No matter what state the economy is in, there will always be a need to transport goods from one place to another. This is why a freight transportation business can be a very profitable venture. This type of business has the potential to be lucrative, but it’s also expensive to run. You need access to cash to repair or replace your vehicles, hire new employees and pay for any unexpected business expenses. If you get to a place where your expenses are competing with your profits, you might want to consider taking out freight loans.
Types of Freight Loans for Your Business
There are various types of small business loans available for transportation companies. Here are three of the best options for your freight business:
1. Business Line of Credit
When approved for a business line of credit (LOC), lenders assign you a predetermined credit amount from which you can withdraw funds whenever you need (as long as you don’t exceed your limit). You don’t have to pay back the entire credit assigned to you, only what you’ve withdrawn plus interest. Since it’s a revolving credit line, you can pay back the loan and use the funds again without having to reapply. Many business owners use an LOC to fund business growth, pay for daily business expenses, or act as a cash cushion to prepare for slower seasons.
2. Short Term Business Loans
Short-term freight loans are ideal for business owners in need of working capital to grow their businesses as they can be used to cover the necessary expenses of taking on new projects. This type of loan typically carries a high APR (sometimes up to 50%), but the total cost of the loan is competitive given that you repay it within a year.
A short-term loan is best if you need to bridge your accounts payable and accounts receivable. This is a great option if you need quick funding since most lenders can fund your business within 24 hours. You can also repay the loan as soon as your clients pay their dues. In this way, you can lower the total cost of the loan.
3. Equipment Financing
If you want to purchase or rent additional vehicles for your business, equipment financing is the best option for you. It’s perfect for expensive purchases that require long repayment terms and low-interest rates. You don’t have to pledge any business or personal assets to secure the loan because the equipment purchased serves as the collateral. This makes it possible for lenders to offer lower interest rates. Equipment financing does require a down payment you will need to provide.
If you want to know more about freight loans, SMB Compass can help. We aim to streamline your loan application process so you’ll be able to receive the funding you need ASAP. Make sure to give us a call at (888) 853-8922 or email us at firstname.lastname@example.org.