Trucking business loans are typically short-term loans for working capital growth or lines of credit (LOC) to help truckers overcome unforeseen cash flow gaps. The best working capital loans from trucking companies have short repayment terms and fast funding, because truckers sometimes need to make quick repairs or fund new runs quickly.
OnDeck, which sponsored this article, offers both short-term working capital loans and small business lines of credit to help truckers get access to the capital you need. You can qualify if you have at least a 600 credit score, $100,000 in annual revenue, and one year of business history. OnDeck’s online application takes about 10 minutes and you can receive funding in as little as one day.
Best Trucking Business Loans for Working Capital
| Best For | |
|---|---|
| Short-term Loans | Trucking companies needing quick financing for growth or other short-term working capital needs. |
| Business Line of Credit | Truckers & trucking companies that need access to recurring capital. |
| SBA Loans | Trucking companies making a large business purchase and wanting a long repayment term. |
| Equipment Financing | Trucking companies buying equipment with a long shelf life like a new semi-truck. |
| Business Credit Cards | Truckers needing a small credit line to pay for expenses, like fuel. |
Trucking loans come in all shapes and sizes, and finding the right financing for your business can be confusing. We break down all your business loan options in this free webinar. Learn about all your financing options and what it takes to qualify.
How We Determined the Best Trucking Business Loans
Trucking companies have a lot of unpredictable expenses like truck repairs, blown tires, or driver overtime due to unforeseen traffic or unexpected delays in delivery. That’s why it’s important for any loan you get to be something you can get access to quickly. However, quick access to capital is only one factor we considered when choosing the best business loans for your trucking business.
When choosing the best trucking business loans, the factors we considered were:
- Speed of funding: The speed with which a lender can provide you funding is important so you can understand when you’ll have access to the funds. Online lenders, like OnDeck, provide the quickest funding.
- Loan amounts: The amount of funding you need, and the amount a lender is able to lend, can be a significant deciding factor when selecting the right financing option.
- Costs: The costs associated with the chosen financing option can include not only the interest rates charged, but also any fees associated with the financing.
- Repayment terms: Your financing choice may be partially driven by the length of time that you need to repay the debt. Borrowers seeking large funding amounts often require a more lengthy repayment term than those borrowing smaller amounts.
- Minimum qualification requirements: Your credit score, the length of your time in business, and your annual business revenues can be determining factors in the type of financing for which you qualify.
- Intended use of funds: The type of financing you need will vary based on your intended use of the funds (e.g., working capital to fund daily working expenses, financing a new piece of equipment).
Many traditional lenders don’t like lending to businesses in the trucking industry because of the uncertainty and seasonality of the business. Only the biggest trucking companies, which bring in millions of dollars in revenue every year, stand a chance of getting the best loans from the biggest banks. However, the trucking industry is huge (over $700 billion), and alternative lenders have stepped in to make loans to growing businesses in the trucking and freight industry.
The best loans for trucking and freight business tend to come from those lenders who can approve and fund loans quickly. These lenders typically have less stringent qualification requirements than traditional lenders (like banks), so the trucking industry isn’t a hurdle for qualifying. Additionally, these lenders can provide quick access to flexible funding. This is important to truckers who need to quickly repair their truck to finish their run, or who need to fund the expenses of a new job before they get paid.
OnDeck offers businesses the option of a getting working capital in the form of a term loan up to $500,000 or a line of credit up to $100,000. In addition to the flexibility in the type of financing it offers, OnDeck can also prequalify a trucking business online in minutes and have it funded in as quickly as one business day.
Some of the best options for trucking business loans are:
Short-term Trucking Business Loans
Short-term trucking business loans are a good fit for trucking companies that need working capital to grow their business by fronting the expenses necessary to take on new contracts. These loans can carry an APR of up to 50%, but generally have a competitive total cost of capital if you repay the loan within 12 months.
Short-term loans are best for trucking companies that want to grow their business because they allow you to fund expenses for new runs before your customer pays you for the work. New routes require upfront working capital to pay for labor and truck expenses before you have completed your scheduled deliveries. Short-term loans work great because they fund quickly (in as fast as one day) and you can repay the loan as soon as your customer pays you, lowering the total cost of capital.
Costs of Short-term Loans for Trucking Companies
The costs of a short-term business loan will generally fall into these ranges:
- APR: 30% to 50%
- Prepayment Penalty: None
While short-term loans through an online lender have a higher APR than traditional financing, the total cost of capital might end up being less. For example, you’ll pay less in terms of total dollars by paying off a short-term loan with a 30% APR over one year than you would paying off a traditional bank loan with 8% APR over 10 years.
