Securing Loans for Small Businesses

The United States is home to several million different companies spanning many different sectors, and the majority of them are categorized as “small companies.” Labeling a company as “small” is usually based on the number of employees it as, typically under 500 or even under 50, and such companies have limited cash flow and revenues. Still, many small businesses can thrive if their owners know how to handle their finances correctly, and a small business may grow if its owner avoids various pitfalls typical to small companies. In particular, this includes truck carrier companies, which can’t afford to buy a cargo jet or freight ships, but they can buy and manage a small fleet of semi trucks for shipper clients to use. Overall, financing for first time owners and operators takes some work and certain know-how, and unfortunately, not all business owners have good credit or even know what business credit is. Getting a loan for semi trucks is vital for these owners, and commercial vehicle financing can make or break a company. How might this work?

Small Businesses Today

As a whole, most truck carrier companies are categorized as small companies, and many statistics are being kept to track how well small businesses operate in the United States today. What do the numbers show? According to the U.S. Small Business Administration, some 28.8 million small companies are running today, and they make up 99.7% of all American businesses. Each one has under 500 employees, and probably only a few million dollars in revenue each year, if even that. A small business typically has only narrow profit margins, especially early in its life, and thin cash reserves. So, a small business owner needs to take out some smart loans to pay off various expenses and keep the whole operation running.

Unfortunately, not all small business owners are able to handle this correctly. It is believed that a whopping 30% of all businesses fail simply because the owner ran out of money, and they often didn’t know how to handle credit or loans, either. A business owner will have both a personal credit score and a business credit score, but as many as 45% of all business owners aren’t even aware of the concept of business credit scores. Further, around 60% of all small business owners say that they don’t feel knowledgeable enough in the world accounting and finance. But there are ways to avoid common issues with financing for first time owners and operators, and to get financing with bad credit (or mediocre credit), big banks are not an option. In fact, big banks often don’t enter the picture at all.

Financing for First Time Owners and Operators

In the world of small truck carrier companies, an owner can take certain steps to keep their business running smoothly. Not only can that owner continue to read books and attend seminars about business and finances to keep current, but they can also make sure they are taking out loans under favorable circumstances. When it comes to financing for first time owners and operators, the business owner must know that their personal and business credit scores are intertwined, and a lender will care about both. An employee using a business credit card only needs a good business credit score, but the owner needs a good personal credit score, such as from responsibly paying off mortgages and credit card loans, among other loan types.

For financing for first time owners and operators, it is best to turn to specialized truck lending companies, as these companies understand the risks of the trucking business. Big banks are reluctant to approve loans for small truck companies, but those specialized lenders will have more lenient terms. Still, these specialized truck lenders will look into the borrower’s personal and business credit score, and check their financial history for any red flags. If the borrower has good scores, they may get approved for as much as 100% of a new truck and trailer’s value in a loan, and at a good interest rate. Even borrowers with low credit may get a loan, though under less favorable terms. And either way, that truck or trailer will typically act as collateral for that loan, making it more attractive for the lender.

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