Many trucking companies consist of only one truck owned and operated by the business owner. That truck is the lifeblood of the business and if it goes down for repairs, the company can be down for the count if there’s no money to fix it. Qualifying for traditional loans can be difficult, but fortunately, there are other options available. Here is what you need to know about the four main types of truck driver loans and how to qualify.
Short Term Loans
Short term loans are great when you need working capital for new contract expenses. You can get funds in less than a day and pay them back as soon as you get paid. They have an annual percentage rate of around 50% with terms up to 36 months with weekly payments. You should have no problem qualifying If you generate at least $100,000 in revenue, have a 600 credit score, and have been in business for at least one year.
Business Line of Credit
This type of lending allows you to continuously borrow and repay without needing to reapply. It’s best used for combatting unexpected expenses or smoothing over seasonal lulls. You can get approved in a few days or up to four weeks and carry annual percentage rates up to 40%. The minimum qualifications for a business line of credit are the same as those for short term loans.
Small Business Association Loans
With these small business loans for truckers, you can borrow up to $5 million for equipment purchases or business expansion projects. They are typically easy for business owners to get with only one in six business owners failing to get an SBA loan. They demand at least 50% of the loan amount to be backed by collateral but have incredibly low-interest rates compared to other types of truck driver loans. You can get funding in less than 90 days with repayment terms up to 10 years. You will also need to have at least 10% of the total loan amount for a down payment and have a personal credit score of at least 680.
Equipment financing uses your truck as collateral and provides low-interest rates with long term financing. A minimum of 5% to 20% down payment will be required but you can get funding in about two to five days with up to seven years to repay the loan. You will need to have held a CDL license for at least 5 years, been in business for at least two years, and have a credit score of at least 600. The truck equipment you are considering financing for must be less than ten years old with less than 700,000 miles.
As you can see, there are plenty of truck driver loans to choose from. Which one you choose will greatly depend on your business needs and budget as well as how fast you need the cash. When considering financing, it’s important to do your research thoroughly and understand everything before signing on the dotted line. Your business depends on it.