If you were to borrow $10,000 with a one-year repayment term at an interest rate of 35% APR, your total cost of capital would be $3,500. This means that your total repayment amount would be $13,500 ($10,000 + $3,500).
It is worth noting that while most short-term business loans have no prepayment penalties, some lenders do require that you to pay a certain fixed dollar amount regardless of when you pay off the loan. For example, if your term is for one year and you have a fixed interest charge of $500, then even if you pay off the loan within two months, you will still be required the full $500 in interest.
Short-term Loans for Trucking Companies Terms
A short-term business loan typically carries these terms:
- Loan amount: Up to $500,000
- Repayment term: Three to 36 months
- Repayment cycle: Weekly
- Time to funding: One to three days
Short-term loans through online lenders generally require you to repay on a weekly basis, though some prime borrowers may qualify for monthly repayment terms. This isn’t a problem for trucking companies that are consistently completing runs on long-term contracts, but there might be better solutions for truckers without consistent cash flow.
Short-term Loans for Trucking Companies Qualifications
The typical qualification requirements for a short-term business loan for trucking companies are:
- Minimum credit score: 600 (check your score for free)
- Minimum time in business: One year
- Minimum annual business revenue: $100,000
Short-term loans are one of the easiest forms of financing to qualify for if you’re an experienced business with plenty of revenue (at least $100,000). For the best chances at getting approved, your revenues should be trending up for the last three to six months.
Lenders are typically more concerned with the performance of your business than they are with your personal credit history, though both will be considered in the approval process. This leniency in credit requirements makes a short-term loan one of the only options for a trucking business loans with bad credit.
What’s Missing With Short-term Loans for Trucking Companies
Short-term loans are great for trucking businesses that are looking to grow, but they can be an expensive form of financing if you’re looking for long-term capital. Due to the short repayment term, these loans won’t be the best option if you need to make a large purchase, like additional trucks or real estate. Additionally, if you have recurring financing needs, then a business line of credit would likely be a better solution.
Where to Find Short-term Loans for Trucking Companies
Online lenders utilize technology to analyze your financials, which allows them to qualify your trucking business for a loan faster than traditional lenders. OnDeck offers short-term loans up to $500,000 and can provide funding in as little as one day. You can start the process by filling out an online application, and you could get prequalified in about 10 minutes.
Small Business Line of Credit for Trucking Companies
A business line of credit (LOC) is a revolving line you can borrow and repay over and over again without reapplying. It can be used to fund your business growth, to pay for recurring expenses, or to help you prepare for your upcoming busy season. With a business line of credit, you only pay interest on the amount that you have borrowed, not the full amount of the credit line.
A business LOC is a good fit for trucking companies needing quick financing to combat unexpected expenses like blown tires (which make up 51% of unexpected expenses on the road for trucking companies). A line of credit can also be useful to cover regular and necessary expenses, like your semi-truck insurance, when an invoice is late. Trucking and freight companies can apply for a line of credit with either traditional banks or online lenders.
Traditional lenders are slower to fund, typically taking at least two to four weeks. Many also refuse to lend to risky industries or ones they’re unfamiliar with, like trucking businesses. However, alternative online lenders have more lenient qualification requirements and can fund your LOC within a few days.
Costs of a Small Business Line of Credit for Trucking Companies
A business line of credit will carry these costs:
- APR: 13.99% to 40%
- Prepayment penalty: None
Prime borrowers (typically a credit score of at least 700) can get approved with an online lender for interest rates that are competitive to the rates offered at traditional lenders. Interest rates on a small business line of credit from an online lender are often more affordable than other alternative financing options, like freight factoring.
For example, if you were to borrow $10,000 from your line of credit at an APR of 25%, your total cost of capital would be equal to $2,500. The total amount that you would repay would be $12,500 ($10,000 + $2,500).
A small business line of credit gives you a quick source of capital without incurring a lot of additional costs. This is especially important to owner-operators who likely get paid on net terms for a run upon completion of delivery, or who need to take unexpected runs quickly or miss out on the work.
Small Business Line of Credit for Trucking Companies Terms
The terms you can expect with a small business line of credit for trucking companies are:
- Loan amount: Up to $100,000
- Repayment term: Up to 12 Months
- Repayment cycle: Weekly or Monthly
- Time to funding: One to three days
Your repayment cycle is dependent on your creditworthiness and the terms offered by your lender. Some online lenders require weekly payments, while others will allow the best borrowers to make monthly payments.
