Business Loans For Transportation Businesses

Business Loans For Transportation Businesses
Ronis Gracie
on November 15, 2016
Read in 2 min

Business Loans and Uses

The transportation industry is large and diverse, and trucking businesses involved in this sector are required to maintain safety and efficiency standards, which can be costly. In addition to the proper equipment needed to run a transportation business, the business must also be able to manage multiple licenses, rules, and scheduled maintenance procedures. Trucking businesses also need to comply with a variety of laws that regulate the weight and size of loads. The loan money can be used to finance these start-up costs, and it can also fund the operations costs necessary to generate enough profit to repay the business loan.

Type of Trucking Loans Available

The most common form of lending will occur in the banking sector. Credit unions may also be willing to finance certain businesses as well, but each lending institution has slightly different requirements for approving a loan for a trucking business. This process usually involves reviewing a business plan and financial statements. The importance of having these documents in order cannot be overstated. Collateral and solvency are carefully reviewed before making any determination about the borrower’s ability to repay the loan.

The Small Business Administration, or SBA, offers alternate programs for business owners who do not qualify for a loan under the rules of most traditional lending institutions. However, it is necessary to go through a bank or credit union that participates in one of these SBA programs. The SBA does not lend money directly, but they do provide many services that assist the borrower in preparing a convincing application. If the loan application is approved by the lending institution, the SBA will guarantee the loan, which improves the chances of approval.

Barriers to Loan Approval

Transportation business owners will face a variety of barriers to entry, and many bureaucratic obstacles can create complications. The nature of the obstacle is usually closely related to the specific industry. For example, trucking and aviation are two of the most expensive businesses to run within the transportation sector. The start-up costs are prohibitive for most business owners, and this creates an incentive to apply for a loan.

There are many pieces of equipment needed to run a successful transportation business. For example, electronic machines can be used for paying fines, buying materials and registering with various agencies. Obtaining permits, licenses and permission from the various regulatory bodies can be time-consuming, yet this needs to be done correctly. Recruiting qualified human resource personnel can also present a barrier to entering the industry.

Qualifications for Transportation Business Loans

Transportation business owners must be able to explain their business plan through financial statements, and long-term planning is essential when dealing with lending institutions. Credit reports will be examined for past payment behavior, and the borrower’s financial statements will be carefully examined by a professional. Lenders want to see proof of successful operation before approving a loan, so they will look at the profit and loss statement, cash flows and balance sheet to determine the financial health of the business. These statements communicate value to potential investors.

Ronis Gracie Finance Journalist

A serial entrepreneur experienced with building several small companies from the ground up and consulting for many others, Ronis understands the finer points of small business financing. He’s passionate about small business & is committed to simplifying small business lending for others.

Lendio
Headway Capital

Important Disclosures. Please Read Carefully.

Persons facing serious financial difficulties should consider other alternatives or should seek out professional financial advice. This website is not an offer to lend. Lendgenius.com is not a lender or lending partner and does not make loan or credit decisions. Lendgenius.com connects interested persons with a lender or lending partner from its network of approved lenders and lending partners. Lendgenius.com does not control and is not responsible for the actions or inactions of any lender or lending partner, is not an agent, representative or broker of any lender or lending partner, and does not endorse any lender or lending partner. Lendgenius.com receives compensation from its lenders and lending partners, often based on a ping-tree model similar to Google AdWords where the highest available bidder is connected to the consumer. Regardless, Lendgenius.com’s service is always free to you. This service is not available in all states. If you request to connect with a lender or lending partner in a particular state where such loans are prohibited, or in a location where Lendgenius.com does not have an available lender or lending partner, you will not be connected to a lender or lending partner. You are urged to read and understand the terms of any loan offered by any lender or lending partner, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you. By submitting your information via this website, you are authorizing Lendgenius.com and/or lenders and lending partners in its network or other intermediaries to do a credit check, which may include verifying your social security number, driver license number or other identification, and a review of your creditworthiness. Credit checks are usually performed by one of the major credit bureaus such as Experian, Equifax and Trans Union, but also may include alternative credit bureaus such as Teletrack, DP Bureau or others. You also authorize Lendgenius.com to share your information and credit history with its network of approved lenders and lending partners. For qualified consumers, our lenders offer loans with an Annual Percentage Rate (APR) of 35.99% and below. For qualified consumers, the maximum APR (including the interest rates plus fees and other costs) is 35.99%. All loans are subject to the lender’s approval based on its own unique underwriting criteria. Example: Loan Amount: $4,300.00, Annual Percentage Rate: 35.99%. Number of Monthly Payments: 30. Monthly Payment Amount: $219.36. Total Amount Payable: $6,581.78 Loans include a minimum repayment plan of 12 months and a maximum repayment plan of 30 months. In some cases, you may be given the option of obtaining a loan from a tribal lender. Tribal lenders are subject to tribal and certain federal laws while being immune from state law including usury caps. If you are connected to a tribal lender, please understand that the tribal lender’s rates and fees may be higher than state-licensed lenders. Additionally, tribal lenders may require you to agree to resolve any disputes in a tribal jurisdiction. You are urged to read and understand the terms of any loan offered by any lender, whether tribal or state-licensed, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Lender’s or Lending Partner’s Disclosure of Terms.

The lenders and lending partners you are connected to will provide documents that contain all fees and rate information pertaining to the loan being offered, including any potential fees for late-payments and the rules under which you may be allowed (if permitted by applicable law) to refinance, renew or rollover your loan. Loan fees and interest rates are determined solely by the lender or lending partner based on the lender’s or lending partner’s internal policies, underwriting criteria and applicable law. Lendgenius.com has no knowledge of or control over the loan terms offered by a lender and lending partner. You are urged to read and understand the terms of any loan offered by any lenders and lending partners and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Late Payments Hurt Your Credit Score

Please be aware that missing a payment or making a late payment can negatively impact your credit score. To protect yourself and your credit history, make sure you only accept loan terms that you can afford to repay. If you cannot make a payment on time, you should contact your lenders and lending partners immediately and discuss how to handle late payments.