Trucking Business Loans

Get access to revolving funds when you need it most

How much are you looking for?

Trucking businesses remain one of the most profitable industries in the United States today. In fact, in 2018, the trucking industry carried 71.4% of the country’s tonnage freight and generated approximately $800 billion in revenue.

Today, the industry employs about 7 million people, including 3.5 million drivers all over the country. With these numbers, it’s safe to say they play a pivotal role in the United States’ economy.

With more and more people going into the industry, it’s becoming more challenging for owners of trucking businesses to compete with other bigger corporations. Without the help of trucking business loans, they wouldn’t be able to establish and maintain a competitive advantage, which may set up their business for failure. Now, if you’re a striving trucking entrepreneur, this is not how you want your business to end.

Trucking business loans are the number one source of funding for many trucking companies. When used right, they can open up a variety of opportunities for growth and expansion. With access to additional cash, entrepreneurs can purchase trucks and fleets easily without breaking their bank account or risking the stability of their cash flow.

Trucking Business Loans Help You

How Can Trucking Business Loans Help You?

Trucking companies take out trucking business loans for numerous reasons. However, the most common one is to acquire new trucks and fleets which are vital in the expansion of their business. With the right amount of working capital, trucking businesses can obtain new equipment and provide a better service to their clientele.

However, buying a new truck can cost $100,000 to $150,000 which when you purchase out of your pocket can create a big cash flow gap in your company.

This puts you at risk of facing cash flow problems in the future. Trucking loans, on the other hand, help you eliminate that risk since they can provide you with the cash needed for the purchase. You can then repay the loan slowly through monthly installments, or on the terms which you and the business loan company have agreed to.

  • How Can We Help?

    Just fill out this quick & easy form!

Trucking Business Loan Options are Available

What Trucking Business Loan Options are Available?

If you’re on the market for a business loan, here’s what you need to be aware of regarding the various options available to you:

1. Equipment Financing

With this type of financing, the equipment bought with the funding will serve as the guarantee for the loan. This means, the bank or lending company can seize the trucks in case you fail to meet the agreed payments. The upside is, since the truck or other equipment you bought will serve as the collateral, you get to enjoy better terms and low-interest rates.

You also have the choice of leasing your equipment which would require lesser upfront cash. However, between the two, purchasing the trucks is a much more reasonable investment since you’ll get to own the truck once you complete the payments.

2. Invoice Factoring

It’s common for many trucking companies to experience some cash flow gaps because of unpaid customer invoices. The needed cash is vital since it helps them meet their day to day operational costs as well as cover other important business expenses. However, with the help of invoice factoring, companies can sell their customer’s invoice to the factoring company to get an immediate infusion of cash they need.

With this arrangement, the financing company will take the invoices and undertake the collection of payments themselves. Once customers have made their payments, the factors (lenders) will then deduct the payment from the cash advance, including the fees and send the remaining amount back to the borrowers. With invoice factoring, trucking companies don’t have to lift a finger to collect payments from their customers.

3. Business Line of Credit

Business lines of credit (LOCs) work much like that of a credit card. The trucking business owner is given a credit limit and he’s allowed to take out the money he needs and pay it back until his credit limit is restored. LOCs are extremely helpful for trucking companies considering they constantly have to keep up with the supply demands of the industry.

Because of this, they need to have immediate access to cash whenever they need it.

A line of credit also comes with advantages. For one, your credit limit can be stretched if pay your dues on time. Aside from that, LOCs also have lower interest rates compared to other types of loans. With an open credit line, you can meet the demands of the industry without any worries.

Other Uses of Trucking Business Loans

Aside from purchasing trucks and fleets, trucking companies also need trucking business loans for other reasons, such as:
Trucking loan usage

1. Hiring more drivers

With the increasing demand in the trucking and freight industry, companies need to keep up by purchasing more trucks and hiring people to operate them. However, the hiring process can be expensive. Included in the costs are the fees associated with a recruitment agency, training and the licensing fees of drivers, as well as insurance policies.

Fortunately, with trucking business loans, you won’t have to worry about falling short on cash to pay these fees.

2. Purchase inventory

Inventory is another important part of the trucking business. With additional working capital, you will have a chance to purchase truck parts in bulk. For instance, tires and other mechanical parts have to be replaced from time to time, and buying these in bulk can lead to substantial cash savings for the company.

Not only will you get to save extra cash, but you’ll also ensure that your trucks are always in tip-top shape.

3. System improvements or automation

With most businesses relying heavily on technology today, there’s no reason why you should let your company fall or stay behind. Trucking companies, nowadays, are required to have an automated login system for their drivers.

This helps companies track the working hours of their drivers and also monitors the status of deliveries. Additionally, improvements done on your system will also help give you an ongoing competitive advantage.

4. Startup Costs

There’s no denying the fact that starting a trucking company is a costly venture. Rent, equipment, office supplies, utilities, and fuel have to be paid and the prices can be steep.

No matter how prepared business owners think they are, funds can quickly go low which leaves them with no other choice but to apply for additional financing from banks or other lending institutions.

Although taking out a loan can be initially risky, once you learn how to use it properly to your advantage, you can be sure your company will be well on its way to success.

Applying for Trucking Business Loans

What are the Advantages and Disadvantages of Applying for Trucking Business Loans?

Investments, regardless of the nature, always come with a distinct set of pros, and cons and trucking business loans are no exception.

When you take out a business loan, no matter the type, you’ll be taking on a huge risk. If a mistake is made during the application stage, you’ll be risking the financial stability of your trucking company.

However, here’s the upside:

Low-interest rates compared to bank loans

Flexible payment terms

No need to present cash for collateral

Now, the downside:

Trucks can be repossessed if a borrower fails to meet payments

Truck values depreciate over time.

Should You Apply for a Trucking Business Loan?

The simple answer is absolutely yes.

By acquiring one, you’ll get to sustain the needs of your company, improve your services, and stay ahead of your competitors without sacrificing the health of your company’s cash flow.

By acquiring one, you’ll get to sustain the needs of your company, improve your services, and stay ahead of your competitors without sacrificing the health of your company’s cash flow.

So, make it a priority to talk to one of the most trusted financial experts near you such as SMB Compass, so you can get all the details regarding business loans for trucking companies.

Learn About Your Financing Options

Call Us: 888-853-8922