Unsecured Business Loan
An unsecured business loan is another great business loan option for trucking companies. As the name suggests, unsecured loans don’t require collateral, placing most of the risk on the lender. Borrowers with high credit scores are likely to qualify for one.
You can use the funds for almost any business purpose: payroll, equipment purchases, expansion, or day-to-day expenses. Qualifying for an unsecured loan is typically more difficult, but if you get one, this usually means that it’s easier for you to qualify for other loans.
Trucking companies heavily depend on the vehicle and equipment it uses. The most common equipment is the trucks, but business owners need other equipment to operate, including:
- Trailers: refrigerated trailers, flatbeds, dry vans, auto transport trailers, etc.
- Specialized trailers to transport liquids and other toxic materials
- Computers, laptops, and other technological equipment
- Vehicle jack
If you’re planning to open an office anytime soon, you can also use equipment financing to purchase furniture and fixtures.
Having the latest equipment and technology is necessary to remain competitive in a cutthroat industry. But purchasing them upfront can cause a dent in your working capital.
Equipment financing is the ideal loan product for business owners who need to purchase or lease equipment or vehicles. It’s easy to qualify for equipment financing since the equipment you’re looking to buy serves as collateral for the loan. However, remember that the lender has the right to repossess if you default on the loan.
Use your unpaid invoices to secure additional working capital. Invoice factoring is a financing option that allows business owners to sell their outstanding invoices to lenders at a discount in exchange for immediate financing. Lenders often give you 80% to 90% of the total invoice value upfront. The remaining percentage will be given once your customers paid their dues, minus a factoring fee.
Invoice factoring is a great option for companies with a lot of pending invoices that affect their cash flow. You can use the money to fund almost any purpose as long as it benefits your trucking company. It’s easy to qualify for invoice factoring as it has lower revenue, time in business, and credit score requirements.
The Small Business Administration (SBA) created SBA loans to help small businesses qualify for financing. They incentivize lenders to approve small business loans by guaranteeing up to 85% of the entire loan amount. This means that lenders will still get paid a portion of the loan even if you’re unable to repay it.
SBA loans are the most sought-after loans for small businesses as it offers lower interest rates, longer repayment terms, and higher loan amount compared to other loans. You can use the money to purchase another business, equipment, trucks, commercial real estate, and more.
However, remember that you need to prove that you are a strong borrower to qualify and the underwriting process often takes about a month.