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How to Get a Trucking Business Loan for New and Used Trailers

It’s no secret that there were winners and losers in the COVID-19 economic fallout. Without a doubt, one of the winners is the still-booming e-commerce sector. Digital Commerce 360 reported that online spending represented 21.3% of total retail sales for the year 2020, with further reporting showing that Amazon alone accounted for nearly a third of these sales. What's staggering isn't so much these numbers themselves but rather the astronomical growth they represent. By taking advantage of innovative loan for trucking businesses, companies can expand their fleets to meet the higher-than-ever demand for cargo capacity. Yet, the traditional approach to lending is sure to fall short if growth continues. Consider this fact. 

The $861.2 billion consumers spent online in 2020 represents a 44.0% increase from the previous year. E-commerce is not only here to stay but here to dominate the retail sector. So,  how can logistics-focused businesses take advantage of the e-commerce boom? By taking advantage of innovative loan for trucking businesses, companies can expand their fleets to meet the higher-than-ever demand for cargo capacity. 

With flexible loans for truckers, businesses can replace old, fuel-guzzling equipment with the latest logistics innovations, all while avoiding the costly, time-consuming hassle of traditional financing. 

Can You Finance a Semi Truck Trailer With Bad Credit?

Despite what many potential loanees may think, poor credit history doesn’t doom a loan application. Though it may limit traditional financing options, those looking for a loan for a trucking business with a problematic credit history should remain optimistic.  There are plenty of direct lenders who will provide asset-based loans to applicants. 

In many of these alternative loans for truckers, the power unit or other owned trailers will serve as the collateral. This can be a boon to businesses, allowing them to use their past successes to prepare for future endeavors. Though a bad credit history may manifest into higher payments. However, flexible financing, such as cash-flow customized payment schedules, can help businesses design loans for trucking businesses that work for them. 

Before approaching a potential lender for a loan for trucking business, there are a few things every potential loanee should consider. 

1. Determine Eligibility

Every potential lender has unique upsides and downsides that businesses should consider when looking at loans for truckers. Knowing what kind of lender they're looking for and what type of screening process to expect from that lender can help businesses get a leg up in the financing process. Lenders are like truck stops: it can be tricky to know which are worth a visit and which are better to drive past. 

Some lenders provide a reasonably quick screening process before offering a loan for trucking business, Though these lenders will likely offer faster funding it might lack some of the customizations available at other lenders ore cautious lenders may take weeks, even months, to provide loans for truckers, and may only do so after performing asset checks and audits Transportation providers who are looking for a loan should consider working with industry-specific lenders. These lenders understand the trucking business, including the rules, regulations, and needs of companies looking for support.  

2. Gather Documents

Though some may require more than others, any reputable lender will ask to see certain documents before providing a trucking business loan; these include asset sheets, financial statements, and payroll documents. By reaching out to a reputable lender and finding out what documents are needed for an application, businesses can expedite the loan process and receive flexible financing faster. 

However, before reaching out to a lender about loans for truckers, businesses must find out whether or not they know trucking. Who does the primary audience of the lending company seem to be? If the answer is anybody besides logistics professionals, look elsewhere: a tractor-trailer can represent the most considerable expense on a business's asset sheet, and it's too risky to trust anybody but the experts regarding trucker loans

3. Find the Right Vehicle

Lenders providing loans for truckers are looking to mitigate as much of the risk of vehicle financing as possible. One way to reduce these risks is to ensure that the equipment a company seeks financing for is right  for the business.  

However, vehicle selection is more complicated than flatbed, lowboy, grain-hopper, or mix-truck. Considering certain external factors, such as fuel prices and upkeep costs, can help businesses choose vehicles that can survive and thrive in the broader logistics ecosystem while securing better financing for truckers' loans. 

4. Determine the Down Payment

Semi-trucks and truck trailers are expensive assets. Even buying a used truck can be expensive. Meanwhile, buying trailers and other types of assets can vary widely in pricing and expected ROI. A flexibly financed loan for trucking businesses can help  companies obtain their equipment with different loan packages. However, it's still important to consider how much and how long a business will be paying for its newest asset.

By working with an experienced, industry-specific lender, businesses can determine a down payment that maximizes their savings while minimizing their payments. A sizeable down payment on a loan for a trucking business can lower the total number of monthly payments.

5. Find the Right Insurance

With the price of a new semi-truck hovering somewhere around $200,000 and trailers ranging anywhere from $20,000 to $90,000, depending on its features, financing companies will insist on seeing proof of insurance before providing loans for truckers. This insurance must cover a wide range of potential crises. Lenders providing a loan for trucking businesses want to see that your asset is protected against accidents, theft, or mechanical failure. 

Working with a lender that understands the trucking industry can help businesses understand what sort of coverage will help them secure the best loans for truckers. Much like with tractor-trailers, there are various types of insurance coverage Companies should partner with expert logistics lenders who can help ensure that an asset is protected against whatever the road throws while maximizing a business's financial flexibility

6. Compare Loans

With the rising labor and fuel costs, it's more important than ever for businesses to maximize their profits and minimize their costs. Choosing the right loan for a trucking business with flexible financing and remarketing options can mean saving enough to hire an extra driver to meet booming e-commerce demands or affording the fuel to add another route. 

The right loan for a trucking business is subjective and largely dependent on the specific needs of a business. If all a business needs is fast cash to fix a truck, then a general business line of credit might do the job. However, choosing specified loans for truckers, such as a commercial truck loan, won’t tie up the working capital you need for other business costs. 

Partnering with an industry-specific, experienced team of lenders can help businesses find the answers to these critical questions, ensuring they find the best loan for trucking businesses. Remember, only expert financiers can provide expert advice.

Find the Best Loan for Trucking Business With the Right Industry Partner 

With the ongoing rise of e-commerce, there are more loans available for truckers available than ever before. With all of these financing options, it can be difficult for businesses to know where to turn. By partnering with Finloc, an experienced team of logistics financing professionals, companies can gain quick access to flexibly financed loans for truckers and their vast network of broker partners. Connect with Finloc today, and see what flexible financing can do for your logistics business today.