Financing Options for Trucking Businesses
Many business opportunities offering the potential for solid profits also require solid upfront investments; in other words, high starting costs are often necessary to generate high returns. Commercial trucking businesses fall within this realm. A trucking company needs to line up substantial trucking equipment, maintenance tools and monitoring software if it is to operate effectively. Fortunately, if you have the drive to start a trucking company, you will find various financing options to be available to help you.
Traditional Financing
Just as when you purchase a home, you may first consider a bank or credit union loan. This may not be your best financing choice, however, since federal regulations and bank requirements can create obstacles for those just starting out. For example, banks will want to see an established pattern of profits and will ask you to put up substantial collateral. If you use the assets of another business or your home you face serious personal risk if you are unable to make your monthly repayments.
Equipment Lending
As is the case with many business startups, you can start rolling with your trucking equipment using lending programs. You access this form of alternative financing through truck manufacturers and specialized lenders with the option to purchase, a feature that benefits both parties. In contrast to securing a bank loan, equipment lending usually allows the trucks and other equipment to be uses as collateral.
Accounts Receivable Financing
Specialty institutions can offer financing based on your outstanding invoices, using remittances as financing repayments. This kind of alternative lending is especially valuable since you will likely have cash flow delays upon startup. Keep in mind, you should try to establish trucking relationships with solid clients since it is their credit history that is the basis for this form of financing.
Venture investments
If you can present a solid business plan that shows potential for growth and high returns you may be able to attract venture capitalists to help you secure trucking equipment. You are more likely to be able to find this form of financing if your business also demonstrates an innovative approach to entering the market, shows substantial projected earnings and possesses significant collateral.
Through hard work, you can fire up a high-performing trucking company. One of the pieces you need to investigate is finding the right form of monetary backing to get the venture off the ground. If you are willing to look beyond traditional means of securing financing, you have options that will fit your particular trucking model.
