How To Get Working Capital for Transportation Businesses
If you work in the trucking and transportation industry, you may find yourself needing capital to help cover your operational expenses. Your business likely has significant expenses and you probably invoice your customers with time to pay, especially on larger contracts. This can make maintaining enough liquidity difficult. Fortunately, financing options can help you keep your business running smoothly.
These term loans are helpful for once-off or short-term expenses. For example, if you want to buy some new tractors without disrupting your working capital, this may be the right choice for you. These loans often have low-interest rates and strong terms. They can also provide large funding amounts. However, they can be challenging to qualify for, especially if you have hit hard economic times.
Line of Credit
Every business should have a line of credit to help it manage common expenses. A line of credit is a revolving account, similar to a credit card. However, unlike a credit card, you draw money straight into your bank account. This lets you pay for all sorts of expenses. When you pay back some of the money, that amount of credit becomes available again.
Working with a lender, you may be able to get a loan through the SBA. This special loan type has significantly better terms that may otherwise be available to your business. The Small Business Administration offers loans of up to 25 years and $5 million. These loans are asset-backed but some of the amount if guaranteed by the government.
Hard Money Loans
Term loans and lines of credit may be available from alternative lenders. These options are often more expensive than bank loans. However, they are easier to qualify for and often move faster. These may be asset-backed or unsecured.
This is a great option for many trucking businesses. You can get short-term financing against your current outstanding invoices. If you offer your customers time to pay, this may be the right option for you. It can help smooth out your cash flow and ensure you always have the working capital you need to succeed.
Understanding your options can help you make better borrowing decisions for your transportation company. Whether you opt for a bank loan, alternative loan, SBA loan or another option, getting the working capital you need can help ensure that your business continued to grow. This business can be a challenging one, but it can also be rewarding if you have the right partner.