Trucking Business Loans: How to Apply For and Use Financing
Fortunately, by applying for a trucking business loan, you’ll have access to the additional working capital that you need. In this blog post, we’ll explain how you can utilize a small business loan to grow your trucking business.
Trucking Business Finance Options: How to Select Financing 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 different types of loans and other financing options, such as:
- Business lines of credit
- Merchant cash advances
- Equipment financing
- Business credit cards
- SBA loans
Before you submit a loan application, make sure to take time and weigh all your options. While most trucking business owners pursue term loans, you should review other financing products as well.
When you compare business lenders, you should determine he typical length of their application processes. This is especially the case if you need financing as soon as possible. Often, alternative lenders can provide approvals within 24 hours. In comparison, 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. Below, you’ll find a few common business loan requirements:
- Time in Business: Some financing companies have a time in business requirement, so startup business owners likely won’t qualify.
- Minimum Credit Score: Most financing providers will want to review your credit score; if you have bad credit, you’ll need to raise your score before applying.
- Bank Statements: In most cases, business lenders will request to review your bank statements. In addition to being able to qualify, these figures could affect your business loan repayment terms and interest rate.
How to Use Truck Financing:
1. Expand Your Trucking Fleet
Per 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 expenses such as:
- Commercial Vehicles and Semi Trucks
- Truck Trailers
- Load Boards
If you currently have a limited number of trucks, you may find yourself having to turn down jobs. If you have to turn down clients, this will hurt your business’s overall bottom line.
By expanding your fleet, you can take on more jobs, which will increase your business 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. However, there are many hiring costs that will need to be purchased first.
To start, you may need to invest in hiring costs, such as hiring a recruiter or posting on paid job sites. In addition, you must be able to afford:
- Commercial drivers licenses
- Possible union costs
- Staff 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 small business loan can make this type of growth possible!
3. Update Trucking Technology
Currently, there are more high-tech solutions for trucks than ever before. Due to this, implementing 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.
There are many technology trends for trucks including:
- Improved camera systems
- Enhanced routing systems
- Electronic logging devices
These technologies can help your trucks operate more efficiently and become substantially safer. Of course, these technological advancements can be costly, which is why having a trucking business loan can make these investments possible.
4. Improve Your Business Logistics
The transportation and trucking industries are very dependent on the use of organized, seamless logistics. Without well-planed logistical processes, your business will likely struggle to fulfill increased demands. In addition to operational success, having logistics in place can help improve your business’s revenues.
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 trucking company isn’t operating on a large scale, there are still logistical changes you can make.
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 inventory such as:
- Mechanical equipment
- Other goods in bulk, which can lower your trucking business’s annual expenses.
Conclusion: Truck Loans Can Help You Grow Your Business
Owning a trucking business can be a lucrative venture, as the trucking industry is vital to the economy. Without commercial trucks, the cost of moving goods to a specific location would increase by a large amount.
Although the trucking industry is clearly here to stay, only some trucking companies will succeed. Due to this, it’s more important than ever to make strategic investments that will set your business apart from competitors.
After reading this blog post, you can probably identify at least one area of your business that you can improve upon. However, making business updates requires ample cash flow, and you may not be able to afford advancements without access to additional financing.
While the loan application process may seem daunting, we suggest applying for truck financing to pursue your business’s long-term goals. Once you have access to a business loan, you may be surprised at how quickly your business grows!
Editor’s Note: This post was updated for accuracy and comprehensiveness in September 2021.
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.