OnDeck, for example, requires weekly payments on your line of credit. However, the repayment term on an LOC through OnDeck is only six months. This helps keep the total cost of capital down compared to lenders willing to let you stay in repayment and accrue additional interest for years.
Small Business Line of Credit for Trucking Companies Qualifications
To qualify for a business line of credit, you must meet these minimum qualifications:
- Minimum credit score: 600 (check your score for free)
- Minimum time in business: One year
- Minimum annual business revenue: $100,000
A business line of credit from an alternative or online lender is generally easily accessible for trucking companies because the majority have been in business for years and have predictable income. Owner-operators may find it more difficult to qualify for if they don’t have long-term contracts lined up for at least one year.
What’s Missing With a Small Business Line of Credit for Trucking Companies
A business line of credit is a great financing option for truckers who have recurring cash flow gaps or need to pay for expenses quickly. However, an LOC is limited in how much you can borrow. If you’re really looking for a larger amount of capital to fund a new contract and you need more than $100,000, you may be better served by a different financing option, like an SBA loan.
Where to Find a Small Business Line of Credit for Trucking Companies
A business line of credit can be obtained from both online and traditional lenders. OnDeck offers a small business line of credit of up to $100,000 with rates starting as low as 13.99% for prime borrowers. You can get approved by filling out their online application, which takes about 10 minutes. If approved, you could start drawing on your line of credit within one day.
SBA Loans for Trucking Companies
An SBA loan is guaranteed by the Small Business Administration (SBA) and offers longer repayment terms with some of the lowest interest rates available to trucking companies. These loans are typically used for long-term financing to make large purchases like real estate or to buy a business. With an SBA loan, you can borrow up to $5 million with a repayment term of up to 10 years on working capital and equipment (25 years for real estate).
SBA loans are large loans typically used by larger trucking businesses to fund large purchases. SBA loans can be a good fit for trucking businesses looking to fund the purchase of multiple trucks, to expand by buying out a competitor, or open a new hub in a new location.
Costs of SBA Loans for Trucking Companies
The typical costs that you can expect with an SBA loan are:
- Interest rate: 8% to 11%
- Prepayment penalty: None
- Origination fee: 0.5% to 3.5%
- Loan packaging fee: $2,000 to $4,000
- SBA guarantee fee: 2% to 3.5%
SBA loans generally have low interest rates, but the fees can be expensive. However, you can save money on interest by paying the loan off early. That’s one of the main reasons SBA loans are a better fit for trucking companies looking to finance a long-term asset, like real estate.
SBA Loans for Trucking Companies Terms
SBA loans will generally carry these terms:
- Loan amount: Up to $5 million
- Repayment terms: Up to 10 years (25 years for real estate)
- Repayment cycle: Monthly
- Time to funding: At least 30 to 90 days
SBA loans can take a couple of months to get funded. You’ll generally have to complete a lot of paperwork, make several trips to the bank, or take many phone calls from your lender throughout the application process. That’s why these loans are not a good fit for trucking companies that need quick working capital financing.
SBA Loans for Trucking Companies Qualifications
To qualify for an SBA loan, you’ll need to meet these minimum qualifications:
- Minimum credit score: 680 (check your score for free)
- Collateral: Typically required
- Down payment: At least 10% to 20%
- Time in business: Any, from startups to mature businesses
It is possible to get an SBA loan even if you don’t have any hard collateral, like a semi-truck, to pledge for the loan. However, SBA lenders typically want to see at least 50% of the loan amount supported by collateral. You’ll also need to have 10% or more of the total loan amount available as a down payment. Both of the collateral and down payment requirements can make SBA loans harder to qualify for than short-term loans.
SBA financing can also be used for owner-operator startup loans. However, borrowers will typically have to have excellent credit and be able to put up at least 30% of the startup costs themselves to qualify.
What’s Missing With SBA Loans for Trucking Companies
SBA loans offer the largest loan amounts and longest repayment terms of the loan options available to trucking companies. However, these loans are difficult to qualify for and can take months to get funded. The extended funding time can be difficult for trucking businesses, especially for owner-operators who often need quick access to financing. If you are looking for faster funding, a short-term loan from OnDeck may be a better option.
Where to Find SBA Loans for Trucking Companies
SBA loans can be obtained through a traditional bank or other SBA-approved lender. The top 100 SBA lenders are fluent in the SBA loan process. Utilizing an experienced lender for your SBA loan can help expedite the loan process for your company, as the lender will be familiar with the nuances of SBA financing.
Equipment Financing for Trucking Companies
Equipment financing is the best fit for trucking companies looking to grow by acquiring or replacing their trucks and trailers. If you need to purchase a brand new rig, then this is likely the best option for you, especially if you are in the process of starting a new trucking business.
