Trucking & Transportation Business Loans

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Financing for Trucking Companies

Transportation and trucking companies are the backbone of America. The $700 billion-dollar industry is responsible for a majority of the overland freight in the United States. Even with the 900,000 truck drivers in the US there is still a constant demand and shortage of drivers. Trucking companies drive the US economy, but not without a cost.

Trucking companies have high expenses to keep up with. In order to do so many use transportation and trucking business loans. Trucking business loan programs are a great way to maintain operating cashflow to keep up with the constant capital demand. Trucking companies can use trucking business loans to finance new vehicles, pay for fuel expenses, maintain payroll, and for routine maintenance on trucks and trailers.

Trucking and transportation business loans programs vary based on what money is being used for. The most important thing is to make sure that you are using the right transportation loan program. For example, the best trucking loan program to use when purchasing a new truck is an equipment loan for the transportation industry. If you are looking for capital for day to day operating expenses like fuel and payroll, you should be using freight factoring programs to get paid quicker on invoices.

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transportation business loan

Is it hard to get approved for a transportation business loan?

Not at all! Qualifying for a loan through SMB Compass is simple and convenient, and you can complete it within a few minutes. Here’s how it works:
a) Fill out our online application form and enter your business information, contact details, and other necessary information.
b) After submitting your application and meeting the minimum requirements, you’ll receive several loan options. Our lending expert will walk you through this process and help you decide which loan works best for your business.
c) Choose a loan and receive the funds within 24 to 48 hours.

How much should your credit score be to get a business loan?

You only require a minimum business credit score of 550. But the higher your score, the better your chances of qualifying for better interest rates, loan amounts, and repayment terms from our partners.

How can you grow your transportation business?

The first step to growing your transportation business is to secure the working capital needed to pursue opportunities that come your way. Fortunately, SMB Compass makes it easier for small business owners like you to qualify for funding.

Don’t hesitate to speak with one of our financial experts for additional information. They’re more than happy to fill you in with the details regarding business growth and financing.

How much money can you get from a transportation business loan?

The minimum loan amount is around $5,000, and the maximum is $5,000,000. If you need to borrow more, we also work with lending institutions that can provide funds for up to $5,000,000.

Most of the loans we offer are unsecured, so you don’t need to pledge any of your assets. Repayment terms are flexible, and they usually range between 3 to 36 months.

How long do you have to wait before the money reaches your account?

You’ll generally be able to receive the funds within 24 to 48 hours upon approval. But keep in mind that this depends on the type of loan you’re applying for. For instance, for SBA loans, business line of credit, and business term loans may take a couple of days before the funds are released.

How can you use the funds from a transportation loan?

You can use the funds from a transportation loan for almost any business purpose. This spending flexibility allows you to:

  • Add more trucks/vehicles
  • Make payroll
  • Improve logistics
  • Update technology
  • Hire more drivers
  • Pay for marketing and advertising efforts
  • Invest in equipment
  • Repair vehicles
  • Extra cash on hand
Trucking loan options

Loan Options for Trucking Companies

Transportation Factoring and Freight Bill Factoring

The most common form of financing in the transportation industry is freight factoring. From owner operators to large fleets, business owners are accustomed to working with large corporations and clients that dictate payment terms. Net 30 to Net 45-day payment terms leave transportation businesses strapped for cash. Weekly expenses such as fuel, payroll, and routine maintenance add up while waiting to get paid on each invoice. By utilizing invoice financing programs such as transportation factoring and freight factoring, companies can get paid sooner and not worry about operating capital. Get paid now instead of waiting 30 to 45 days!

Benefits of Invoice Factoring

Regardless of industry, the biggest benefit of invoice financing for B2B companies is cashflow. Instant payment on invoices enables companies to collect payments on Day 1 which directly impacts the day to day operating cashflow. An often-overlooked benefit is the time savings on invoice collections and billing. Factoring companies can provide ancillary services, such as billing and collections, which frees up administrative work that companies are accustomed to. The time savings directly impacts employee expenses and can improve the bottom line. The third benefit is there are no monthly principle or interest payments. Because the programs are set up as invoice advances and not loans, payments are only made when customers pay their bills. Below are some of the ways to use freight factoring.

  • Weekly payroll
  • Truck maintenance
  • Fuel expenses
  • Extra cashflow
  • Growth capital
  • Hiring new employees

Invoice Factoring Client Case Study

One of our clients owns a fleet of 12 trucks and has been operating for 3 years. Every year they add new trucks which comes with addition expenses, such as fuel, repairs, and payroll. In order to support their growth, we provided a $250,000 factoring facility which provided them with the following benefits; 1. Payment on invoices within 24 hours 2. Operating cashflow to make weekly payroll 3. Fuel and repair discounts to reduce non-revenue generating expenses. 4. A Load Board to supplement loads and add additional revenue.
Asset-Based Loans

Asset-Based Loans for Freight Companies

Asset-Based Loans for Freight Companies
The transportation industry is an asset heavy industry. The two main assets that all companies have are accounts receivable and trucks. Most businesses use freight factoring for ongoing cashflow and truck equipment loans for new truck purchases. However, asset-based loans are a great way to combine both. Transportation asset-based loans can be used to provide a revolving line of credit secured by both account receivables and vehicles. Asset-based lending is a great transportation loan program to have a relationship with one lender, instead of multiple ones.

