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Business Credit for Trucking and Transportation Companies

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Trucking and transportation businesses are considered among the highest-risk businesses by lenders. For this reason, it can be challenging for even seasoned trucking and transportation companies to obtain credit lines and loans. Establishing and maintaining good business credit, as well as personal credit, enables trucking and transportation business owners to secure credit lines and loans vital to expanding their businesses with the lowest possible rates and payments.
There are several options for financing, from conventional bank/SBA financing to alternative financing, which includes products such as bridge funding, credit line hybrids, and invoice factoring. Companies can get funding regardless of credit or amount of time in business. Obtaining financing without a personal credit check is possible, even when the business is considered high risk, as trucking/transportation is.

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Business credit

Business credit affords more funding options for trucking and transportation companies, enabling them to obtain credit lines and loans to purchase the fuel, supplies, and equipment their businesses need to become and stay lucrative. Follow these general guidelines to establish and build good business credit to avoid needing collateral, cash flow, or good personal credit (the three Cs).

Business owners can begin by applying with starter vendors such as U-Line, Quill, and Grainger. Starter vendors report to business credit reporting agencies. After opening about five such accounts and paying on time or early, the company will have built some business credit in a relatively short time.

The next step is to move to retail credit vendors such as Home Depot, Sam’s Club, Lowe’s, Costco, Staples, Office Depot, Amazon, and Walmart. Again, be sure to pay on time or early. This will strengthen business credit.

Once about eight accounts are on the business credit report, apply for Fleet credit at Citgo, BP, Chevron, Wawa, and others. Fleet credit normally requires one or more of the following: a personal guarantee; credit check; collateral; or cash flow. However, because the company has already built business credit via the aforementioned vendors, it can get approved for fleet credit without these.

Finally, with at least fourteen accounts on the business credit report, the company can easily qualify for business VISA, Mastercard, auto/vehicle financing, computer leasing, etc. just for having built and maintained solid business credit.

If the company has established good, solid business credit and the business owner has a good personal credit score, the company may able to get business lines of credit, equipment/vehicle loans, etc. via conventional lenders such as banks and SBAs with lower rates and longer loan terms, which equates to lower payments. It’s important to know, however, that conventional lenders often deny business applications in to trucking/transportation companies because they have stricter underwriting guidelines due to the risk associated with them. In addition, – the three Cs — cash flow, credit, and collateral – are underwriting requirements for traditional lenders. Companies and business owners who possess all three CS, will get the best loan term and lowest rate/payment.

 

For owners of start-up trucking/transportation businesses and those with little or lackluster business credit and/or low personal credit scores, limited cash flow or revenue, and little/no collateral, there are several alternatives to conventional bank/SBA funding. Although companies may not get the best rate or longest term by going this route, it is much easier to get approved when applying with these lenders. This can be a great help to those businesses which are lacking in one or more of the aforementioned areas. Some require no collateral and even offer bridge funding if the business is short on revenue. Suppliers and vendors may offer net 30, 45, 55, or 60 terms – business owners just need to inquire.

 

Some alternative financing companies offer a product called a credit line hybrid, which helps start-up trucking and transportation businesses by financing up to $150,000 business lines of credit at a 0% rate for 6, 12, or 18 months. A lot of these lenders report to business credit reporting agencies so the company can build credit while building the business at the same time. Companies can get approved for an unsecured LOC with no cash flow and no collateral. A good personal credit score (> 680 FICO) is required, or they will accept a guarantor if the personal credit score is poor.

 

There is also a product called invoice factoring or invoice financing, which gives a business the opportunity to get 90% of the funding up front as it waits for its customers to pay on invoices, up to 90 days. The lender will collect invoiced amounts from the business’s customers and within 90 days the company receives the balance of the financed amount. This enables businesses to continue to grow even if they have outstanding receivables.

When working with a lender to secure funding for a trucking or transportation business, negotiating a longer term will enable the business owner to get the lowest possible payment. Companies have the option of paying extra without incurring a prepayment penalty if there is additional revenue. Business owners can prove the company’s creditworthiness by paying half of a loan before applying for another, thereby earning a means of negotiation for a better rate and/or term with the next application.

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alternative financial companies

Some of these alternative financing companies and their features are listed below.