Equipment financing is most often used for expensive purchases that require a long-term financing option with low interest rates. Equipment financing uses your truck, or other equipment that you are purchasing, as collateral for the loan. Because the loan is collateralized, the lender is able to offer lower interest rates on your loan to purchase a semi-truck. However, to get qualified for equipment financing, you will need to be able to show proof of a down payment.
Costs of Equipment Financing for Trucking Companies
Equipment financing carries these costs:
- Interest rates: 6% to 9%
- Prepayment penalty: None
Equipment financing carries low interest rates and has no prepayment penalties. The interest rate is dependent on whether you’re leasing or buying your equipment outright. If you’re purchasing equipment, your monthly costs will be higher than if you are leasing equipment, because you’ll own the equipment at the end of your term.
If you were to borrow $10,000 for equipment financing with an APR of 9% and a one-year repayment term, the total cost of capital on your loan would be $900. This means that your total repayment would equal $10,900 ($10,000 + $900).
Equipment Financing for Trucking Companies Terms
Equipment loans typically have terms that look like this:
- Loan Amount: $10,000 to $500,000 (up to 95% of equipment costs)
- Repayment Terms: Two to seven years, based on the useful life of the equipment
Equipment financing amounts vary by lender, but most equipment financing providers will typically finance 85% to 95% of the value of the equipment. This means you will be responsible for providing a down payment of 5% to 15%. Typical repayment terms for large equipment purchases, like a semi-truck, are five years but vary based on the expected useful life of the equipment being purchased.
Equipment Financing for Trucking Companies Qualifications
When purchasing a truck, you’ll generally need to meet these minimum qualifications to get an equipment loan:
- Minimum credit score: 600 (check your score for free)
- Down payment: At least 5% (10 to 20% for owner-operators)
- Collateral: Financed equipment
- Time with CDL license: At least five years
- Age of truck: Less than 10 years
- Truck mileage: Less than 700,000
- Time in business: At least two years for many lenders; some will fund startups with industry management experience
Equipment financing isn’t difficult to qualify for if you’ve been in the industry for many years and have the opportunity to buy a valuable truck. The truck requirements could be difficult for startups or owner-operators to stomach since the costs are going to be higher than you necessarily need to spend if you were to get an older truck with more miles.
What’s Missing With Equipment Financing for Trucking Companies
Due to the low interest rates available with equipment financing, it can be a great fit for trucking businesses that need to finance the purchase of a new truck. However, if you’re not looking to purchase a large piece of equipment, then you would need to seek another source of financing, such as a short-term trucking business loan or line of credit.
Where to Find Equipment Financing for Trucking Companies
Equipment financing can be found at traditional lenders like banks and at many truck dealers. You can learn more about these small business loans for truckers and where to find them by reading our article on how to get semi-truck financing.
Business Credit Cards for Trucking Companies
Business credit cards are a good fit for any trucking company because they allow you to float expenses for up to 30 days. A business credit card is essentially a miniature small business line of credit, with a maximum credit limit that is typically around $30,000. Business credit cards are also the easiest type of financing for trucking companies to qualify for.
Business credit cards can be used to pay for all business-related expenses while on the road. Additionally, many business credit cards provide rewards for spending on ongoing expenses, like fuel, insurance, tolls, and more. Since the cost of fuel is one of the biggest expenses for your trucking business, using a business credit card to fund these purchases during your runs would allow you to take advantage of cash-back rewards provided by the card.
Costs of Business Credit Cards for Trucking Companies
Business credit cards typically carry these costs:
- Interest rate: 12% to 29%; some have 0% introductory offers
- Annual fee: $0 to $350 or more
Some business credit cards will require you to pay an annual fee. Many of those cards carry higher rewards, but the rewards may not benefit your company. You should make sure that any card you apply for provides rewards for fuel purchases or other purchases you’re likely to make on a consistent basis. You don’t want to pay an annual fee for a card that won’t give you any relevant rewards for your business.
Business Credit Cards for Trucking Companies Terms
A business credit card will generally carry these terms:
- Loan amounts: Up to $100,000, but typically less than $30,000 for most businesses
- Repayment terms: 30 days interest-free
- Time to funding: Instantly to two weeks (time it takes to receive your card)
- Initial rewards: Introductory APR of 0% for seven to 18 months
- Ongoing rewards: Cash back on fuel purchases
Many cards will offer an introductory period with 0% APR. This can be good to help you fund purchases you need to pay off over a period of time since you’re borrowing for free during that period of time.
