7 Trucking Business Loan Types for Bad Credit

Your trucking company deals with a lot of expenses. Maintaining your fleet, fueling up for transportation, commercial insurance, replacing outdated equipment and making repairs all add up. And to complicate things, money from invoices doesn’t always come in soon enough to cover your bills. 

If an emergency strikes, it could lead to a downward spiral of debt that does a number on your credit score.  

Getting back on track after your business takes a hit can be tricky, but you’re not quite out of luck. You just have to know where to look for trucking business loans and the best choices for companies with bad credit.

Why Truck Business Financing Can Be Hard to Find

If you’ve applied for a loan in the past, you know lenders aren’t exactly eager to grant financing to trucking companies. Trucking is a dangerous business involving a lot of risk, including: 

• Accidents
• Distracted driving
•  Road fatigue
• An aging workforce 

Likely due in part to these factors, the 2017 Travelers Risk Index reported 45% of transportation lenders seeing their risk levels increasing. Shaky credit history or a low credit score adds more uncertainty, as it may indicate a pattern of missed payments, poor spending habits or overutilization of credit. 

The Trucking Slowdown: Why Truckers Took a Hit in 2019

As 2019 has gone by, many trucking companies have felt the effects of the often-cyclical economy. While the industry was recently at a high point, it has now tapered off into a decline, due to the increased number of trucking companies. Dangerous winter conditions may play a role in this change, too.

Lenders also take a big chance when they approve loans for high-risk industries, including trucking and transportation. 

If the recipient of the funding defaults, a lender may have to invest a significant amount of time collecting the remaining cost of the loan through other means. A business with a very poor financial picture may be in danger of going under before the loan terms are up. If things don’t go well, the lender could potentially lose money in the ensuing debt settlement negotiations.

The Best Way to Find All of Your Options

You can’t really blame lenders – who are business owners just like you – for not wanting to finance high-risk loans. But you also can’t go without the money you need to keep your company going. 

Bad credit shouldn’t prevent you from getting funding to buy new vehicles, upgrade your technology, hire more staff members or invest in improved route planning tools. 

Alternative lenders like National Business Capital & Services recognize the difficulties you face as the owner of a trucking business and understand that a low credit score doesn’t always tell the whole story. By considering more than just a FICO number, nonbank lenders are able to offer several trucking company financing choices:

7 Best Types of Loans for Financing a Trucking Business

• Equipment financing covers the cost of any type of equipment you purchase for your business, including vehicles, electronics and new technologies. Because the funding is secured by the equipment, this loan type poses less of a risk to lenders and may be easier to qualify for. Purchasing equipment this way spreads payments out over time to preserve more of your cash flow for other business uses.
• Short-term business loans are a typical choice for companies in need of quick cash to serve as working capital. Depending on the lender, you can get access to your funds in a few hours or a couple of days. Use of the loan typically isn’t restricted to any one type of expense, so short-term financing can be a good choice to get you through a slow season or help your business recover from an emergency. Since shorter terms can equate to higher overall loan costs, be sure to get clear information on the payback terms and rates.
• Invoice factoring covers the often-stressful period between issuing invoices and getting paid. Waiting a month or more for your money isn’t practical when you have expenses to cover right away, and putting off your own payments can drive down an already low credit score. With invoice factoring, you get a big chunk of what you’re owed up front by selling outstanding invoices to a lender. The remainder comes your way, minus fees, after customers pay. Some lenders offer a version of this loan type called freight factoring, which is specifically designed for trucking businesses.
• A business line of credit is another useful form of funding for covering gaps or handling expenses when business is slow. Choosing this financing option means you always have a ready source of working capital and aren’t stuck dealing with years of loan payments. Look for a revolving credit line that replenishes every time you pay off what you’ve drawn.
• Performance Advance is a special type of cash advance offered only by National Business Capital & Services. Like an MCA, the terms are flexible and based on your trucking company’s sales. The Performance Advance requires no minimum FICO score and no personal guarantee. You may also be able to qualify for double the funding available through other financing programs.
•  eQuickment Loans are also unique to National and are designed to secure equipment funding fast for businesses with FICO scores of 600 or more. With one-hour approval and funding available in less than 48 hours, eQuickment loans allow you to purchase equipment from your choice of vendor as soon as you need it. So, if critical vehicles break down or completely bite the dust, you can replace them right away and get your fleet back to full operating capacity. 
• SBA Loans are paid off on longer terms, but are a great choice if your trucking company is looking to make a major purchase or investment. If you’re purchasing new trucks, or kick-starting business in a new area, then an SBA loan may be the way to go. A Hybridge® SBA Loan from National can help you get bridge funding right away, and an SBA loan down the line.

Find the Right Trucking Business Loans for Bad Credit Today

Regardless of credit score, you have plenty of options to finance your trucking company. National Business Capital & Services provides a range of small business loans to enable you to purchase equipment, cover expenses or pursue growth.

Equipment financing is available with no minimum FICO requirement if you’ve been in business for at least six months and bring in $120,000 or more in annual sales. You can qualify for up to $5 million and have access to the funding in two to five days. At the end of the term, the equipment is yours. Depending on what type of equipment you purchase, you could also qualify for a Section 179 tax deduction!

Need funding for other expenses? Let National point you toward the right loan type and structure to support your trucking business on the road to success.