The trucking industry provides vital goods to communities across the country and is an integral part of the economy. Many industries depend on the trucking industry to source the goods they need. The trucking industry creates thousands of jobs each year and generates approximately $650 billion in revenues.

Trucking business owners, like most entrepreneurs, are well aware of the financial challenges and cash flow constraints that can impact their business. It can be difficult to predict expenses due to external factors such as fluctuating gas prices, supply chain restrictions, and changes in labor and workforce.

Many trucking business owners may decide to take a break from expanding their businesses in order save money for unexpected expenses. However, financing is essential to either start your trucking company or grow your fleet.

What is a Trucking Loan?

Trucking loans are a way to get the capital you need in order to buy a truck, repair it, or upgrade your fleet. You can also use a trucking loan for general business purposes like buying fuel or inventory.

A trucking loan financing doesn’t require collateral. The collateral is the truck you buy. Some lenders may still require a down payment to secure a loan. This can be anywhere from 5% to 25% depending on the truck’s price.

However, if you are unable to pay the loan payments, the lender can seize your truck to recover their losses. One of the benefits of financing is that you own your truck once the entire debt has been paid off.

Commercial Truck Financing Vs. Leasing

It is important to consider the pros and cons of leasing or financing your truck when looking at your options. These are the key points that will help you make a decision.

Commercial Truck Financing: The Pros and Cons

After paying your financing loan, you can own your truck through commercial truck financing. Monthly payments are made towards the truck’s equity. After you pay off the entire loan, the truck will be yours and you can use it as you wish. You can also sell the truck to buy a newer one if needed.

A key point to remember is Depreciationspan styling=”font-weight 400 ;”>. It’s likely that you won’t get the entire value of your truck when you sell it. You should be able to keep a part of your initial investment. You’ll also see a return on your investment if you choose financing over leasing.

Commercial Truck Leasing: The Pros and Cons

You can borrow the truck through commercial truck leasing, provided you make regular monthly payments. Leasing commercial trucks typically lasts for between one and three years, depending on which leasing company.

Commercial truck leasing is more affordable than financing because you don’t have to actually buy the truck. Leasing a truck is more affordable than financing in the short-term, as there are fewer upfront costs and lower monthly payment.

Commercial truck leasing, on the other hand, can place restrictions on truck usage because you don’t own the truck outright. The monthly payments won’t go towards your ownership. After your lease ends, you will need to search for a new vehicle. Leasing can prove more costly than financing long-term.

5 Advantages of a Trucking Loan

Business owners can finance to alleviate liquidity worries and to ensure that they have the resources they need to address challenges and grow their business. Here are some top reasons trucking companies need financing.

Cover startup expenses

It can be difficult to start a business because of the initial costs. The equipment can often be the most expensive part of a business. Commercial truck financing allows you to work with a lender in order to finance startup costs and split large investments over time.

Purchase trucks

You’re building equity and long-term investment in your business by owning trucks, instead of leasing. If you want, you can also sell or trade your vehicle at any time. These moves can lead to significant savings over time.

Operating costs

Trucking companies face many expenses, not just the cost of purchasing expensive vehicles. Licenses, permits and insurance are just a few of the costs that trucking businesses face. There are also ongoing costs for vehicle repairs and maintenance.

You can use trucking loans to pay for operational expenses, without affecting cash flow. You can still make consistent monthly payments and focus on your business.

Marketing

It’s important to manage your day-to-day expenses, but it’s equally important to plan for long-term growth. Marketing is essential to your brand’s success and to attract new customers.Trucking loans can help you do this. You can use financing to fund advertising, networking opportunities, or other promotional strategies.

Wages for employees

Today’s economy is difficult for business owners to find qualified labor. Both current and potential employees place wages as a top priority. You can take care of your existing workers and attract the best talent with financing.

How to Select a Trucking Loan

You have many options when it comes to financing your trucking business. Here are the most popular.

SBA loans

Small Business Administration (SBA), loans are a government-backed financing option that offers benefits for small business owners. These loans offer low interest rates, high funding amounts and repayment terms up to 25 year. This option can be used to reduce the cost of a costly vehicle by making long-term monthly payments at low rates.

SBA loans can be obtained at banks, online lenders and other qualified lenders. To determine if you are eligible, take a look at the requirements for SBA loans.

Terms loans

Term loans are the oldest type of business loan. They have a lump sum payment, which is repaid over a period of one to 25 years. Term loans are available for many business expenses. However, you will need to determine the amount of funding that you require in order to avoid borrowing more than you actually need. A term loan can be used in a straightforward way by knowing the truck model and cost.

Credit lines for business

A business credit line is similar to a business credit card. It allows you to borrow money for business expenses. This is a flexible financing option for entrepreneurs. You can access capital as needed and only pay interest.

Revolving credit lines allow you to pay off the balance and retake the funds. Your line of credit can be used for all business expenses. Trucking companies can use their credit line to pay for fuel, tolls and other expenses.

How to Apply For a Trucking Loan

The process of applying for a trucking loan business loan is the same as any other business loan. There are specific steps you need to follow and criteria that you must meet. These steps will help you get to know the process.

Step 1 – Understand the amount of funding that you will need

The first step in buying a truck is to calculate the price of the vehicle that you are interested. You will need to estimate the cost of new employees and marketing efforts if you plan to invest in your business beyond purchasing commercial vehicles.

Step 2 – Consider the requirements for a loan to a trucking company

You must meet the requirements to be eligible for a loan. The criteria will vary depending on the lender. Online lenders are better for young businesses with poor credit. Online lenders are also faster to approve your application and can provide funding within 24 hours.

Step 3 – Choose the loan type

Before you start looking at lenders, it is important to think about the type of loan that you are interested in. It is important to be informed about all options available so that you can make an informed decision regarding the future of your company. Consider your business from both a macro and micro perspective to determine the best type of loan for you.

Step 4: Review different lenders

There are many types of lenders. Each lender has its own eligibility requirements. They may also differ in their approach to lending. You might get declined by one lender, depending on the nature of your business. Other lenders might be willing to offer you terms and rates that are more favorable.

One way to get a loan for your business is through banks. These lenders typically have the lowest interest rates, but they also have the most stringent requirements. Online lenders are a more accessible option for small businesses and start-ups that require quick funding.

National Business Capital is an online marketplace that connects you with a variety of lenders through one application. You can streamline your search and save time. National can be used to search for the best loan offer that suits your needs.

Step 5: Submit Your Application

Once you have a clear understanding of your business and a general idea of the type and amount of financing you need, you can prepare your application.

While banks will have strict requirements, online lenders are flexible and can work with your credit history and business history. This makes it easier to find the right options for you. Online lenders can be quicker than banks if you require cash fast. However, application waiting times will vary depending on the lender.

Apply to a Trucking Loan with National

A healthy cash flow is vital for trucking business owners to cover operating costs and pay for unexpected expenses. The quality of your truck fleet is also important. You can manage multiple business needs with trucking loans without compromising your cash flow or losing equity.

National Capital Business assists entrepreneurs and small businesses in securing affordable financing through an online network of lenders. You can also secure funding for your trucking business with over $2B in funding via 25,000+ transactions. Start by filling out this online application.