Truck driving is one of the fastest growing jobs in America as 80% of all cargo is transported across the nation by trucks. According to the U.S. Bureau of Labor Statistics, there are more than 1.7 million heavy-duty and tractor-trailer truck driving jobs today. Additionally, a recent study found that “truck driver” was the most dominant job in 29 U.S. states. Although giant corporations like UPS and FedEx hire truck drivers, owning and operating a single truck or a small fleet is a frequent route to business ownership.
Owning a trucking business comes with the same financial challenges as other small enterprises. It’s important to keep a handle on cash flow and secure low-cost funds when it’s time for growth and savings.
Running a trucking business can be costly. Owners often need fast funds for repairs or covering overtime payroll if bad weather, traffic or other issues delay drivers. Unfortunately, fast can equal expensive. Here are options with a variety of rates and time to fund.
Term Business Loans
A business term loan is a lump sum of money paid back through regular payments at a fixed interest rate. The interest rate, repayment time and loan size depend on your credit rating and business revenue. This type of loan can be a great way to get the funds you need to successfully grow or maintain your business.
SmartBiz currently offers the following term loans through its bank partners for working capital, debt refinance and new equipment purchase:
- $30,000 to $200,000 loan amounts
- 2 – 5 year repayment terms
- Fixed interest rate*
- Monthly repayments
- No pre-payment penalties
* Interest rate depends on loan term and the applicant's credit and financial profile.
Learn more about bank term loans and how to apply on the SmartBiz Loans website here.
Business Lines of Credit
Truckers might need immediate access to funds when on the road. In fact, tires are the largest percentage of problems (51.3%) on the road. If you have a blown tire, there’s no time to fill out a loan application!
A business line of credit allows you to borrow funds up to a limit based on your credit, typically smaller than a term loan. You only pay interest on the amount you use, and you can continue borrowing as necessary until you reach the set maximum. These loans are usually unsecured, meaning that you won’t have to provide collateral to qualify. For in-depth information, read this post from the SmartBiz Blog: Small Business Lines of Credit Pros and Cons.
Business credit cards are revolving lines of credit. The main distinction is that they don’t terminate once the predetermined limit is reached. They work like personal credit cards, with varying spending rewards and offers depending on the lender. Learn more here: 5 Business Credit Card Myths.
Business Equipment Loans
A business equipment loan is specifically made for the purpose of buying equipment. Usually, these loans are intended for large purchases that don’t depreciate too quickly like a truck.
Equipment loans are specifically made for the purchase of a certain item, so they can be quicker to obtain than a traditional term loan, which can be more multi-purpose. Equipment loans can be taken out for amounts as large as 100% of a truck’s value, and the term is determined by how long the equipment will be used. Because the truck serves as collateral for the loan, it can sometimes be easier to apply and get approved.
The terms and rates of an equipment loan will depend on the cost of the truck, your business finances, and your credit score. A down payment typically in the 10-20% range may also usually be required as another way to show that you’ll be able to pay back the loan amount. The riskier the loan is, the higher the down payment may go.
SBA Loans
SBA 7(a) loans are known as the “gold standard” in small business funding. You might have heard that getting an SBA loan is a lengthy process. However, SmartBiz loans has streamlined the application. Funds can be distributed in as soon as 7 days after the application is completed. An SBA 7(a) loan has several advantages compared to other options including:
- Low interest rates
- Long terms
- Very low monthly payments
- Available for many uses
- Can help build business credit
- No prepayment penalty
To learn more about SBA 7(a) loans, visit the SmartBiz Loans website here.
Lenders and loan programs have unique eligibility requirements for an SBA loan. For example, some lenders may require a business plan while others do not. (SmartBiz Loans does not require a business plan). Requirements for an SBA loan facilitated by SmartBiz include:
- Time in business must be above 2 years
- Business owner’s personal credit score must be above 650
- The business must be U.S. based and owned by US citizen or Lawful Permanent Resident who is at least 21-years old
- No outstanding tax liens
- No bankruptcies or foreclosures in the past 3 years
- No recent charge-offs or settlements
- Current on government-related loans
In addition to great rates and long terms, an SBA loan can be used for a variety of purposes like working capital, debt refinance, marketing and hiring.
In Conclusion
Although running a trucking business can be expensive, low cost funds can fuel growth and savings. Want to learn more? This blog post takes a deep dive into how a small business can benefit from low-cost funds: 5 Ways Successful Companies Can Benefit from a Loan.
