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  • The Best Business Loans & Financing Options for Trucking Companies

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All About Trucking Loans

The trucking industry can be difficult to break into, there’s no two ways about it. Though it is worth putting the effort into starting a trucking company when you consider the fact that more than 70% of all domestic freight tonnage is transported by trucks.

 

And, with online shopping becoming more and more popular as the years go by, the demand for shipping is also on the rise. According to recent research, 63% of online shoppers expect their purchases to be delivered within a span of just 3 days. That research also found that 85% of online buyers indicated that they would pay for expedited shipping.

 

Some of the challenges that new trucking businesses will face include:

 

But don’t let those stats make you slam on the brakes so quickly - there are solutions to help you overcome those pesky speed bumps. Financing a trucking business wisely and responsibly can ease the load.

 

When considering the different truck finance options, one of the most effective strategies to remain competitive and profitable in the trucking industry is to apply for a truck loan. Want to learn all about trucking business loans? Keep reading!

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Financing Options for Trucking Business Loans

What Is a Truck Loan?

A truck loan is exactly what it sounds like - an amount of funds that are borrowed by a trucking company in order to meet their expenses. There are a number of reasons to take out a truck loan, and those reasons include both needs and wants.

 

Generally speaking, a truck loan may be used for:

  • The cost of starting a trucking business, which can run somewhere between $10,000 and $20,000
  • Purchasing insurance
  • Obtaining required licenses and permits
  • Leasing or purchasing of equipment, including trucks, trailers, forklifts, etc.
  • Maintenance and repairs, both the routine and the unexpected
  • Advertising
  • Hiring drivers
  • Scaling up the business
  • Establishing a base of operations/acquiring a warehouse
  • Covering unpaid freight invoices

 

It’s crucial to the successful operation of a trucking business that it has access to truck finance at any time. Before shifting gears and discussing options for financing a trucking business, there’s another way to cover the costs of running a trucking company: grants. More specifically, there are a variety of grants to start a trucking company that are available from the government. Most grants to start a trucking company will require that you have a strong business plan, so be sure to tune it up before applying.

 

We know your engines are revving and you’re ready to discover more about trucking business loans. Here is where we embark on our trip...

 

Best Trucking Loans & Financing Options:

When it comes to picking the right trucking business loans, there are a whole lot of truck finance solutions to consider. Sometimes having so many options can actually stall the decision-making process.

 

Don’t sweat it - the table below summarizes all of the relevant information you’ll need to help you avoid getting stuck in a roundabout when choosing how to go about financing a trucking business.

 

Lending Partner

Fundbox

Kabbage

Fora Financial

OnDeck

BFS Capital

Bluevine

Best used for

Invoice financing & line of credit

Line of credit

Small Business Loan & Merchant Cash Advance

Business term loans & Line of credit

Small business loans & Merchant cash advances

Invoice factoring & Line of credit

Loan details

Loan size

$1,000 – $100,000

$2,000 – $250,000

$5,000 – $500,000

Credit lines up to $100,000, term loans from $5,000 – $500,000

$5,000-$500,000

$5,000 – $250,000, invoice factoring $20,000 – $5 million

Repayment term

12-week repayment term for line of credit, 12-week or 24-week repayment terms available for invoice financing

6, 12, or 18 months

Flexible

3-12 months on short-term, 15-36 months on long-term

Flexible

6-12 months for credit line, 1-13 weeks for invoice factoring

Qualifications

Time in business

At least 3 months

1 year

At least 6 months

1 year

1 year

At least 3 months

Minimum credit score

n/a

560

550

500

550

530

Annual revenue

$50,000

$50,000

Minimum of $5,000 in credit card sales or $12,000 minimum in gross sales

$100,000

Average daily bank balance of at least $1,500

$100,000

 

Types of Financing for Trucking Businesses

 

Start up Business Loan

Financing a trucking business can be difficult when you’re starting from the ground-up. A start up business loan is one way to solve your need for truck finance. Start up business loans are especially helpful in the event that you’ve already gone about sketching out your business plan, but don’t have the money to get the gears turning.

 

To qualify for this type of loan your trucking company doesn’t need to be in business long, which is music to the ears of anyone who’s aiming to become a trucking business owner.

 

Qualifications & Features

  • Credit score of 680+ for FICO
  • Preferably 3 months in business
  • Rates as low as 0%
  • No monthly revenue required (yes, you can have a revenue of $0 and still qualify!)
  • Trucking business loans from $3,500 to $250,000
  • Monthly repayment schedule

Apply for Start Up Loan

 

Business Line of Credit

Owners of trucking companies are well aware that there are a number of variable costs that can make budgeting a headache. Because of those constantly changing costs, trucking companies may rely on a line of credit that gives the business the flexibility to borrow as much as needed (up to a set amount).

