Types Of Business Loans For Truckers
If you’re in the trucking industry, there are several business loan options available for you. For the purchase of a truck, you should consider equipment financing. You may also be able to qualify for the SBA Microloans program, which provides up to $50,000 in financing for expenses.
Short-term loans, lines of credit among others are also available to you, but they usually have a higher cost.
Let's take a look at the different types of financing available to truckers to find the one that best suits their needs.
Equipment financing is exactly what it sounds like: funding that is used to purchase equipment. In the trucking industry, this could mean the purchase of a new or used truck, a trailer, or other long-term physical assets that are necessary for operations. This type of funding allows you to break down the cost of expensive equipment into smaller payments that are easier to manage.
There are two types of equipment financing:
Equipment Loans: With a loan, you’ll make scheduled payments that go toward the principal balance and interest. Once all payments have been made, the equipment is yours. If you plan to keep your equipment for many years, this is the best option for you.
Equipment Leases: When you lease equipment, you’re essentially renting from the lender. You make payments each month to be able to use the equipment. Once your lease is over, you’ll return the equipment and can upgrade to the latest model. In some cases, you may be able to pay the remaining balance if you’d like to own the equipment outright. With leases, monthly payments may be more affordable and it’s possible to find leases that don’t require a down payment. However, the total cost of the lease typically winds up being more expensive than loans due to higher interest rates.
Medium-Term Installment Loans
A medium-term installment loan is a loan that is paid off over a period of 1 to 5 years. With this type of loan, you can break down the cost of a purchase or receive working capital while repaying with low monthly payments.