Business owners in the transportation industry are often faced with unexpected expenses. Things like truck repairs and maintenance, blown tires, driver overtime due to traffic or unforeseen delivery delays, parking and toll fees all come due to the nature of the business.
While you can’t predict when these types of things will occur, you can and should keep one step ahead and plan for them by maintaining a healthy, topped up cash flow. A transportation loan is a viable solution to obtaining cash for such instances without having to deplete your working capital. Here are the three of the most common types of transportation loans for your business:
1. Transportation Business Line of Credit
A transportation business line of credit works like a credit card. This means you can repay the credit and use it again without having to reapply. There are many ways business owners use a line of credit. You can use it to fund your business growth, pay for daily business expenses and bridge cash flow gaps. The major benefit of a business line of credit is that you only have to pay for the money you’ve withdrawn from your line, plus interest.
You can apply for a business line of credit through online lenders or banks, but keep in mind it’s harder to qualify for a traditional bank loan. Banks usually take two to four weeks before they can fund your business. Furthermore, many banks deny loans to risky and/or unfamiliar industries.
2. Equipment Financing
If you’re planning to purchase or rent trucks or trailers, equipment financing is your best bet. This is especially true for new transportation business owners. Equipment financing is a long-term financing option with low-interest rates, which makes it ideal for expensive purchases like trucks or trailers.
The good news is, business owners don’t have to pledge any business or personal assets in order to qualify, since the equipment purchased serves as collateral for the loan. This acts as an incentive for lenders who in turn offer lower interest rates, however, you will have to provide a small down payment in order to qualify for this funding. Ask us for details.
3. SBA Loans
The Small Business Administration (SBA) created SBA loans to help small business owners secure funding. Since the SBA guarantees your funds up to a maximum of 85% of the loan. This is an incentive for lenders to offer financing to startup companies and other small businesses. Among other types of traditional loans, SBA loans come with some of the longest repayment terms as well as some of the lowest interest rates available anywhere. You can borrow up to a maximum of $5,000,000 and repay it within ten to 25 years.
Business owners often use SBA loans to make large purchases, such as property or other businesses. This kind of funding can also be a good fit for transportation businesses looking to expand their fleet of vehicles, buy an existing business, or open another branch.
Transportation Loans for Your Business
Both startup and established transportation companies benefit from a transportation loan. Businesses need cash reserves to fund unexpected expenses, bridge cash flow gaps, and make payroll – the needs can be endless. If you want more details regarding a transportation loan, A SMB Compass finance expert can help you. Our team of professionals will answer all your questions and steer you in the right direction.
Remember, time is money and money is time.
So, give us your time… and we’ll help you get the money!