Trucking Business Loans

What are trucking business loans?

A trucking business loan is any business loan you use to pay for expenses in your trucking business. Trucking business loans are traditionally a lump sum loan you receive and pay back over a fixed term of years, but there are other forms of financing available which we’ll cover in this guide.

How do trucking business loans work?

Trucking business loans are usually a lump sum you borrow from a lender over a short, medium, or long term, and pay back plus interest via a monthly payment. These loans allow you to pay for equipment, maintenance, services, staff, and other costs associated with running a successful trucking business.

Types of Trucking Business Loans & Finance Options

• Term Loans: This is the traditional type of loan where you get a lump sum and pay it back over a short, medium, or long term. Term loans are usually offered by online lenders who will ensure you have your funding quickly one approved.
• Bank Loans: If you have a long business history and good credit history, you may be able to qualify for a traditional bank loan. This is a form of term loan and usually offer some of the lowest interest rates available (2-5%), but are often hard to secure.
• SBA Loans: These are term loans guaranteed by the Small Business Administration, and so they’re slightly easier to get, offer more money than you may get with a normal term loan, and have low interest rates (2-12%). The downside of these loans is that there is a lot of competition for them and so the application process can take as much as 12 weeks.
• Equipment Financing: Equipment financing is one of the best choices if you’re looking to purchase new trucks, loading and unloading equipment, or technology for your business. This is like a term loan but the loan is secured by the equipment purchased with the loan. This means their requirements are often less strict and have lower rates, but if you default they’ll take the equipment to recoup their losses.
• Business Credit Card: A credit card won’t be the right choice if you’re looking to make a big purchase, but if you’re looking for a way to borrow to smooth cash flow when waiting for invoices to be paid, this can be a good option for paying for small expenses, like license and registration fees and fuel.
• Business Line of Credit: This is like a credit card in that you’re given a maximum credit limit you can use, but it is usually more like a bank account to access. You can use credit as and when you please, only paying interest on the money you’ve actually borrowed, and you can usually reuse the credit once you’ve paid it back.
• Invoice Financing: There are two forms of invoice financing, invoice factoring and invoice financing. Invoice factoring is where you sell an unpaid invoice to a third-party company for around 95% of the value of the invoice. You have then washed your hands of your customer, and it’s up to the invoice factoring company to get paid by your client. This is a good option if you need financing fast and aren’t worried about keeping a future relationship with the client.It’s also a good option if you are unlikely to qualify for traditional forms of financing due to your credit score, because the invoice factoring company buys the invoice from you, they aren’t lending you money, and so they don’t care about your credit score.

  Invoice financing is where you borrow the money you’re waiting for from an unpaid invoice from a third-party company and pay it back once you’ve been paid by the client. This is a good option if you have decent credit and want to keep control of the customer experience.

Lenders that offer trucking business loans

BlueVine

✔ Funding: Borrow $5,000 - $250,000
✔ Minimum Credit Score: 600
✔ Loan term: 6-12 months
✔ Funding turnaround: 24-48 hours

With BlueVine, borrowers can get approval as fast as 24 hours and obtain a business line of credit for short term capital needs while only paying interest on the funds you borrow.

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Fundbox

✔ Funding: Borrow $2,500 - $150,000
✔ Minimum Credit Score: 600
✔ Loan term: 12-24 months
✔ Funding turnaround: as fast as next business day

Fundbox requires minimal documentation and access to a revolving line of credit without origination or maintenance fees. Borrowers are not required to have collateral (with exception of larger credit lines which are subject to a personal guarantee).

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SBA 7(a) loan

✔ Funding: Borrow up to $5,000,000
✔ Minimum Credit Score: 650
✔ Best For: SBA loans
✔ Funding turnaround: Varies.

The SBA 7(a) program features lenders such as Wells Fargo in their network and provides capped interest rates and long repayment term flexibility. Term loans and lines of credit access available. Typically, collateral will be required with a personal guarantee. Funding times vary and may be longer than most other lenders.

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How can a trucking loan help my business?

A trucking business loan can help you expand your services, enter a new market, cover costs, ease cash flow, and more. It’s one of the best ways to expand your business without depleting your working capital or savings.

How can you use a trucking business loan?

A trucking business loan can have numerous uses. Some common examples include:

• Expanding your fleet (purchase more commercial vehicles, different types or size commercial vehicles, and trailers)
• Upgrade your on-board technology
• Upgrade your office equipment
• Hire more drivers
• Ease cash flow while waiting for invoices to be paid
• Pay for vehicle maintenance
• Website and marketing materials
• Hire or buy a new base for your business
• Insurance
• Investing in compliance software