The backbone of the U.S. economic system is trucking and transport companies. These businesses have many expenses to keep track of, making it difficult to get off the ground and stay profitable. This is especially true with the volatile fuel and material costs we have seen in the past two years. Although it’s a difficult task, entrepreneurs in this sector have one resource to help them manage their cash flow: short-term loans.

Short-term loan are exactly what you would expect. A financing solution that is and repaid in a short timespan styling=”font-weight 400 ;”>. These loans are often used by entrepreneurs to overcome a particular challenge or take advantage of an opportunity. Longer-term loans, however, are better suited to expenditures that take longer than one year. While each repayment plan is beneficial for certain industries and circumstances, trucking companies have the ability to reap the many benefits of short-term financing.

A short-term loan can be used for any purpose. This includes operational expenses, team expansions and special projects. Here’s what you need to know about short term loans for trucking companies looking to get ahead of their competition.

What are Short-Term Loans?

Businesses in short-term need of funds can get quick access to money through short-term loans. These loans can be used for temporary cash flow, to pay taxes, get necessary equipment, and even to renovate your home. Trucking companies can use these loans to help manage fuel costs, repair costs, equipment purchases and many other things.

The majority of short-term loans don’t require collateral. They also have flexible repayment terms that allow borrowers to repay them according to their own schedules. These loans are generally competitive in interest rates and can be obtained quickly, compared to other loan options.

How can a trucking company use a short-term loan?

Entrepreneurs trying to remain competitive face a tough situation due to the fluctuating costs of fuel, materials and vehicle parts. You might get a quote from a supplier that is lower than the price you need. However, the price could rise to twice the price the following week. This forces you to be vigilant and make sure you don’t spend more than you should. This is a problem that affects the entire industry. However, it can be more difficult if your cash flow restrictions limit your ability to buy the fuel, materials and equipment that you need to run your business.

A high-priced expense can hinder your ability to work at your best. A business loan can provide cash flow to cover your expenses and allow you to grow. These are just a few of the ways trucking companies can use short-term loans as a way to help them grow.

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  Cover fuel prices when prices rise
  
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  Buy trucks and other equipment
  
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  Get bulk supplier discounts
  
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  Additional team members
  
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  Bridge the gap between customer payments
  
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  Increase your physical location
  
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  Create a website
  
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  Create a new campaign
  

Short-term loans are available with fast repayment terms. This can help you save money on interest but it can also cause financial problems for your company if not managed properly. Late payments and total default can have serious consequences so make sure you carefully review your finances to see if you are able to repay the borrowed funds within the time limit.

What are the benefits of a short-term loan for trucking companies?

Trucking companies can get the funds they need quickly without waiting for their regular income to cover the cost of repairs and upgrades. They provide quick access to cash that can then be used for many purposes including fuel, insurance, repairs, maintenance and other unexpected expenses.

Because it is quick and easy, this type of financing helps reduce stress for both drivers and business owners. These short-term loans can be used to bridge funds for the purchase of new equipment and vehicles. This allows small trucking companies to increase their cash flow and expand their operations faster. This can result in higher profits over the long-term, which is a benefit for all companies.

Remember that your benefits from a short-term loan are dependent on who you deal with and what terms you agree to. The terms offered by the lender are not necessarily the best for your business goals. It is just that you have been approved for the loan. There are many horror stories of entrepreneurs who have been locked into bad contracts.

What types of short-term loans are available to trucking companies?

There are many options for short-term loans, some more flexible than others. Here are some of the most popular short-term loans that trucking entrepreneurs use:

Term Loans

A term loan allows you to borrow funds in one lump sum that you can manage over time. The lender will stipulate terms and interest payments. You will repay the loan amount. Term loans work best when you have an exact estimate of the cost of a project.

