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Gaining funding for your trucking business can be tricky. You’ve got high costs, making it difficult to find a suitable business loan for trucking. Some lenders opt out, finding the industry to be volatile and high-risk which can severely limit your loan options. 

However, there is good news. There are lenders (like Coastal Kapital) who specialize in trucking business loans. We know the ins and outs of the trucking industry, and we’ve got loan options for you! In this article, we will present the most common financing options for trucking companies so you can find the best option to suit your business needs. 

The gold truck full with coins on white calculator use as business and financial concept.

Common Uses for Trucking Business Loans

For trucking company owners, small business loans can always be put to good use. Often we hear about a wide range of expenses for commercial trucking companies that pile up over time including: 

  • New trucks: If your small business is doing well or if you are a new startup, you are probably looking into buying some new trucks. Semis are often bought with equipment financing loans. Many business owners get truck financing when offered leases with buyout options. This is possible for both long-haul and short-haul trucks. 


  • Equipment and technology: As you probably already know, it takes a lot of extra equipment and technology to help run a successful trucking business. This includes things like cameras, collision technology, or dynamic routing software. The problem is, many of these things can drain the finances over time. Or you may come upon an unexpected expense such as repairing your existing equipment. Getting an equipment financing loan just as you are starting your business will ensure you have all the necessities to succeed. This will boost productivity, so the loan will pay for itself in the long run.


  • Hiring more truck drivers: Expanding your fleet isn’t just for trucks and equipment; you will also need more drivers to drive these trucks. If you hit an unexpected bump in your workload, it might be helpful to get a loan to help you hire more truckers. It is quick, and your revenue from the busy spurt will help pay off the short-term loan quickly and painlessly. 


  • Inventory: Buying things in bulk might be a good way to save money in the long run. However, if you don’t have the money on hand to pay for it, it may just be easier to get a working capital loan. This ensures you’ll have the inventory when you need it. 

Before You Apply…

There are some things you will want to consider before seeking financing for your trucking business. Make sure that you can answer the following before you go through with the application process:

  • Leverage your business: How can you leverage the loan to make your profits greater than the interest payable? This could include buying new trucks and hiring more employees to help you make a greater profit. This could mean getting an equipment financing loan to help you replace existing equipment whose repairs are nickel-and-diming you. Make sure you put the money where it will give you the biggest payoff in the long run. 


  • Time in business:  How many years have you had the business? It is common for loan providers to require that borrowers have been in business for at least one year (or another amount of time). If this is the case, you may want to wait until you have passed the required time before you apply. 


  • Loan amount: Figure out how much you will need. Make sure you know exactly how much you need upfront, based on estimated costs of equipment or figuring out how much working capital you would need on hand. 


  • Be realistic: Can you afford to pay the loan back in the time allotted, with interest? Figure out what your annual percentage rate (APR), lender fees, and down payment will be. What will your average monthly payment be? Then look at your finances to see if you can realistically pay off the loan in a given period. 


  • Put together a business plan: Your lender will like to see a business plan along with the application for your loan. This helps give them an idea of what you will do with the financing. Include things in your business plan, such as market analysis, company description, and operational plan. 

How To Get a Trucking Business Loan

Are you ready to apply for business financing? While each lender will have its process, there are some general procedures for applying for this kind of loan. We will walk you through it, step by step. 

  • Review your loan provider’s requirements. Do you need to be in business for a certain amount of time? Do you need to have collateral? Is there a minimum credit score needed? If you fit the bill, then get ready to apply!


  • Fill out the loan application form. While some lenders will give you a physical form to fill out, with many lenders you can do an easy online application. You may also need to sign a personal guarantee depending on the type of financing you’re receiving. This is an agreement that the borrower who signs is responsible for paying the loan back if the business cannot make the payments. 


  • Make sure to provide the documents your loan provider might ask for including bank statements, tax returns, your business license, and balance sheets. 


  • The lender will review everything you’ve submitted and go through the underwriting process. He or she will verify your income, assets, debt, and property details in order to issue final approval on your loan application. Then the loan provider will let you know if you are approved for the loan. 


  • If your lender approves your loan, you will be offered rates, terms, and repayment terms. Not only will this depend on your financial situation, but these things will also depend on what type of loan you get. You will review and sign the loan’s closing documents, agreeing on where and when the loan proceeds will be disbursed. 


Now that you are more familiar with the loan process, we can explore what types of business loans you can consider applying for. 

Best Loans for Trucking Businesses

Let’s explore different funding options for your trucking company. Be sure to keep in mind which loan will give you the biggest return on your investment. 