Benefits of an Asset Based Loan

The main benefit of an asset-based loan is that your lending relationship is with one company, rather than having multiple lenders for equipment and receivables. Consolidating monthly payments to one lender helps companies manage cashflow and have one direct point of contact. The second benefit is that the programs act more like a traditional line of credit with an interest rate, instead of a purchase commission. Interest rates are charged on outstanding money borrowed, versus the face value of each invoice. This results in lower interest expense and more flexibility. Some of the ways to use an asset-based loan are below.

  • Refinance trucks
  • Get paid sooner on invoices
  • Increase operating cashflow
  • Hire new employees
  • Secure new customers
  • Purchase new vehicles

Asset Based Loan Client Case Study

Our client based out of Colorado hauls general freight within the state. They had an aging fleet and a factoring company that was charging higher than average rates. With an aging fleet and 1-3 years remaining on their equipment leases they needed a solution that would refinance their fleet and provide ongoing working capital. By using an asset-based loan we refinanced the equipment debt over 4 years, added extended warranties, and provided a revolving line of credit against the receivables of the business.
Transportation SBA Loans

SBA Loans for Transportation Businesses

An SBA loan is the best way to get low cost and long-term financing. SBA transportation loan programs allow for companies to borrow money over a 10-year term. This results in better operating cash flow and low monthly payments for trucking companies. SBA loans for transportation businesses are commonly used for refinancing existing truck loans and leases. Truck loans and truck equipment leases are usually over a 36 to 72 months. By using an SBA loan, you can refinance existing trucks and purchase new ones over a 10-year term.

Benefits of an SBA Loan

There are many benefits to utilizing SBA loan programs. The first and biggest benefit is the length of term. Traditional truck financing programs provide terms as long as 6 years, where SBA loans can provide financing out to 10 years. The length in term results in lower monthly payments compared to traditional financing options. In addition to the length of term, SBA loans can also provide permanent working capital for the business. Another major benefit is the ability to refinance existing truck loans and leases. There are limited ways to refinance older vehicles which is a unique benefit of SBA loan programs. Additional ways to use an SBA transportation loan are below.

  • Purchase new vehicles
  • Refinance existing debt
  • Hire new employees
  • Improve operating cashflow
  • Buy out truck leases
  • Reduce monthly loan payments

    Client Case Study

    Our client, based in Ohio, is a 25-year-old trucking company with 17 trucks. 10 of the trucks were owned free and clear and the remaining had equipment loans with terms ranging from 2-5 years. To provide additional working capital and reduce the monthly debt payments we provided a 10-year SBA term loan. The result of the loan was an additional $140,000 of working capital and a monthly payment reduction of $11,000 per month.
    Bridge Loans for Trucking

    Bridge Loans for Trucking Companies

    Short term loans and bridge loans are a great solution for quick capital. Businesses frequently come across opportunities that require them to act fast, which requires fast access to capital. Bridge loan programs have an easy application process and can be turned around in as quick as 24 hours. The most important thing for business owners to consider is the short repayment period. Bridge loans are meant to be a short-term solution for companies to fill cashflow gaps or take advantage of opportunities. The short-term nature of bridge loans has a quick repayment period so it’s important that they monthly payments are sustainable.

    Bridge Loan Benefits

    There are many benefits to short term loan programs. The first is the quick turnaround time. Applications have limited requirements and can be processed and funded within 24 hours. Another benefit is the flexibility it gives business owners to act quickly and take advantage of opportunity. Bridge loans can be used in a variety of different ways, but due to the short duration it’s always important to use transportation bridge loans for short-term needs.

    • Slow paying customers
    • Working capital
    • Emergency maintenance
    • Hiring new employees
    • Equipment down payments
    • Purchasing truck parts

    Client Case Study

    A client of ours uses bridge loans on a consistent basis to purchase used trailers. Rather than go through the equipment financing process for low cost trailers, they utilize bridge loans for quick turnaround and short repayment. The trailers enable the company to increase revenue, earn more profit, and pay off the loan quickly.
    Business Line of Credit

    Business Line of Credit for Transportation Companies

    The most flexible transportation loan program is a business line of credit. A line of credit is quick to get approved for and can be used in a variety of ways. For trucking in particular, there are always unexpected expenses that arise. From opportunities to buy discounted equipment, to tire purchases and repairs, a line of credit can be a tremendous resource. There are different structures depending on the line of credit that’s used, some are secured, and others are unsecured. For a secured line of credit, the loan amounts are larger with lower interest rates, while unsecured lines of credit are typically capped at $250,000 and have higher interest rates.