Business Line of Credit

The trucking industry has many financing options, including a business line of credit. It is flexible and short-term. You can draw capital from your credit line as needed, unlike a term loan that provides funds in one lump sum. You can borrow the same amount again once you have repaid the loan amount. This allows you to be prepared for any opportunity or challenge that may arise. For projects that you don’t know how much they will cost or for entrepreneurs who need an emergency fund, a line of credit is the best option.

Equipment Financing

Equipment financing can help you break down large asset purchases into manageable chunks. Equipment financing is a great option if you are looking to add a truck to your financial statement, fix a vehicle that has been damaged, or build your business with a CRM.

Revenue-Based Financing

Cash flow can be seriously affected by late payments and slow-paying customers. Revenue-based financing allows you to leverage future cash payments in the short-term, which will allow you to keep operating at your full potential. This type of financing can be beneficial for any challenge or opportunity. However, before you sign the dotted line, make sure the terms are appropriate to your business and goals.

What are the interest rates on short-term loans?

Lenders set interest rates based on your type of financing, how much you want to borrow, what repayment schedule you request, and financial information about your business. Your interest rate is a combination of all these factors.

Let’s look at the factors that affect your interest rate.

Types of Financing

The interest rate you pay will depend on the type of loan that you are applying for. Equipment financing agreements have generally higher interest rates than term loan, while SBA loans have the lowest interest rates.

Maximum amount to borrow

The amount you borrow will affect the interest rate. Because the lender is taking less risk in financing your business, interest rates will be lower for smaller amounts.

Repayment Schedule

Because of the lender’s risk, longer repayment terms will result in higher interest rates. The abridged schedule means that even though your interest rate may be higher for a short term loan, you will pay less interest compared to long-term financing.

Financial Information

When determining your interest rates, revenue, credit score and time in business all play a role. Your interest rate will be lower if you have a good credit rating, a substantial annual income, and a long time in business.

Lenders who offer to finance a business are taking on the risk of default regardless of its financial security and profitability. Anything can happen during repayments that causes the recipient of the loan to default on payments. Therefore, lenders have interest rates in place to protect themselves from a sudden default or loss. National’s Business Finance Advisors can help you find the right interest rate for your business.

Streamline your Search for Short-Term Loans with National Business Capital

Entrepreneurs don’t have the time to search for the right lender. How can you make time for your research when your business is running? National understands this and has created a time-saving tool for entrepreneurs to help you get from funding application to funding.

Our Business Finance Advisors use a network of 75+ lenders to match our clients with the best lender for them. Multiple competitive offers are sent to you in one application. This eliminates the time and effort required to complete each lender’s application. Our team is there to help you through every step. If you are not satisfied with any of the offers, we will go back to the drawing boards until we have a proposal that suits your business and your budget.

With more than $2B in transactions and 2,100 5-star Trustpilot reviews, we have secured more than $2B. National is the only company that can match its speed, simplicity and professionalism. You can count on it.

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FAQs

Why would a business use a short-term loan?

Short-term loans are used by businesses to address short-term problems and opportunities. Businesses that can repay the loan amount within one year of its start date or less, and have regular income or the opportunity to do so, will be best suited for the abridged repayment plan. A business might be able to get a discount from suppliers by buying inventory in bulk. However, they must have sufficient income to pay the loan.

How can you use an SBA loan to buy a semi-truck?

SBA 7(a), loans are ideal for adding sem trucks to your fleet. This financing option offers favorable terms and low interest rates. You can also get shorter repayment terms depending on your needs. Although the SBA underwriting process can be lengthy, National Business Capital is able to streamline your search for fast funding.

How do I apply for a short-term loan?

Finding a lender that offers short-term loans is easy. However, it can be difficult to find terms that suit your needs. You’ll first research lenders to find those that offer the type of financing you need. Make sure you carefully review each lender’s eligibility requirements. Next, gather financial information about your company and apply to each lender. Each application will be reviewed and a decision made. However, if you want to speed up the process, National and our 75+ lenders marketplace can help.