If you are in the commercial trucking business or are interested in starting your own business, one thing you will undeniably have to consider is financing. Whether you need financing to get your new business off the ground or are trying to elevate your existing business into a higher net profit margin, financing your business needs considerable consideration. Regardless of which type of commercial truck business you are either in or considering, the shape of your credit, or whether you have enough to put down, you can get financing regardless.
Check out the following information from Seek Capital you will need when looking to finance your new or existing commercial truck business.
Why the Commerical Truck Business is Booming
Commercial truck businesses are not only a booming but lucrative business that has a lot of staying power within the trucking industry. America, and even internationally, relies on the trucking industry to transport all sorts of goods across the country and internationally. It is the lifeline between consumer and business and without it, most businesses would be jeopardized. All of your favorite products you get from stores wouldn’t be there without commercial trucking. We owe a lot to this industry, which is why it’s always a great venture for anyone looking into getting into a reliable industry and a lot of profit to be made.
In addition to commercial trucking being profitable, there is also a need for drivers, which means that starting your own commercial truck business will be even more lucrative when truck drivers are in hot demand. So, before you begin rushing into financing, let’s break down all you need to know about financing your truck business.
Financing: 101
If you are new to financing or need a quick refresher, we’ve got the information you need to make it easy to understand what financing options are best for you. Check out the following types of borrower information you need to know before you choose a lender that best works for you:
- Credit Score – when it comes to financing, your credit score plays a huge role in whether or not lenders will consider you for a loan. Although having no credit doesn’t mean you won’t get approved for financing, it does make it harder and less likely for major banks to consider your profile, but it’s not impossible. Be sure you know what your credit score is before jumping into financing so you can find specific lenders who can help you with your credit score in mind.
- Documentation – lenders will always need to see the complete picture of your financial history, so always be prepared to bring documentation of this. This type of paperwork can include tax records, financial statements, business licenses, and much more to help the lender decide on their financing decision.
- Financing history – is always recommended that you have a great repayment history when it comes to being considered for a loan by a lender. Lenders want to see that you are good and reliable about repaying any of your debts or at least have a repayment plan set up that is in good standing.
Now that you know what is expected when it comes to financing, now you can start looking at the right types of loans that work for you and your commercial truck business. Check out below to learn more about the different types of loans available for your trucking business.
Types of Loans for Financing
Having gotten your credit score information, documentation lenders need for your profile, and have a stable or impressive repayment history, you are now set to start assessing the different types of loans for your commercial truck business financing.
The following are types of financing to consider:
- Truck loans or leases – for this type of loan, you can usually get approved with 0$ down and are typically split up into operating and capital leases, with the former being better of the two options. Another great thing about truck leases is that you can swamp out trucks and equipment each year for newer models.
- Capital leases – similar to leasing a car, capital leases typically use the commercial truck you finance as your asset. The best part about this type of financing is that once you fulfill the terms of that lease, the truck belongs to you entirely.
- Fleet financing – if you own or want to start a fleet truck business, you are already ahead of the game in terms of being approved for financing. Lenders love to see borrowers with existing fleets because they create less of a risk due to having several instead of one truck to impose on your revenue.
- Semi-truck financing – if semi-trucks are more the speed your business is in, you’ll need to be prepared to take on all that comes with that category for financing. Although semi-trucks can carry more loads and go further distances, they are more at risk with liability, even if they are more profitable in the long haul.
Commercial Truck Business Financing Made Easy
Like we stated earlier, financing your commercial truck business doesn’t have to get in the way of your running your business. As long as you understand what all is involved and how to be prepared when applying for a lender, you should have no issues getting approved for the financing you need.