The Ultimate Guide to Trucking Business Loans
Fortunately, by applying for a trucking business loan, you’ll have access to the additional working capital that you need. In this post, we’ll explain how you can utilize a small business loan to grow your trucking business.
Trucking Business Finance Options and How to Select a Financing Product for Your Business:
Although this post will primarily focus on trucking business loans, there are many types of financing options that you can consider. This includes business lines of credit, merchant cash advances, equipment financing, and business credit cards.
Before you submit a financing application, make sure you weigh all your options. While most trucking business owners pursue term loans, you should review other financing products as well.
When you review financing options, you should also find out the typical length of their application process. This is especially the case if you need financing as soon as possible. While some alternative lenders can provide approvals within 24 hours, some banks can take weeks or even months to get back to applicants.
Another aspect to consider when reviewing trucking business finance options is the application prerequisites. For example, some lenders will have a time in business requirement. Most financing providers will want to review your credit score, and they may want to review your bank statements. In addition to being able to qualify, these figures could affect the repayment terms and interest rates you’re given.
How to Use a Trucking Business Loan:
1. Expand Your Fleet
According to recent research from the American Transportation Research Institute, trucking companies with large fleets typically earn a greater return on their investment. In addition to saving on the cost of shipping per mile, larger companies can also save on equipment, permits, insurance, fuel, tolls, and other costs.
If you currently have a limited number of trucks, you may find yourself having to turn down jobs, which can hurt your bottom line. By expanding your fleet, you can take on more jobs, which will increase your revenues. Developing your fleet early is essential for successfully positioning yourself in this very competitive industry.
2. Hire More Drivers
Having enough drivers is necessary for your trucking business to succeed. Sadly, there are many costs of hiring drivers that will need to be paid prior to them starting their jobs.
To start, you may need to invest in hiring costs, which can include working with a recruiter or posting on paid job sites. In addition, you must be able to afford training, licenses, permits, insurance, possible union costs, and other expenses. You’ll also need to budget for your staff’s uniforms and personal equipment.
Although these costs may seem steep, your trucking business will benefit in the long-term from having more drivers. Using your business loan can make this possible!
3. Update Technology
Currently, there are more high-tech solutions for trucks than ever before. Due to this, finding ways to implement new technology is one of the surest ways your business can establish a competitive advantage. If you wait to update your technology, you may end up falling behind your competitors, or could risk underperforming.
There are many technology trends for trucks including improved camera systems, enhanced routing systems, electronic logging devices, among others. These technologies can help your trucks operate more efficiently and become substantially safer. Of course, these technologies can be costly, which is why having a trucking business loan can make new advancements possible.
4. Improve Logistics
The transportation and trucking industries are very dependent on the use of logistics. For example, UPS’s policy of only using left turns when necessary was a logistical move. By making this change, the company used 10 million fewer gallons of fuel per year. Even if your company isn’t operating on a large scale like UPS, there are still logistical changes you can make to operate at a higher level.
Improving your company’s logistics involves many different pieces. These advantages are often found by process engineers, operation experts, and even using automated data systems. By applying for a trucking business loan, you can invest in a system that can effectively meet your needs.
5. Save on Inventory
In most industries, buying larger quantities can help your business save on a per-unit basis. Over time, driving down marginal costs is one of the best ways to increase your trucking business’ bottom line.
Using additional working capital, you can purchase more inventory for your trucking company. For instance, you can buy tires, mechanical equipment, lights, and other goods in bulk. By doing this, you can lower your annual expenses.
Conclusion: Truck Loans Can Help You Grow Your Business
Owning a trucking business can be a lucrative venture, and the industry is vital. Without commercial trucks, the cost of moving goods to a specific location would increase by a large amount. Although the industry is clearly here to stay, only some trucking companies will succeed. Applying for additional working capital can help your trucking business pursue its long-term goals and continue to grow.
Editor’s Note: This post was updated for accuracy and comprehensiveness in September 2019.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.