Trucking Business Loans for Owner-Operators & Trucking Companies

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 business loans from trucking companies have short repayment terms and can fund fast because truckers need to sometimes 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 a 500+ credit score, $100k+ in annual revenue, and 1 year or more of business history. Their online application takes about 10 minutes and you can get funded in as quick as 1 day.

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Best Trucking Business Loans for Working Capital

How We Determined the Best Loans for Truckers

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 loan we included these considerations:

• Speed of funding
• Loan amounts
• Costs
• Repayment terms
• Minimum qualification requirements
• How trucking companies plan on spending funds

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 who 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 ($720+ 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 doesn’t turn them off. Second, these lenders can help you get 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 you get paid.

OnDeck offers businesses the option of a getting working capital in the form of a term loan up to $500K or a line of credit up to $100K. In addition to the flexibility in how you’re able to borrow, they can prequalify a trucking business online in minutes and have them funded in as quick as 1 business day.

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Short Term Trucking Business Loans

Short term trucking business loans are a good fit for truckers who need working capital to grow their business by fronting the expenses necessary to take on new contracts. These loans can carry an expensive APR 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 looking to grow their business by funding expenses for new runs before your customer pays you for the work. New routes require working capital to pay for labor and truck expenses to make some deliveries before you’re paid. Short term loans work great because they fund quickly (in as fast as 1 day) and you can repay the loan as soon as your customer pays you, lowering the total cost of capital.

Interest Rates & Fees

The costs of a short term business loan will generally fall into these ranges:

• APR: 30 – 50%
• Prepayment Penalty: None

While short term loans carry a high APR compared to 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 1 year than you would paying off a traditional bank loan with 8% APR over 10 years. Further, there are typically no prepayment penalties, allowing you to pay off your loan as soon as you have the capital.

It’s worth noting, however, that while there are no prepayment penalties with short term loans, some of these lenders require you to pay a certain fixed dollar amount regardless of when you pay it off. So if your term is for 1 year, then the interest is sometimes calculated so that you’ll repay the annual interest even if you pay it off in your second month.

Loan Terms

A short term business loan typically carries these general terms:

• Loan Amount: Up to $500k
• Repayment Term: 3 – 36 Months
• Repayment Cycle: Weekly
• Time to Funding: 1-3 Days

Short term loans 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 Loan Qualifications

• Minimum Credit Score: 500 (check your credit score for free here)
• Minimum Time in Business: 1 Year
• Minimum Annual Business Revenue: $100k

Short term loans are one of the easiest forms of financing to qualify for if you’re an experienced business with plenty of revenue ($100k+). These lenders are more concerned with business performance than they are with your personal credit history, though both will be considered in the approval process. That makes a short term loan one of the only options for a trucking business loans with bad credit. For the best chances at getting approved your revenues should be trending up for the last 3-6 months.

What’s Missing With Short Term Loans for Truckers

Short term loans are great for truckers looking to grow their business, but they carry expensive costs if you’re looking for long term capital. They’re also not a good fit to buy large equipment, like semi-trucks, or to buy real estate. 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 Truckers

Trucking businesses can find short term loans with online lenders that utilize technology to analyze your financials and get you funded faster than traditional lenders. OnDeck offers short term loans up to $500k and can fund in as quick as 1 day. You can start the process by filling out an online application where you could get pre qualified in about 10 minutes.

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Business Line of Credit for Trucking Companies

A business line of credit (LOC) is a revolving line you can repay and use over and over again without reapplying. It can be used to fund your business growth, to pay for recurring business expenses, or to help you prepare for your upcoming busy season. You’ll only pay interest on what you owe, so a LOC is a good fit for truckers needing quick financing to combat unexpected expenses like blown tires (which make up 51% of unexpected expenses on the road for trucking companies).

Trucking and freight companies can apply for a line of credit with either traditional banks or online lenders. Traditional banks are slower to fund, typically taking at least 2-4 weeks. Many also refuse to lend to risky industries or ones they’re unfamiliar with, like trucking businesses. For this reason, we’ll focus on alternative online lenders that are more likely to approve you and that can fund your LOC within a few days.

Interest Rates & Fees

A business line of credit will carry these costs:

• APR: 13.99 – 40%
• Prepayment Penalty: None

Prime borrowers can get approved for rates at an online lender that are competitive to the rates offered at traditional lenders and often more affordable than an alternative, like freight factoring. This gives you a quick funding source without incurring a lot of additional costs, which is important to truckers that typically need to fund new runs very quickly. 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.

