The Most Effective Loans for Transportation Businesses in 2021
There have been many occasions: “Truck drivers keep America moving.” Although a few inexperienced people may consider this a sham, anyone who understands freight knows how accurate it is. For instance, 70% of the items consumed in the United States were shipped by truck. If America’s trucks were idle even for one single day, the consequences could be devastating.
There are 3.5 million drivers of trucks within the United States. Additionally, 5.2 million other employees in the trucking industry never get into the truck’s cab. This is 8.7 million workers each day to keep the business humming. Although that might sound like a lot, it’s not enough. As per research, around 60,000 more drivers are required to meet the increasing demand.
Of course, no words are more appealing to business owners than “rising demands.” It’s just a matter of cash to grow your business in line. While purchasing several trucks might be an important business decision. However, it’s not as easy as visiting the local bank to obtain auto loans such as GAD Capital.
Finances can be a challenge for those who work in the trucking business. For starters, as you know, trucks are costly. New trucks can range between $130,000 and $180,000 with the trailer adding an additional $30,000-$80,000. To top it all off, trucking companies are usually thought of by lenders as a risky investment.
As you consider financing options for the new year is a good idea to explore your alternatives. When you’re trying to purchase an automobile, lease one, or even repair/upgrade your existing truck, it’s crucial to be aware of your alternatives.
On the first list first is the financing of equipment since it’s designed for the same expenses as trucks. With the maximum loan amounts reaching $5 million, it will allow you to purchase that brand-new Kenworth W990 that you’ve been eyeing. If the W990 isn’t available currently, equipment financing could enable you to buy the other equipment you need to move the freight.
The financing for equipment is relatively simple to obtain because your vehicle is likely to be used as collateral for the loan. This is good news since it means that you’ll be able to secure an amount higher on a loan, even if your credit or financial background is not as good. But be aware that it means that your vehicle may be taken away when you don’t keep up with your payments.
If you require trailers, trucks, or even a brand new application to run your business, term loans can help you get there. With amounts that range from $5,000 to 2 million dollars, you could get your cash within just a couple of days.
The interest rates can begin at around 6.6% when you borrow on term loans. Of course, it depends on your history’s credit score, your business’s history, and the loan amount required. Whatever the circumstances, you should plan for the duration of your loan to be between 5 and 10 years.
Short Term Loan
These loans are similar to credit cards, but they’re designed to be faster. You can have the cash you require in just 24-hours, and the time frame is three to five years.
It sounds great, doesn’t it? Be aware that you’ll have to pay a fee for the short-term loan. They are more expensive in terms of interest than a traditional term loan, and the maximum sum is less. If you find you need fast money, these types of loans will generally meet your needs.
The US Small Business Administration (SBA) offers a range of loans with favorable rates. The loan’s good terms for borrowers is that SBA assures a substantial portion of the loan amount. This decreases risks for the lenders. This means the lenders are more willing to cooperate with you.
On the other hand, SBA loans are highly competitive. If you can qualify for them, they could take an extended time to get. There’s plenty of paperwork required, and the process can be lengthy.
Line of Credit
If you have to make purchases for equipment with lower costs, think about a company credit line. Instead of offering you a free sum of thousands of dollars, the line credit grants you access to an amount you can draw from whenever you require. Similar to credit cards, it is only charged for the amount you need to use.
The revolving method of financing is a good choice because it offers flexibility. For instance, if you’re experiencing an economic downturn or are waiting for many payments to get paid, your credit line could help make up the shortfall.
Suppose you research your loan options today so that you’re ready to make financial decisions in 2021. Keep in mind that regardless of whether you’re a seasoned business employing hundreds or trying to start your company up and running, there are various loan options available to those who need them.