How to Start a Tow Truck Business with the Right Financing
Thinking of starting your own towing company? Running a tow truck business involves hard work, but it can also be immensely rewarding. The key to success is to have the capital you need to fuel your business and drive growth.
Why Start a Tow Truck Business?
Broken down and stranded vehicles are a problem in every city across the US. They always will be. It doesn’t matter what direction the economy is moving in or what’s going on in the world, people will always need tow truck services.
If you have experience driving a rig, have a knack for mechanics, and are ready to be your own boss, getting into this $7 billion industry as an entrepreneur might be a good career move for you. Here’s a look at what steps you’ll need to take to start a tow truck business, including acquiring the financing you need to lift your business off the ground.
Step-by-Step Guide to Starting Your Towing Company
Here’s what you’ll need to do to get started.
- Acquire a Class B commercial driver’s license so you can legally operate a medium-duty truck. You’ll also need to obtain several other permits and licenses, depending on what type of tow truck business you’re starting. Some of the standard requirements include a towing company license for your state, an oversized vehicle permit, and a consent tow permit.
- Determine how much capital you’ll need to start a tow truck business. Startup costs include financing for a tow truck as well as capital for marketing, insurance, licensing fees, and early ongoing expenses such as fuel and repairs.
- Create a plan for your towing company. Select a location and put together a pricing plan and marketing strategy – if you’re a first-time entrepreneur, consider discussing your business plan with an independent account, business consultant, or other professional.
- Decide the type and number of tow trucks you’ll start with. If you’re going to operate a small business with one tow truck, you may be able to operate out of your private residence, which will save you money on renting commercial space. In this case, your only major financing need for starting your business will be for the tow truck.
List of Tow Truck Financing Companies
When it comes to tow truck financing, there are a few things you’ll want to look for in a loan:
- Reasonable interest rates
- Flexibility if you plan on making early repayments or refinancing in the future
- Repayment terms suitable to your budget
- Loan amount maximums that will cover your expected tow truck costs
- Minimal fees
There are dozens of excellent companies nationwide that offer equipment financing for tow trucks. Here are a few:
- First Capital Business Finance
Types of Tow Truck Financing
There are also different types of tow truck financing. What is right for you depends on your business goals, credit, and capital needs.
- An equipment finance agreement is a tow truck loan. In this case, you own the truck and make payments each month until the loan is paid off.
- If you need financing to cover startup costs outside of the equipment, you may also need a standard business loan.
- With a lease-to-own agreement, once you pay off the lease, you’ll own your truck.
If you’re not sure where to get started, we can help. At Coastal Kapital, we can help you navigate this process, so you know you’re getting the best possible terms for your situation. As trusted leaders in commercial equipment lending, we have the experience and network in place to ensure you get the financing you need quickly.
Is It Possible to Obtain Tow Truck Financing with Bad Credit?
If you don’t have great credit, you can still qualify for financing. While many lenders will look for a minimum credit score of 650, there are alternative lenders that are willing to work with borrowers who have bad credit. You may pay a higher interest rate or need to have collateral for the loan to qualify.
Ready to Get Started?
Get in touch with the team at Coastal Kapital today. We are a one-stop-shop for business loans and equipment financing. With our experts on your team, you can count on a fast, hassle-free experience. Contact us for financing you can trust.