    Benefits of a Business Line of Credit

    The most attractive benefit of a business line of credit is the flexibility. Having access to capital without having to go through an application process is key to the success of many businesses. Applying for a line of credit should be proactive so that’s available when needed. Another benefit of a line of credit is the repayment structure. For unsecured lines of credit payments are made monthly and for secured lines of credit, interest only payments are made on a monthly basis. Next, you only pay interest on a line of credit when you use it! Rather than a lump sum, a credit line is standby capital to be used on an as needed basis.

    Here are other ways to utilize a trucking line of credit.

    • Emergency repairs
    • New equipment purchases
    • Operating cashflow
    • Standby capital
    • Hiring new employees
    • Advertising and marketing
    • Equipment down payments
    • Purchasing new parts
    • Fuel expense
    • Payroll

      Business Line of Credit Case Study

      One of our clients came to us with an existing factoring relationship, which worked well, but did not give them enough working capital. The factoring company gave them a 95% advance rate on receivables and as the company continued to grow, they needed additional working capital to expand their facility and hire additional employees. We used both a new factoring solution at a 98% advance rate and a line of credit to boost their cashflow and support their ongoing growth.

      Equipment Loans for Trucks and Trailers

      Trucks and trailers are a big upfront cost to trucking companies. A vast majority of trucking companies use truck loans and leases instead of paying cash. By using a transportation equipment loan, trucking companies are able to make low monthly payments for their equipment. The two most common forms of transportation equipment loans are truck leases and truck loans. At the end of a truck lease the equipment needs to be returned to the vendor, while at the end of a truck loan you own the equipment.
      Equipment Loans for Trucks and Trailers

      Benefits of Equipment Financing

      The most important thing when operating a business is having cash on hand for opportunities or emergencies. A big benefit of financing trucks versus paying cash is the low monthly payments and the ability to keep cash reserves in your business. Another benefit is the low rates that are associated with equipment financing. Trucks and trailers are great assets and lenders offer low rates, long terms, and large amounts for both leases and loans.

      Some of the ways to use equipment loans for trucking companies are below.

      • Purchase new trucks
      • Refinancing truck loans
      • Upgrading outdated equipment
      • Buy used equipment
      • Update equipment software
      • Buy used equipment

      Client Case Study

      One of our favorite clients is based in Wisconsin and has been growing his transportation business at 20% year over year. His growth comes with the need to constantly finance trucks and doing it quickly and efficiently. Rather than go through different vendor programs, which are based on the manufacturer, we provide a single source financing option. Within 48 hours of finding the vehicle he wants to purchase we align the financing and help get trucks on the road as quickly as possible.
      Finance for transportation

      Types of Transportation Companies We Finance

      Tanker Trucking Loans

      Flatbed Trucking Loans

      Fuel Transport and Hauling Loans

      Oil Field Trucking Loans

      Local Freight Trucking Loans

      Long Haul Trucking Loans

      LTL Trucking Loans

      Refrigerated Freight Loans

      TCar Hauling Loans

      Interstate Trucking Loans

      Intrastate Trucking Loans

      FAQ About a Transportation Business Loan

      What is a transportation business loan?

      Transportation business loans allow a business to sustain the high expenses that are infamous in the trucking industry. There are different financing solutions in transportation to assist with all the upfront and overhead expenses. Equipment, labor, and fuel are very expensive and transportation financing allows businesses to manage these expenses without restraining the operating cash flow.

      How do you qualify for a transportation loan?

      The qualifications for a transportation loan are contingent on the certain financing a business is considering. Qualifications for a business line of credit or a bridge loan in transportation typically only include revenue and the time in business. Equipment financing is more challenging and requires that a business owner have sufficient credit, time and business, and cash flow.

      How long does the application process take for a transportation loan?

      The length of the application process for financing in transportation will vary depending on the type of financing. Bridge loans, lines of credit, and factoring require limited documentation and the entire application process is quick and easy. SBA loans, asset based loans, and equipment financing typically require significant documentation and will take a longer time to complete the application process.

      How would you use a transportation loan?

      Transportation loans can be used in array of ways including the purchase of equipment, payroll, and repairs. It can also be used to refinance any existing debt as well as hiring new employees and growing the business. It’s common in trucking that businesses will have long payment terms. Factoring allows businesses to be paid immediately on their accounts receivable so they don’t have wait to be paid and can properly manage their cash flow.

      Is collateral required for a transportation loan?

      Collateral is required for a transportation loan if a business is securing longer term financing such as an SBA loan or equipment financing. If a business is securing a line of credit or a bridge loan, collateral may not be a requirement. Factoring lends money against the open accounts receivables a business has and uses that as the collateral.

      What are the different transportation loan options?

      There are numerous different loans and financing options utilized in the transportation industry. The most common type of financing is factoring and business lines of credit. Trucking companies can have payment terms anywhere from 15-90 days and factoring and lines of credit help bridge those payment gaps. Equipment financing is also commonly used to help finance the purchase of trucks and trailers over multiple years.

      Learn About Your Financing Options

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