If you run a trucking business, then the tractor trailer is probably the most important piece of commercial equipment you need. And they don’t come cheap. Whether you need a fleet of trucks or just one tractor trailer at a time, commercial vehicle financing programs can help you conserve cash for other uses and still get the equipment you need to successfully run your business.
Tractor Trailer Financing & Leasing for 2020
So what do trucking business loans for small businesses in the trucking industry look like right now? With all-time-low interest rates, commercial truck loans and leasing programs are more attractive than ever.
We’ll look at both buying and leasing a truck or tractor trailer, and examine some options you have for equipment finance.
3 Options for Tractor Trailer Financing
When it comes to commercial truck financing, your business has many finance options, no matter what kind of qualifications you have.
TimePayment
If you’re interested in leasing a commercial vehicle or other equipment, TimePayment is worth consideration. Even if you’re a startup, you can qualify for funding.
Rates
TimePayment offers a .0219 – .0626 factor rate, depending on your credit profile and length of your lease term.
Requirements
You’ll need a FICO credit score of 550 or higher to qualify.
Amounts
TimePayment can help you get financing for equipment valued at $500 up to $100,000.
LendSpark
LendSpark is a great financing option, whether you want to purchase new or used equipment or vehicles. The company also offers equipment leasing.
Rates
LendSpark rates start as low as 5%, depending on your credit, and can go up to 35%.
Requirements
For working capital loans, you’ll need to prove you’ve been in business at least six months and are generating revenue. For equipment financing, you need to have been in business for two years or more.
Amounts
You can borrow up to $2 million.
SmartBiz
If you’d prefer to work with a more traditional lender or even get an SBA loan, SmartBiz can help. SBA loans can often take months to process, but SmartBiz can expedite yours in 60-90 days.
Rates
SmartBiz offers low rates at 4.75-7%.
Requirements
You need to have been in business for at least two years and you may be asked for financial statements.
Amounts
With the SBA loan program, you can borrow $30,000 to $5 million.
How to Qualify for Tractor Trailer Loans
Lenders each have their own requirements, but there are a few things your business can work on to qualify with all finance companies.
First, make sure you have the appropriate business licenses or permits you need for your trucking company. If you’re not sure what those are, check with your Secretary of State website.
You (as well as any other business partner you have) may need to provide a personal guarantee for a loan, so make sure you are financially able to do so.
Each truck dealer or bank will have a different requirement in terms of credit history and credit scores, but generally, expect to need at least a 600 personal credit score. But know that you still have financing options even if you don’t have good credit.
(Get your free business credit scores here.)
Beyond that, you shouldn’t have any bankruptcies on your credit report in the last seven years, nor any unresolved tax liens.
Can You Get Tractor Trailer Financing as a Startup?
Even if your business is brand new, you still have options to get equipment or tractor trailer financing. You may pay more in interest, though, and you may be required to put down payment up front.
Is it Possible to Qualify for Tractor Trailer Loans with Bad Credit?
Rest assured, there are business loan options for less-than-perfect credit. Yes, you will pay a higher interest rate for the privilege, but if having the commercial vehicle or equipment is critical to your growing revenues, it may be worth the investment.
Should You Buy or Lease Tractor Trailers?
As you start your research on lenders, you’ll notice that many offer lease options. Rather than buying the tractor trailer and owning it, you lease it for a number of years, then surrender it to the financing company (you may also have the option to buy it at the end of the lease).
Pros of Buying Tractor Trailers
The benefit of buying a tractor trailer, especially with financing, is that you get the equipment you need while maintaining cash flow. You can use the vehicle you’re buying as collateral, and down the road, you can sell it to have more working capital.
Cons of Buying Tractor Trailers
A drawback to getting funding through commercial truck financing companies to purchase a tractor trailer is that you’ll pay more for the equipment in interest. If your company has poor credit scores, you’ll pay even more.
Pros of Renting Tractor Trailers
On the other hand, leasing a semi-trailer truck or commercial equipment gives you a low monthly payment without the hassle of having to sell the vehicle when you’re done with it. Also, you aren’t saddled with outdated equipment.
Cons of Renting Tractor Trailers
You may end up with higher monthly payments working with leasing companies than you would if you put down a payment toward the purchase of a truck.
Alternative Financing Options for Tractor Trailers
In addition to the tractor trailer and equipment financing options mentioned above, here are other solutions.
Nav’s Final Word: Tractor Trailer Financing
The trucking industry relies on commercial loans to cover the expense of trucks, big rigs, and fleets. The key is maximizing your cash flow by taking out financing that is affordable and easy for your company.
This article was originally written on July 7, 2020 and updated on April 6, 2023.
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