Business Credit Cards for Trucking Companies Qualifications
To qualify for a business credit card, you’ll need to meet these minimum qualifications:
- Minimum credit score: At least 650 for best offers (check your score for free)
Business credit cards take into account your personal credit score and the annual business revenue of your trucking company. Some credit card providers will also ask you for your monthly expenses to gauge your ability to repay your approved amount. While owner-operator startup loans can be difficult to obtain, it’s often much easier for startups and new owner-operators to qualify for business credit cards.
What’s Missing With Business Credit Cards for Trucking Companies
A business credit card is easy to qualify for compared to other financing options, and you’ll be able to use them over and over again without reapplying. However, these cards won’t likely give you a large amount of financing. If you need more than $20,000 to $30,000, then a small business line of credit may be a better option for your business.
Where to Find Business Credit Cards for Trucking Companies
You can learn more by reading our guide that provides the best small business credit cards. Those trucking companies that primarily spend money on fuel and maintenance may also want to see if a fleet card or fuel card is a better option.
How to Improve Your Chances of Getting a Trucking Business Loan
Regardless of which trucking business loan is right for you, there are certain things you can do to improve your chances of getting approved. Generally, you need to keep your business and personal income separate, improve your credit score, grow your revenue, or eliminate how much you pay out on a monthly basis by reducing business expenses.
You can improve your chances at getting approved for a trucking business loan by considering these four things:
1. Separate Business & Personal Income
Traditional business loans for truckers can be difficult to qualify for, especially for own-operators who complete jobs for other trucking companies. This difficulty stems from the uncertainty of the industry and the inconsistency of revenue. You’ll need to take extra care in separating your business and individual income if you want to get funded. A dedicated business bank account and proper accounting software for trucking is essential.
According to Ty Kiisel from OnDeck, a lender that works with trucking businesses:
“Owner-operators will want to treat his or her truck like a business, not simply an extension of personal life. In other words, most small business lenders will want to see a business license and a business checking account—and will want to review several months of business bank statements. Depending upon the lender, it will also be important to make sure they can demonstrate some time in business.”
“Owner-operators will want to treat his or her truck like a business, not simply an extension of personal life. In other words, most small business lenders will want to see a business license and a business checking account—and will want to review several months of business bank statements. Depending upon the lender, it will also be important to make sure they can demonstrate some time in business.”2. Improve Your Personal Credit Score
Regardless of which loan you choose, your personal credit score is going to make a big difference in your ability to get approved. Improving your score could open up opportunities to either get financed or to get approved for larger loan amounts.
You can typically improve your score by doing these three things:
- Verify everything on your credit report is accurate.
- Make all of your credit payments on time.
- Spend much less than your maximum approved credit limit.
If your credit has taken a hit because of poor repayment performance or unforeseen circumstances, then you may need help. Take a look at our article on the best credit repair companies out there that can help you repair the damage that’s already been done.
3. Apply When Revenue Is Trending Up
The amount of annual business revenue your business generates is the second most important factor that will be considered in a trucking business loan application. To maximize your potential for getting approved, you should be strategic about when you apply. This means that you should wait and apply for a loan when your revenues have had a positive trend over the past three to six months. This shows the lender that your business is headed in the right direction.
In the trucking industry, this can sometimes take just one new payment for a contract you’ve recently signed. If you know that you just signed up a new customer and expect to receive payment from them within the next 90 days, then it might benefit you to wait until you can show that revenue on your business books. Even if you think you’ll get approved without the extra revenue, showing your lender that you have it could increase your financing amount.
4. Eliminate Unnecessary Expenses
The fewer expenses your business has on a monthly basis, the higher your debt service coverage ratio (DSCR) will become. DSCR is important for many lenders to decipher your ability to repay the amount you’re borrowing. If your DSCR is below 1.25x, many lenders won’t approve your loan application.
DSCR is calculated by dividing your business annual net operating income by your current year’s debt obligations. It’s an accurate way of showing how much your business can currently pay back in addition to your current debt obligations.
Bottom Line: Small Business Loans for Truckers
When looking for trucking business loans, you have plenty of options. The best loan for you will depend on what you plan to spend the funds on and what your credit profile looks like. If you need working capital fast, then your best bet is to get a short-term loan or small business line of credit from an online lender that can fund you quickly.
OnDeck offers short-term small business loans of up to $500,000. If you’ve been in business for at least one year, have a 600+ credit score, and annual revenues exceeding $100,000, you may be eligible for a short-term loan from OnDeck. You can apply online in minutes, and receive funding within one day.
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