Loan Terms

A business line of credit will carry these terms:

• Loan Amount: Up to $100k
• Repayment Term: Up to 12 Months
• Repayment Cycle: Weekly or Monthly
• Time to Funding: 1 – 3 Days

Your repayment cycle is going to depend on your personal and business creditworthiness and the terms offered by your lender. Some lenders require weekly payments while others will allow the best borrowers to repay what you borrow monthly. OnDeck, for example, requires weekly payments but the term on a LOC is only 6 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 Qualifications

To qualify for a business line of credit you must meet these minimum qualifications:

• Minimum Credit Score: 600 (check your credit score for free here)
• Minimum Time in Business: 1 Year
• Minimum Annual Business Revenue: $100k

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 you don’t have long-term contracts lined up for at least 1 year. You can learn more by reading our guide to a business line of credit.

What’s Missing With a Small Business Line of Credit for Truckers

A business line of credit is a great fit for truckers who have recurring cash flow gaps or needs to pay for expenses quickly. However, a 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 $100k, then this isn’t the right financing option for you.

Where to Find a Small Business Line of Credit for Truckers

A business line of credit (LOC) can be found by both online and traditional lenders. OnDeck offers a LOC up to $100k with rates 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 down on your LOC in as quick as 1 day.

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SBA Loans for Trucking Companies

An SBA loan is guaranteed by the Small Business Administration (SBA) and carries longer repayment terms with some of the lowest 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 10-year repayment terms.

SBA loans can be a good fit for trucking businesses looking to fund the purchase of multiple trucks or to help you expand by buying out a competitor or opening a new hub in a new location. These are large loans typically used by larger trucking businesses instead of owner-operators.

Interest Rates & Fees

SBA loans will carry the following costs:

• Interest Rate: 5% – 10% (check current SBA loan rates)
• Prepayment Penalty: None
• Origination Fee: 0.5 – 3.5%
• Loan Packaging Fee: $2k – $4k
• SBA Guarantee Fee: 3 – 3.5% (Waived if loan amount is under $150k.)

SBA loans generally have low interest rates but the fees can be expensive if you’re only looking for short term financing and you can save money by paying it 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. You can learn more about these fees by reading our article on the SBA guarantee fee.

Loan Terms

SBA loans will generally carry these terms:

• Loan Amount: Up to $5 million
• Repayment Terms: Up to 10 years
• Repayment Cycle: Monthly
• Time to Funding: 30 – 90+ days

SBA loans take a long time to get funded. You’ll generally have to complete a lot of paperwork and make several trips to the bank or take many phone calls from your lender. That’s why these loans are not for truckers who need quick working capital financing. You can learn more about the SBA loan process by reading our article on how to apply for an SBA loan.

SBA Loan Qualifications

To qualify for an SBA loan you’ll need to meet these minimum qualifications:

• Minimum Credit Score: 680 (check your credit score for free here)
• Collateral: Typically required
• Down Payment: 10-20%
• Time in Business: Startup – 2+ years

It’s possible to get funded with an SBA loan if you don’t have any hard collateral, like real estate, to pledge for the loan. However, SBA lenders typically want to see the loan collateralized by 50% or more. You’ll also need to come up with 10% or more of the total loan amount you need as a down payment. Both of these things make SBA loans harder to qualify for than short term loans.

SBA financing can also work as owner operator startup loans, but borrowers will typically have to have excellent credit and be able to put up ~30% of the startup costs themselves.

What’s Missing With an SBA Loan for Truckers

SBA loans offer the largest loan amounts and longest repayment terms of pretty much any loan option available to trucking companies. However, these loans are difficult to qualify for and can take months before you’re every funded. That’s difficult for your trucking business, especially for owner-operators who need quick access to financing.

Where to Find SBA Loans for Truckers

SBA loans can be found by applying at a bank or other traditional lender. You can read our article on the top 100 SBA lenders to learn more about the best places to start looking.

Equipment Financing for Trucking Companies

Equipment financing is the best fit for trucking companies looking to grow by acquiring or replacing their truck and trailers. If need to purchase a brand new rig then this is likely the best option for you, especially if you’re starting out your trucking business from scratch.

