Editor's choice: First Down Funding business loans
- No prepayment penalties
- Competitive rates
- Works with bad credit and most industries
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Time, unyielding effort and an incredible amount of coordination are necessary to keep a trucking company moving forward. Licensing, insurance, vehicle maintenance, drivers, tolls and new trucks all cost money, and the quality of each impacts the bottom line. Comparing all of your financing options and making the choice that’s best for your needs can make or break your profits.
This guide will take you through financing for trucking companies, how to compare lenders, and some great tips to get you through the process.
Trucking companies tend to do big freight deliveries and charge customers large amounts at a time. With this type of revenue model, you might have a good portion of your business income tied up in invoices. That’s why we’ve listed two types of accounts receivable financing options as the first to look into.
Now that you know your options, it’s time to figure out how to sort through them. Certain loans will offer a larger amount of funding. An equipment loan may offer a larger amount of financing than invoice factoring, for example. But invoice factoring could be used for a wider array of purchases versus equipment loans that are limited to purchase equipment.
Another factor to consider is loan term. Terms can vary among financing options. Invoice factoring has a finite term, and is paid off as soon as the invoices are paid — usually within a few weeks to months. Equipment and general purpose loans may be paid off over longer periods of time such as five or more years.
Lastly, be sure to consider fees and costs. The interest rate won’t be your only cost and might not be the best factor to show the cost difference between loan types with varying repayment terms. Look out for origination, prepayment, late payment and application fees. While you’d be hard-pressed to find a business loan that doesn’t charge additional fees, you may have an easier time finding ones with more reasonable penalties than others.
Each lender will have its own requirements, and some have more than others. Below you can find a package of the most common documents you’ll need to apply for financing:
While there’s no way to guarantee approval, try these four tips to improve your chances of getting your application across the line.
Your next cash flow solution or truck could be just around the corner. Take your time and review your finances, your business plan, and your needs before settling with any one lender. Shop around, compare your options and make the decision that’s best for your business.
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