If you bought it, a truck brought it. Most of the supplies delivered nationwide to retail stores, hospitals, construction sites, banks, and clean water depend on the trucking industry. The trucking industry doesn't just move raw materials, supplies, and manufactured items. According to the 2021 Statista Trucking Industry Report, it also drives a 732.3-billion-dollar market and employs more than 902,000 truck drivers nationwide.
Are you already part of this robust industry? Funding can enhance your opportunities when the road is wide open and aid you whenever you encounter bumps or delays. Owner-operators and business owners who oversee a trucking operation can benefit from trucking business loans and business funding. A trustworthy funder for your trucking business can be crucial to keeping operations running smoothly. We'll look at some options to find small business loans for trucking businesses.
Uses for a trucking business loan
Picking the best business loan for trucking also means taking care of your safety and the safety of your employees. Below are some ways you can use small business loans and funding for your trucking business:
Truck maintenance, repairs, and truck part replacements.
Business expenses during transportation trips.
Lease or purchase vehicles to expand your business.
Purchase or upgrade tools and machinery.
Employee salaries, recruitment, and retention.
Adding a new location or increasing warehouse or office space.
Funding for moments of slow growth.
So far, we have explored the importance of the trucking business to the economy. Also, we reviewed some of the main challenges and uses of a trucking business loan. Check some of the best loans and funding for trucking companies below.
Best loans and business funding for trucking companies
1. SBA loans for trucking companies
The most popular government funding programs for truckers and trucking companies are Small Business Administration (SBA) loans. Banks, financial institutions, and online funders are issued these loans, but the U.S. government sponsors them. They can go from $30,000 to $5 million and help you cover some of the expenses we've previously covered.
The upside is that SBA loans typically have low-interest rates, smaller down payments, and long terms for repayment. The downside is that their application process can be long and strict. You'll probably need a solid credit score, a business structure, and a stable credit score. The following are types of SBA loans for a trucking company:
The SBA 7(a) loan program
You can get up to $5 million financing as a business owner. The SBA can guarantee 85% of a loan up to $150,000, whereas you're only 75% guaranteed with additional funding. The SBA can extend your payments to six years, and interest rates can go from 8% to 13%, depending on the funder.
The SBA Microloans can help you cover travel expenses, supplies, and the administration and marketing of your trucking business. You can apply for $50,000 in funding or less and the average loan distributed through this program is $13,000, depending on the lender's conditions. The maximum repayment term allowed for an SBA microloan is six years. Interest rates depend on the lender but generally go from 8-13%.
2. Equipment financing services
Equipment funding is critical for the trucking industry that depends, well, on trucks. We're talking about purchasing trucks valued at anything from $30,000 to $150,000, depending on if the equipment you purchase is a commercial truck, tractor, repair tools, heavy-duty vehicles, long-haul semi-trucks, and tow trucks. There are a few limits on how you can expand and mold your trucking business.
Not only that, but because of the new government and industry regulations, you'll need to renew your truck to make it more mile efficient constantly and environmentally conscious. Equipment funding will allow you to break down expensive equipment costs into smaller payments that are easier to manage. Some of the following are equipment financing services for trucking companies:
An option only viable for those who want to rent and not own the truck or equipment is an equipment lease. The downside is that the equipment is not yours; it is just a temporary lease, where you pay monthly to use the equipment for a determined period. Once you pay the lease, you'll have to return the truck or upgrade to another vehicle. Also, the lease costs are usually higher than loans or other types of funding due to their high-interest rates.
Equipment loans and funding
If you want to purchase equipment and become a proprietor, we suggest reaching out for a loan or other types of funding. Once you finish paying, the equipment will be yours for years. The typical option is traditional bank loans, but they typically have higher lending requirements. They will ask you for a high credit score, more than two years in business, collateral, and financial documentation. If this is not the best option for you, you can always opt for different options such as:
Online term loans
Lines of credit
3. Alternative business funding
Alternative funding can provide working capital for trucking businesses needing expansion. Trucking business owners have an option to conventional forms of finance thanks to merchant cash advances. A merchant cash advance, often referred to as a business cash advance, is an advance made against the predicted future revenue of a company rather than a standard business loan. The funds are typically available within 72 hours. Business owners don't need to have perfect credit scores to be approved.
Suppose your trucking business has steady weekly revenues paid into a business bank account. In that case, you could check if you pre-qualify for One Park Financial's alternative funding programs.
For more than a decade, we've been working with many small business industries, including trucking businesses. Whatever type of commercial truck financing, utility truck financing, or simple office equipment leasing you need, there are many options. Reach out today. One of our funding experts will be more than happy to discuss your business needs and opportunities to determine what funding type best meets your needs.
4. Grants for trucking businesses
Unlike popular belief, there are also grants for business owners in the trucking industry. These grants can come from federal or local programs, private entities, and nonprofit associations. Unlike SBA loans and traditional banks, you won't need to return the money or subsidy. On the downside, you'll probably have to fulfill extensive requirements and get picked out of many applicants to qualify and get the working capital. The following are grants for trucking businesses:
USDA Rural Business Development Program
If you live and work in a rural area, generate less than $1 million in gross revenue, and have less than 50 workers, you can qualify for this grant. The USDA Rural Business Development grants can be used to purchase equipment to pay employee salaries.
LISC rural relief small business grants
Ford and Lowes partnered to create the Local Initiatives Support Corporation that funds eligible businesses between $5,000 and $20,000. Your truck must be registered in an area with a rural population of fewer than 50,000 people. In addition, they prioritize minorities and businesses in underserved communities.
NASE growth grants
As we previously stated, most truck business owners are sole proprietors. If this is your case, you can apply for the Growth Grant, awarded monthly and worth $4,000.
Choose a trucking loan or financing that makes sense for your company.
Whatever your financial requirements are, business funding is available to help you start or expand your trucking company. The key is understanding your options, shopping around, and determining whether the return on investment outweighs the loan cost.
Disclaimer: The content of this post has been prepared for informational purposes only. It is not intended to provide and should not be relied on for tax, legal, or accounting advice. Consult with your tax, legal, and accounting advisor before engaging in any transaction.