Equipment financing is for expensive purchases that typically require a long term financing option with low interest rates. Equipment financing uses your truck, or other equipment you’re purchasing, as collateral for the loan. This makes it possible to offer the lowest potential rates you’ll be able to find when you’re purchasing your semi-truck, but you’ll have to come up with a down payment to get qualified.

Interest Rates & Fees

Equipment financing carries these costs:

• Interest Rates: 6 – 9%
• Prepayment Penalty: None

Equipment financing carries low interest rates and has no prepayment penalties. The interest rate is going to depend on whether you’re leasing or buying your equipment outright. If you’re purchasing it then your monthly costs will be higher than they would be if you’re just leasing because you’ll own the equipment at the end of your term.

Loan Terms

Equipment loans typically have terms that look like this:

• Loan Amount: $10k – $500k (up to 95% of equipment costs)
• Repayment Terms: 2 – 7 Years

Equipment financing amounts vary by lender but typically will finance 85-95% of the value or cost of the equipment, which means your down payment will be 5 – 15%. Typical repayment terms for large equipment purchases like a semi truck are for around 5 years.

Equipment Financing 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 credit score for free here)
• Down Payment: 5%+ (10-20% for owner-operators)
• Collateral: Financed equipment
• Time With CDL License: 5+ Years
• Age of Truck: Less than 10 years
• Truck Mileage: Less than 700k
• Time in Business: 2+ Years from 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 Truckers

Equipment financing is a great fit for truckers looking to fund the purchase of a new truck because of its low interest rates. However, if you’re not looking to buy a large piece of equipment then you have no need for these loans. You can’t use equipment financing to fund your working capital needs.

Where to Find Equipment Financing

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 Truckers

Business credit cards are a good fit for any trucking company because they can float expenses for up to 30 days and provide rewards for spending on ongoing expenses, like fuel, insurance, tolls, and more. Business credit cards are also the easiest type of financing for truckers to qualify for. Since the cost of fuel is one of the biggest costs to your trucking business it makes sense to use a business credit card to fund these purchases during your runs to take advantage of cash back rewards.

While this is a revolving line like a business line of credit, the max amount is typically around $30k so this is for small expenses only. Business credit cards can be used to pay for all business-related expenses while on the road, but they won’t fund things like payroll or other large cash flow gaps.

Interest Rates & Fees

Business credit cards typically carry these costs:

• Interest Rate: 12 – 29%, some have 0% introductory offers
• Annual Fee: $0 – $350+

Some business credit cards will require you to pay an annual fee. Many of those cards carry higher rewards, but those 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 to your business.

Loan Terms

A business credit card will generally carry these terms:

• Loan Amounts: Up to $100k but typically less than $30k for most businesses
• Repayment Terms: 30 days interest free
• Time to Funding: Instantly – 2 weeks (time it takes to receive your card)
• Initial Rewards: Introductory APR of 0% for 7 – 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 Card Qualifications

To qualify for a business credit card you’ll need to meet these minimum qualifications:

• Minimum Credit Score: 650+ for best offers (check your credit score for free here)

Business credit cards take into account your personal credit score and the annual business revenue of your trucking company. Some 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, business credit cards are often far easier for startups and new owner operators to qualify for.

What’s Missing With a Business Credit Card for Truckers

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 $20-30k then you’ll need to look to another type of loan.

Where to Find Business Credit Cards

You can learn more by reading our guide that provides the best small business credit cards. Those trucking companies who primarily spend money on fuel and maintenance may also want to see is a fleet card or fuel card are a better option.

How to Improve Your Chances of Getting Funded

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 can 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 4 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.

According to Ty Kiisel from OnDeck, a lender who 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.”

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 3 things:

1. Verify everything on your credit report is accurate
2. Make all of your credit payments on time
3. Spend much less than your maximum approved credit

If your credit has taken a hit because of poor repayment performance or unforeseen circumstances then you may need help. You should 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 thing that will be considered in a trucking business loan application. To maximize your potential at 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 a positive trend over the past 3-6 months. This shows the lender that you’re 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 1.20, 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. You can learn more by reading our guide to DSCR.

Bottom Line on 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 business line of credit from an online lender that can fund you quickly.

OnDeck offers loans up to $500k and you can typically qualify if you’ve been in business for at least 1 year, have a 500+ credit score, and have annual revenue of $100k or more. You can apply by filling out an online application that takes about 10 minutes and they could fund your loan in as quick as 1 day.

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