Monday 4 March 2024
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Best Loans for Transportation & Trucking Businesses

Best Loans for Transportation & Trucking Businesses

Whether you’re looking to start a new transportation or trucking company or need working capital to run a current operation, getting a transportation business loan can help you grow. This guide will show you the different types of financing options available for transport companies providing shipping and logistics.

1) Short Term Loan

A short term provides you a fixed lump sum of capital in exchange for a fixed interest rate from a lender. You pay the money back overtime based on the agreed upon payment schedule. Lenders like Clarify Capital, Fundera, and American Express provide flexible payment options.

2) Equipment Loans

Similar to a traditional car loan, an equipment loan lets you borrow up to 100% of the money needed to buy or lease new equipment. Your fleet of trucks is the main ingredient for the success of your business. Trucks break down all the time and they end up costing you money. An equipment loan allows you to have a well-maintained fleet running at all times.

3) Line of Credit for Transportation Businesses

A business line of credit works like a credit card (but with much lower APR). The lending company approves you for a maximum credit line which you can withdraw funds from when needed. One core benefit of a line of credit is that you only pay interest on funds you use. For example, if you have a $50,000 credit line but only use $1,000 of it, you will only pay interest on the $1,000.

4) Invoice Factoring

Transportation and trucking companies often have outstanding invoices to customers that have yet to be paid. Factoring allows you to get up to 100% of the invoice value up front from a lender based on a factor rate. There is no collateral needed from the invoices themselves. Bad credit is not an issue either as a factoring company will look at the credit history of your customer, not your own personal credit score.

5) SBA 7(A) Loans

If your needs for working capital are not urgent, it’s worthwhile to go through the SBA loan process to see if you qualify for a loan from the federal agency. The SBA itself doesn’t loan you the money. Instead, the Small Business Administration backs your loan up to 80% via an authorized bank or lender.

There are plenty of options available for transportation companies to get funded. It’s a good idea to pick one that fits your business goals and needs for working capital.