 

A business line of credit is oftentimes used as a financial safety net that provides your business emergency with funds at the time you need them most.

 

The credit limit for your business is based on the market value, profitability, and risk taken on by your trucking company - all of which are determined by the loan provider. A trucking line of credit can be compared to business credit cards.

 

Qualifications & Features

  • Basic requirements to qualify:
    • Do not exceed the credit limit
    • Meet monthly minimum payments
  • Time in business: 3 months minimum
  • Minimum monthly revenue: $5,000
  • Interest rates vary according to factors designated by the lender (1%-10%)
  • Repayment schedule is pre-arranged directly with the lender

Apply for Credit Line

 

Equipment Finance

A trucking company’s ability to operate depends almost completely on the equipment that it uses. The most obvious equipment needed is, of course, the trucks. But that’s not the end-all.

 

Other equipment trucking companies need include:

  • Variety of trailers
    • Dry vans
    • Flatbeds
    • Refrigerated trailers
    • Auto transport trailers
    • Other specialized trailers like those needed to transport liquids or hazardous materials
  • Trollies
  • Forklifts
  • Computer systems
  • Vehicle jack

 

Whether you’re just starting to put your equipment inventory together, or if you’re looking to maintain your company’s competitiveness in the industry - it’s essential to own up-to-date trucking equipment so that your business can operate at full capacity and keep clients satisfied.

 

Business equipment loans can be used to make the purchases you want (or need) without driving your debt through the ceiling.

 

Qualifications & Features

  • Trucking companies with poor credit scores are often still eligible
  • Interest rates range 4-6%
  • Repayment over a long period: 2-6 years
  • No need to pay assets in full

Apply for Equipment Financing

 

Unsecured Business Loan

An unsecured small business loan will offer some of the best terms available, which is why it’s one type of truck finance option that is more readily available for those companies with high credit scores.

 

Since they don’t require any form of collateral, unsecured business loans put the bulk of the risk on the loan provider (which is good news for trucking business owners). And, although qualifying for an unsecured loan is generally more difficult, getting approved for this type means that other small business loans will be easier to obtain.

 

Qualifications & Features

  • Short approval process: 48-72 hours
  • Higher interest rates than other forms of financing a trucking company
  • Repayment periods tend to be shorter: 3-18 months

Apply for Unsecured Loan

 

SBA Loan

The SBA (U.S. Small Business Administration) provides help to small businesses by covering up to 85% of a business loan amount - including SBA trucking loans. What this really means is that your trucking business can get funded even if you may not feel completely sure that you’ll be able to repay the loan.

 

Although SBA loans don’t directly provide the funding, they do provide security to borrowers (which also serves as security for lenders, and gives them more of an incentive to approve applications for trucking business loans). Financing a trucking company doesn’t need to be such a big risk when you’ve got SBA trucking loans as an option.

 

Qualifications & Features

  • Minimum credit score of 500 for FICO
  • Ideal time in business: 2 years
  • Interest rates as low as 6.5%
  • Minimum monthly revenue: $0
  • Loans from $30,000 to $5,000,000
  • Monthly repayment schedule
  • Payback periods range 5 - 25 years

Apply for SBA Loan

 

Merchant Cash Advance

When you’re searching for a short-term remedy to your trucking business financing, a cash advance may be a useful option. This method of financing a trucking company is recommended as a last-case scenario in the event that you’re faced with a particularly demanding billing cycle and need a quick fix.

 

When your forklift decides to quit on you without any forewarning, or when you have unpaid invoices and can’t make rent, merchant cash advances can get you out of a jam. Generally speaking, your credit score will determine the amount your business is qualified to receive in the form of a cash advance.

 

Qualifications & Features

  • Minimum credit score: 500 for FICO
  • Minimum time in business: 6 months
  • Minimum monthly revenue: $10,000
  • Repayment is done automatically by drawing from future debit and credit-card transactions
  • Payment period lasts as long as it takes for the full amount to be repaid

Apply for MCA Loan

 

How to Get Loans for a Trucking Business

Step-by-step guide for applying for trucking business loans:

  1. Choose your desired loan amount and select ‘Get Loan Offer’
  2. Fill in the requested information (including time in the industry, revenue, business, etc.)
  3. Submit your business’s checking account information for analysis
  4. Wait for offers. You can also review your status by clicking ‘Access Your Loan Application’
  5. Review offers and select your preferred lender
  6. Receive the funds to your business checking account
  7. Review your tailored LendingScore™ dashboard to improve your funding options
  8. Improve your rates - if your LendingScore™ is insufficient, follow the personalized plan (8-12 weeks to unlock funding)

See if I qualify

 

Is it Difficult for a Trucking Business to Get Loans?

