(866) 264 - 7007

Transportation Business Financing: Everything A Small Business Owner Needs to Know

Transportation Business Financing: Everything A Small Business Owner Needs to Know

To run a successful transportation company, it’s essential to have the financial resources needed to cover expenses such as vehicle purchases and repairs, employee salaries and benefits, fuel costs, and more.

If you are looking for ways to finance your transportation business, you are not alone. Many small business owners find themselves in this situation. Luckily, several financing options, such as transportation business loans, are available to you.

This article will discuss the various types of transport loans and provide tips on how to get the money you need to grow your business.

How to Use Transportation Business Loans

Transportation companies with huge business goals but not enough cash can seek additional financing to secure their funding.

So how can you use these loans for your company?

There are a few different ways to use a transportation business loan.

  • To purchase vehicles or equipment for your business. This is an everyday use for transportation loans, as new vehicles and equipment can be expensive.
  • To cover the costs of doing business, such as employee salaries, fuel costs, and repairs. This can help keep your business running smoothly and prevent unexpected expenses from causing problems.
  • To expand your business. This can include hiring more employees, expanding into new markets, or purchasing new vehicles or equipment.

Transportation companies looking to scale their business can look into loans to finance their business goals. Read on to discover the most common loan options for transportation financing.

What Are the Types of Transportation Business Loans?

If you run a transportation company or a commercial vehicle business, you know how costly it is to invest in transportation equipment.

Buying a new truck can eat up your cash flow and leave you without working capital for emergencies and unforeseen expenses, thus needing transportation financing.

Here are five transportation business loans to consider:

1. Transportation Equipment Financing

Transportation equipment financing is a type of loan that can finance the purchase of new or used commercial transportation equipment.

The loan amount is typically based on the fair market value of the equipment being financed, and the lender will take a security interest in the equipment until the loan is repaid.

Interest rates are usually lower than credit card rates, and the loan terms can be up to 10 years.

2. SBA Loans for Transportation Companies

The Small Business Administration (SBA) offers several small business loans for transportation businesses.

The SBA 7(a) loan is the most common loan offered by the SBA and can be used to finance various business purposes, including equipment, inventory, and real estate.

The SBA also offers loans specifically for purchasing transportation equipment, such as the SBA 504 and the SBA Express loans.

3. Transportation Line of Credit

A transportation business line of credit is a transportation loan that gives you access to a pool of funds that you can use when you need it.

The funds can be used for any purpose, including purchasing new or used transportation equipment.

You only pay interest on the funds you use, and the line of credit can be used for short-term or long-term needs.

4. Transporation Collateral Loans

A transportation collateral loan is a type of loan that uses the assets of your business as collateral.

This type of loan is usually used to finance the purchase of new or used transportation equipment.

The lender will take a security interest in the assets being financed, and you will need to provide documentation showing that you can repay the loan.

5. Transporation Equipment Lease

An equipment lease is a type of financing that allows you to use the equipment you are purchasing for your business without paying for it all upfront. 

The lease is for a specific period (usually 3 to 5 years), and you will need to make monthly payments.

At the end of the lease, you have the option to purchase the equipment or return it to the lender.

Why Finance Transportation Equipment?

There are several reasons why you might want to finance the purchase of transportation equipment:

  • You don’t have the cash to pay for the equipment up front.
  • The equipment is too expensive to purchase outright.
  • You need the equipment now and can’t wait for it to be paid for overtime.
  • The equipment will help you increase your profits, and you need the extra cash flow to cover the payments.
  • You want to take advantage of tax breaks associated with the purchase of transportation equipment.

The bottom line is that there are some benefits to financing the purchase of transportation equipment. It’s essential to consider if you are in the market for new or used commercial transportation equipment.

What are the Requirements to Apply for a Transportation Business Loan?

The requirements to apply for a transportation business loan vary depending on the type of loan you are using for.

Generally, you will need to provide documentation that shows:

  • Your business is a legal entity
  • You can repay the loan
  • The equipment you are purchasing is for business use
  • The purchase price of the equipment is within your budget
  • You have a good credit history (a minimum FICO Score of 650)

If you are applying for an SBA loan, you will also need to provide documentation showing that your business meets the SBA’s eligibility requirements.

Getting A Loan to Finance Your Transportation Company

Securing a transportation loan can help you grow your business and scale in the transportation industry.

Whether you are looking for a loan to purchase new transportation equipment, lease a vehicle or truck, or want access to capital through a line of credit, our lending experts are here to help you find the right financing solution for your company.

Contact us today to learn more about our transportation loans and how we can help you take your business to the next level.

Check if you qualify for funding