Commercial Truck Financing: What Are Your Options?
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Commercial Truck Financing: What Are Your Options?

No matter what industry they operate in, all business owners come to a point over their business’ life cycle where they may need some additional working capital. Commercial trucking companies are no different, however, like everyone else, acquiring the financing they need can be quite difficult at times. Trucking companies tend to have a hard time with obtaining financing through traditional lending channels. They are considered high risk for a few reasons, including:

  • Globalizations
  • Pricing Powers
  • Payments coming in at 30, 60, and 90 days after job completion
  • Demand for Trucking
  • Fuel Cost Increases
  • Driver Shortages

Aside from the above, it’s still hard to obtain the financing through a traditional lender for other reasons. As mentioned in our recent blog, “3 Reasons Why Business Loan Application Get Declined By Traditional Lenders,”  commercial trucking business owners may be hit with a decline due to having no personal collateral to pledge, poor credit, no credit, low cash flow, and more. Rest assured, though, there are still funding options available.

 

A Few Funding Options

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Luckily, despite the aforementioned risk factors there are many alternative financing options. Let’s take a closer look at some:

Equipment Financing: Equipment Financing is a loan product used to help business owners purchase any type of equipment needed to run the business. The loan amount is dependent upon the type of equipment needed, as the repayment term is usually as long as the expected life of the piece of equipment and if it is used or new.

Split Funding aka Merchant Cash Advance: Short-term financing transactions that are collected through a set percentage of your Visa and MasterCard sales that are accepted at your place of business. Probably the most common term used in the industry. These do not have a set repayment schedule and are based on the volume of your businesses credit card processing sales. These are usually only guaranteed by the future sales of your business.

Term Loans: A loan that is backed by a bank for an exact amount that has a specified repayment timetable and interest rate that are adjusted accordingly. Terms mature between 1 and 10 years.

Invoice Factoring: Invoice Factoring is used to finance businesses with short-term cash flow issues – especially when your business doesn’t qualify for a traditional bank loan or any other alternative solution. Your lender will factor your business’ customers’ invoices to match your working capital needs.

ACH Loan: These loans may need personal guarantees, and have a fixed repayment schedule that is paid either daily, weekly or monthly. These products are catered to industries that do not accept credit cards and need a fixed payment.

Business Lines of Credit: A rotating loan that gives business owners access to a fixed amount of money, which they can use day-to-day according to their need for cash. Interest is only paid on the amount of the advance actually used.

What Can The Capital Be Used For?

The great thing about these commercial truck financing options is that the capital obtained after funding can be used for anything as long as it pertains to the trucking business. Here are a few popular uses:

  • Inventory & Equipment Purchases
  • Unforeseen Circumstances
  • New Locations
  • Employee Training & New Hires
  • Various Business Expenses

Before You Apply, Ask Yourself a Few Questions & Do Your Research

commercial truck | Excel Capital Management

Identify Your Business’ Needs – First things first, why does your business need a loan in the first place? Sit down with your core staff members, financial advisors, or simply yourself to determine your business’ needs and how a quick business loan could help. Do you need to purchase inventory, hire additional staff, catch up on bills? Having a plan of execution once the loan is acquired is essential for success, as well as a plan for paying the loan back.

Do the Due Diligence – You may hear the phrase, “do the due diligence” a lot when researching quick business loans. In simpler terms, this means doing the necessary research before applying and accepting an offer with a lender. There are thousands of lenders and brokers out there – traditional and alternative. Don’t take everything at face value. Learn as much as you can about each lender you are interested in, compare pricing, read reviews, ask questions, and follow your gut if something just doesn’t seem right. You have the right to protect yourself and your business. The last thing you want to do is put your business in more of a financial bind or have setbacks. Research and knowledge is key. Do your due diligence.

Choose the Best Quick Business Loan Option – Maybe you did this when identifying why your business needs a quick business loan, but it’s a good idea to confirm again the type of loan product your business truly needs. Speak with your chosen lender to go over all of your options and get a better understanding of each financing option and how everything works.

Find Out What’s Needed To Qualify and Apply – All lenders have different business loan qualification guidelines. Depending on your business’ financial standing the amount of money you are looking to obtain, the documentation needed to be presented with an approval will vary. It is a good idea to at least have your last six months of business bank and credit card processing statements available, as well as additional financial documents like P&L and Balance Sheets and tax returns easily accessible.

The Application, Approval and Funding Process

The great thing about the commercial truck financing options is that the application, approval, and funding process is quick and simple. Generally, lenders that provide these financing options only require a simple, one-page application, four months of recent business bank statements, and four months of business credit card processing statements to get started. Once these pieces of documentation (and maybe a few others) are received, you can be presented with an approval and funded in as little at three business days!

For more on commercial truck financing options, contact one of our funding specialists today at 877-880-8086 or APPLY NOW! Also, check out one of our latest Success Stories to learn how Excel Capital Management helped a trucking company get out of a bind!

 

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