SBA Trucking Loans

Loans backed by the Small Business Administration (SBA) offer a good opportunity for small business owners. These loans can be used for many different things, including buying a commercial truck or getting enough working capital to cover operational costs. 

SBA loans are known for their low-interest rates. However, you will probably need to provide a down payment which could possibly be from 5% to 25%. And good news, if you are looking for a significant amount of funding, there are some loan options that can disburse up to $5 million upon approval. 

Qualifying for an SBA loan would mean meeting certain criteria like: doing business in the US, making up-to-date payments on other government loans or taxes, having company equity, and meeting trucking industry standards for the number of employees and annual receipts. 

SBA loans offered here at Coastal Kapital include: 

  • Traditional SBA loan options up to 30 years
  • SBA Express – underwritten in less than 2 weeks
  • Line of credit options

Equipment Financing Loans

Commercial truck financing will likely be your biggest expense. In addition to SBA loans, you can also finance your commercial truck, trailer, or other equipment expenses with an equipment financing loan. Equipment loans allow you to pay installments to cover large equipment expenses.

The loan can be used to replace, repair, or buy new equipment. Typically you will need to put up some collateral to secure an equipment loan. This allows you a lower interest rate since the loan provider is assuming less risk. The collateral you may consider using could be securities, corporate bonds, real estate, inventory, or vehicles.

The collateral could even be the equipment purchase itself; if you don’t make the payments, your lender will take possession of the equipment. Equipment financing loan options you can get here at Coastal Kapital are: 

  • EFA, or equipment finance agreement
  • 10% Put option buy
  • FMV Lease, or fair market value lease
  • $1.00 Buyout Lease
  • Average Terms – 24-60 Months
  • Amount – $5,000 to $500,000

Working Capital Loans 

Are you short on inventory, or looking to make a quick expansion to your business? Consider getting a working capital loan. We will get you approved quickly, and you will soon get the funds in your hands. If interested, check out our working capital loan solutions like:

  • 3 months to 2 years of short-term micro business loans, with a value of up to $3 million
  • 2- to 4-year terms, with a value of up to $500,000, for expansions and inventory
  • 2- to 5-year terms for collateral

Business Lines of Credits

Business lines of credit have set limits on how much you can spend and allow you multiple draws up to that limit. Think of it like business credit cards rather than a loan. You will only be expected to pay interest and fees associated with the credit line. This means you only have to pay the interest you spent, not on the limit you were allowed. 

The advantage of a business line of credit is that you are not borrowing more than you need. You are simply using it when you need it. This can be helpful for business owners who are not sure how much they will need in the beginning. You may want to use it to cover daily business expenses like toll roads or other travel expenses where you can quickly make withdrawals.

Approved loan application with rubber stamp and calculator concept

How to Increase Your Chances of Getting Approved

As you probably already know, running a trucking company can be high-risk, high reward. And the “high risk” part makes many lenders cautious. But, there are some things to do to improve your chances of getting funding from your loan provider. Here are a few tips on how to increase your chances of getting approved: 

  • Improve your credit score: Your personal credit score shows if you are a trustworthy borrower that pays off debts. If you’ve got bad credit, it is unlikely that a lender will approve your application (but not impossible!). To improve your credit score, make sure to make payments on time, pay off old debts, and review your credit history on your credit report to ensure there are no outstanding debts you’ve forgotten. The higher your score, the more money you will be able to borrow.  


  • Get the timing right: If you apply when your revenue has been on the rise for a few months, this signals to the loan provider that you own a profitable business that is worth the risk. They are much less likely to lend to a business whose revenues are down. 


  • Spend less: Lenders are unlikely to get you a loan if your debt service coverage ratio (DSCR) is less than 1.25. The DSCR represents a firm’s available cash flow to pay current debt obligations. The lower it is, the less likely you will be able to pay back the money you borrow. Therefore, limit spending to keep your DSCR high. Calculate your DSCR by dividing your annual net operating income by this year’s debt payments. 


  • Be insured: Your loan provider will want to know that you’ve got insurance on all your trucks and equipment. If you are well insured with adequate coverage, you will more likely get a loan than if you are not. The lender knows that if something goes wrong, the collateral will cover any outstanding balance. 

High Risk, High Reward

The trucking industry is full of risk. Long hours on the road can be dangerous, and expanding your fleet of trucks is expensive. As soon as you purchase a commercial truck for your new business, it immediately depreciatesSuccess is the only option! And that means having the right financing is imperative.

Here at Coastal Kapital, we know that high risk=high rewards, and we are behind you. We offer equipment financing loans, SBA loans, and working capital loans to help you fund your trucking company. Apply today! 

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