National Funding

National Funding has $5,000 to $500,000 available if the business has consistent revenue, and equipment financing up to $150,000 if the company has been in business at least six months. Requires a personal credit score > 575 and a quote from a vendor.

LVRG Funding

LVRG Funding offers small business loans, revenue-based financing, cash flow solutions, business lines of credit, term loans, and cash advances for US businesses with > $8,000/month in gross revenue. There are several types of financing available from $10,000 to $500,000 for trucking/transportation companies. Even if credit is poor, they will offer 4-12 month term business loans. While these will have high payments, they will provide businesses the opportunity to prove their creditworthiness. Subordinate financing is available as well.

Headway Capital

Headway Capital offers business lines of credit up to $100,000 for 12-, 18-, and 24-month terms with no prepayment penalty. However, P/L and corporate tax returns, as well as standard documentation, are required for underwriting purposes. Loans may differ from state to state.

Lendio

Lendio will finance $5,000 to $5,000,000 for 24-to-60-month terms. The rate can be as low as 7.50% with approval in < 24 hours. They offer short term loans (12-36 months) as low as 8.00% as well.

Kabbage

Kabbage offers loans up to $250,000 and uses Artificial Intelligence to link the business’s information online and underwrite electronically. Offers invoice factoring/financing and the credit line hybrid product mentioned earlier, which can really help start-up trucking and transportation businesses build credit.

Fundbox

Fundbox will finance up to $150,000 business lines of credit for US trucking or transportation companies in business for at least six months, with a FICO score > 600. Companies need a business bank account and at least $100,000 in annual revenue to qualify. Fundbox also uses AI to underwrite electronically and can approve the financing for access to the funds on the same day. Businesses can start out with lower credit limits, and once they have established a good pay history with the lender, they can request to increase the credit limit. Invoice factoring/financing is available as well.

Blue Vine

Blue Vine offers LOC funding similar to Fundbox and uses the same type of AI underwriting technique. However, it may be more difficult to get approval through Blue Vine because they require a personal credit score > 620. Blue Vine also offers invoice factoring/financing.

Gud Capital

Gud Capital offers the most difficult kind of trucking and transportation business financing to get (bank and SBA financing). It requires 3 years of tax returns, collateral, good personal AND business credit, and established cash flow (the three C’s). Gud Capital offers the following (collateral required):

1st Commercial Credit

1st Commercial Credit offers invoice financing with 1.0% to 3.0% rates with no financials required. It initially takes three to five days to set up but subsequent credit applications take less than 24 hours for approval. Gives fuel credit card discounts.

Fundera

Fundera offers semi-truck financing for terms up to 10 years. The higher the credit score, the lower the rates. In order to qualify, the business cannot have tax liens, bankruptcies, or repossessions.

HIL Financial

HIL Financial offers equipment financing even with bad credit. Includes specialty truck financing (refrigerated trucks, flatbeds, etc.).

FastUpFront

FastUpFront will finance either unsecured or secured business funding for US businesses (NO startups) up to $250,000, even with bad credit or no collateral. No personal guarantee is needed, but they do require bank statements from the past three to four months.

Top Mark Funding

Top Mark Funding prefers if companies are in business > 3 years but will work with those just starting out. They offer up to $250,000 for trucks/equipment less than 10 years old, with > 600 FICO score required.

Crossroads Equipment Lease & Finance, LLC

Crossroads Equipment Lease & Finance, LLC finances transportation equipment for a maximum of $250,000 and will give up to 100% of the vehicle’s cost.

Clarify Capital

Clarify Capital offers secured or unsecured term loans up to $750,000 with rates starting at 7.0% for 6 to 24 month terms.

Become.co

Become.co will finance equipment, finance loans for startup, and offer business LOCs from $5,000 to $500,000. Requirements vary by individual lender.

In addition to these alternative financing lenders, there are veteran-owned business opportunities available whereby grants are awarded based according to the business owner’s military service. This is coordinated through the Department of Veterans Affairs via the Veteran Entrepreneur Portal. To qualify, the business owner must meet program and compliance guidelines. If the business owner became disabled during the time in service, s/he can qualify for VR&E Self Employment Track. Contact the VA for details.


Those interested in starting their own trucking or transportation-based business can apply for available trucking school scholarships and grants. These assistance programs can help to pay for training and certification prior to establishing a business.

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