Why a Business Line of Credit Is Perfect for the Trucking Industry
Usually, trucking business loans are perfected for the industry, and they can help drivers overcome any gaps in their cash flow using lines of credit or working capital growth. The best option for truckers is a short repayment term and fast funding because quick repairs and funding new runs need to happen speedily.
Quick Loans Direct offers options like a short-term revenue advance, merchant cash advance, and fast business loans. You can get the cash you need, and they provide same day funding for the trucking industry. Below are some of the best options.
Figuring Out What You Need
The trucking industry deals with a lot of variable expenses. Truck repairs, breakdowns, driver overtime, and other delays contribute to the cost of operating a fleet. It’s important to be able to get the money you need quickly to address these situations.
While speed may be the most critical component, you should also consider things like loan amount, repayment terms, and qualification requirements. It’s tough to get money from a traditional lender because the trucking industry can be seasonal and uncertain.
The best loans for truckers tend to be from unconventional lenders who can approve and offer funds quickly. An online business offering financing has less stringent requirements, and the funding is flexible. You can get the money you need fast, even before you get paid.
Short Term Loans
A short-term trucking business loan helps truckers increase their working capital and finance new contracts. While they may have a higher APR than some other loan options, the repayment terms are competitive if you can pay it off in twelve months or less.
These types of loans make it easy to grow your trucking business by footing the bill for new contracts and additional runs before the customer pays you. There usually aren’t any prepayment penalties, so you can pay the fixed dollar amount until it’s been paid off or you can pay it off when you get the money.
While short-term loans work great for truckers who want to grow their business, they cost a lot of money if you need long-term capital. They don’t work well for buying large equipment either, so if you have recurring needs, a business line of credit is better for you.
Business Lines of Credit
With business lines of credit, you have revolving access to capital that you can use and repay when you need it. You don’t have to apply again as you need more. You can fund the growth of your fleet or pay recurring expenses. It can even help prepare you for your busiest season.
With revolving lines of credit, you only pay interest on what you borrow, so it’s a great fit for truckers who need financing fast to take care of unexpected repairs. While traditional banks take more time to fund and are resistant to funding the trucking industry, online lenders can get you approved in less than twenty-four hours.
While a business line of credit is great for truckers who need recurring cash flow or to pay for things quickly, it’s not the best option if you need a large amount of capital over $100,000.
The Small Business Association (SBA) guarantees these types of loans with the lowest available rates in the industry. The government backs them, and they’re a good option for truckers because of the repayment terms.
They are typically used to provide long-term financing for large purchases like businesses or real estate. You can borrow up to five million and get as many as ten years to repay it. If you need to fund the purchase of several trucks, expand your business by acquiring a competitor, or open a new hub, an SBA loan will work for you.
The downside to SBA loans is that the application process is more stringent, it is hard to qualify, and it can take months to get your money. If you need quick access to money, an SBA loan is not the right choice. SBA loans are also only available through a traditional lender, so they’re not a great option if you don’t want to gather a lot of paperwork or fill out lengthy applications.
Trucking companies who want to acquire new trucks and trailers or replace existing ones should look into equipment financing options. This type of funding is for purchasing expensive equipment, and it can offer long-term financing at low interest rates.
Equipment financing requires collateral, but uses the equipment you purchase to secure the loan, so you don’t have to front any existing collateral. This works well if you’re just starting out and don’t have any. Using collateral to secure the loan also makes it possible for the lender to offer rates you won’t find anywhere else.
You can’t use equipment financing for your everyday working capital needs, so these loans aren’t for you if you don’t need to purchase large equipment. You also need a down payment to qualify for these, so it can be difficult if you don’t have access to the capital up front.
Business Credit Cards
Business credit cards are a lot like personal credit cards. They give your business access to a designated amount of pre-approved capital and can offer rewards for spending. You can use them for ongoing expenses like tolls, fuel, insurance, and more.
This is the easiest type of funding for truckers to qualify for. Because fuel is one of the biggest recurring costs of a trucking business, it’s easy to use business credit cards for these purchases in order to earn rewards and build up your business’s credit.
The maximum amount of capital you can get using a business credit card is typically $30,000, so it should only be used for small expenses. You can use them for small recurring costs or costs while you’re on the road, but you can’t use it for cash flow gaps or payroll.
Improving Your Chances
There are things you can do now to improve your chances of getting funded later if you need it. Monitor your business and personal credit scores to make sure they’re good. Separate your business and personal income to make it easier to prove the revenue and stability of your company. Always apply for funding when your revenue is on the upward trend. If you foresee a cash flow issue or the need to purchase equipment soon, apply now while revenue is good.
There are a lot of options for you, and each has its own purpose. Your needs will determine which type of financing is best for you. Alternative lenders like Quick Loans Direct can help you get approved and funded in less than twenty-four hours, and often the same day.