The level of difficulty you’ll face when applying for a truck loan will largely depend on where you are applying.

 

When you approach a bank for truck finance, don’t be surprised by the loads of bureaucratic hoops you’ll need to jump through. Not to mention that the process of applying for a truck loan with a bank can take weeks to get through, and every time you apply your credit score gets negatively impacted.

 

Luckily, Become offers a service that not only is much faster and simpler to use but also improves your overall funding odds! By using advanced algorithms and the LendingScore™ dashboard that provides tailored advice, Become is able to effectively assist companies of all sizes and ages get truck finance.

 

 

Become improves the chances of obtaining commercial truck loans by departing from the traditional loan application process and setting new norms in the lending industry.

 

Benefits of applying via Become:

  • Simplified application process
  • Speed indeed - funding in as little as 3 hours!
  • No damage to your credit score

 

When you’re en route to financing a trucking company, there are a handful of hazards that should be checked for, and handled, before applying for a truck loan.

 

The top 5 reasons why business loans get rejected are:

  1. Bad credit - trucking business loans bad credit sound familiar to you? If your credit score is too low, it will act as a red light to lenders. They will see bad credit as a sign that that you may not be a reliable borrower. Make payments on time and limit your debt utilization (more just below).
  2. Misuse of debt utilization - you should aim to use around 30% of your line of credit. For example, with a credit line of $6,000 you should try to use roughly $2,000 so that you can keep your credit history in good standing.
  3. Business is too young - the truth is that youth is not a virtue when applying for loans. Have a great credit score and fantastic revenue? Even so, if you’re a newer company then you’re still capable of being denied. But it’s not a dead-end, there are still ways that you can get funded without having to wait for time to pass.
  4. Revenue is lacking - when lenders see that your revenue is less than impressive, they may take their foot off of the gas and second-guess whether you’ll be able to pay back the borrowed amount or not.

How to fix weak revenue:

  • Reduce spending where possible
  • Find strategies of collecting unpaid invoices
  • Find a method to boost your cash flow when times get tough
  1. Applied with the wrong lender - with so many loan options and loan providers to choose from, it’s possible to mistakenly apply with a loan provider that isn’t such a great match with your company’s financial profile. Proper advice, like that offered by Become, can go a long way.

 

What Can Trucking Companies Use Business Loans For?

Commercial truck loans can be used for virtually any purpose related to the job - but a few uses tend to be most popular among trucking business owners.

 

Common ways of how to use truck finance:

 

  • Finance jobs - at some point you’ll want your trucking company to grow, and that’s when you’ll naturally want to start taking on larger jobs. That may be difficult if the costs involved aren’t feasible with your current budget; commercial truck loans can be a practical solution.

 

  • Hire employees - you started a trucking business to make big bucks, but you didn’t dream of doing all of the work alone. Growing your team means your business will be able to provide high quality service, and a truck loan can ease the financial strain of hiring professionals. 

 

  • Buy equipment - a successful trucking company relies on having fully-functioning equipment. Maybe you want to buy new, or perhaps you’ll save some money and buy used, but either way, truck finance will make the ride smoother. Be sure to explore the differences between equipment loans and equipment leasing.

 

  • Outsourcing - trucking is your profession, but you’ll need help with accounting, advertising, or web design (to name a few). In the end those services will make and save you money. But they, of course, won’t come for free. Use truck finance as a way to afford outsourcing.

 

  • Developing a headquarters - making sure your company is active online is definitely important, but in the trucking industry it’s a necessity to have a physical base of operations as well. Whether you’re establishing or expanding your physical location, a truck loan can be useful.

 

Why Choose Become for Trucking Loans?

If you’re having trouble financing a trucking company and looking for the best rates for commercial truck loans, Become can be the helping hand you need.

 

Become works hard to improve your chances of obtaining truck finance. But improving funding odds is only one advantage - another way Become helps is by finding trucking businesses their optimal funding solution. Become has revolutionized the business lending process by using fintech to match your business with tailored financing solutions.

 

How does Become help with getting approved for commercial truck loans?

 

First, in order to assess your business’s health, data is gathered and taken into consideration by advanced algorithms. The data is taken from a wide array of factors (including business age, financial status, business credit, and more).

 

Second, you’ll find out which lending partners you may qualify with - and with dozens available your options are varied. If for whatever reason your business doesn’t qualify, you’ll be provided with advice on how to improve your fundability.

 

The interactive LendingScore™ dashboard offers a tailored step-by-step improvement plan that helps nurture businesses are throughout the funding cycle. What is really unique about Become is that the service it provides comes at no fee!

 

Discover which trucking business loans you may qualify for

 

Apply today

 

Don’t think commercial truck loans are the right option for you?

 

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If you still have any questions and would like to speak with one of our representatives, please feel free to reach out to us!

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