GPS tracking systems allow you to monitor your vehicles from one central location. This information can help you streamline operations and reduce costs.
Outsourcing: If you want to grow your trucking company but don’t have the time or expertise to expand into new areas, consider outsourcing some of your responsibilities. Hiring a marketing consultant or an experienced CPA may allow you to focus on other aspects of running your business while keeping an eye on important financial decisions.
How to choose the best trucking business loan
Here are some tips on how to choose the best trucking business loan:
Identify the use of the loan: Before looking for a trucking business loan, identify what you want to use it for. Are you looking to buy new equipment or expand your fleet? Or maybe you want to upgrade your current equipment?
Budget for repayments: Once you know how much it will cost, set aside a budget for repayment. If you can afford monthly installments, try negotiating lower interest rates or longer repayment periods with lenders. If this does not work, consider applying for another loan with better terms and conditions.
Gather quotes: Once you have decided on the type of loan and amount required, get quotes from different lenders before applying for one. This way, you can compare rates offered by different lenders and choose one that suits your needs without compromising on quality or service standards.
Consider additional fees and taxes: You also need to consider additional charges and taxes when choosing a trucking business loan. If any other fees are involved in obtaining this type of financing, such as processing or origination fees, make sure that they are clearly stated before applying for the loan, so there are no surprises later on down the road.
ÂąAll businesses are unique and are subject to approval and review.
