Semi-Truck Financing

Alternative Small Business Funding

According to the latest estimates, the trucking industry is getting closer to breaking the $800 billion value mark. Without the pandemic, the industry would have likely broken through the barrier. However, revenue eventually fell and much of 2021 has been a case of repairing the market. Eventually, the industry is likely to smash through and it highlights the importance of trucking companies, big and small.

While it’s great to learn of the thriving trucking industry, this doesn’t help when you’re struggling to make it from one set of monthly bills to the next. When you’re trying to hide your poor credit score, the challenge is even harder. Are you seeking no credit check semi-truck financing? In this guide, we’re going to explore the topic in detail. As well as looking at the reasons why you might want to avoid a credit check, we’ll also look at alternative financing and other advice.

Types of Trucking Companies

Firstly, you might wonder whether the information in this article applies to you. Well, we believe that it will pique the interest of all those in the trucking industry. Although guaranteed semi-truck financing is hard to come by, we’ll provide methods of alternative funding that could provide the help that you need this year.

Here are just some of the different types of trucking companies that will find value in this article:

Less-Than-Truckload - Firstly, these businesses carry small freight and loads across the country. Normally, it involves moving packages from various locations in the United States using parcel carriers.

Over-The-Road Truckers - On the other hand, over-the-road truckers tend to live on a grander scale. Not restricted by size, they carry goods from one area to another. Typically, drivers will sleep in their vehicles as they cross state boundaries from one day to the next. As they travel, they will make various deliveries. These days, most trucking companies fall under this umbrella.

Local Truckers - Essentially, these types of businesses perform the same role as over-the-road truckers. Yet, the fact that they only deliver locally means that they don’t have to sleep on the road. With not much overnight travel, many drivers in these businesses work standard business hours.

Freelancers - These days, you’ll find freelance accountants and writers so perhaps we shouldn’t be surprised that some people go it alone in the trucking niche too. Yet, they normally go by the name owner-operator businesses rather than freelancers. An individual owns a truck, and they’ll lease their services to various companies. While some focus on regional travel, others offer countrywide services.

Even if your trucking company doesn’t appear on this list, you might still benefit from the advice in this guide, so keep reading.

Importance of Funding for Trucking Companies

Why do you need funding as a trucking company this year? Well, why does any business need money this year? While some will want to invest in real estate, others will need a new vehicle. Elsewhere, you might invest in the following:

• Trailers
• Tow trucks
• Upgrades
• Repairs
• Bills
• Dump trucks
• Semi-trucks

Elsewhere, you might have outstanding tax debts, or you may need to adjust your service so that it falls in line with new regulations. Alternatively, you might be in the early stages of starting a trucking business. In this case, you may need money for all the above.

Why Do Lenders Use Credit Checks?

In this guide, we have special advice for those who need semi-truck financing with bad credit. Every day, you spend more time looking at bank loans and wonder why they make it so hard for business owners to get loans. In truth, no credit check semi-truck financing is difficult to find, and you need to act with caution when you do find a solution that forgoes the credit check.

But why are credit checks so important for lenders? Ultimately, it tells the lender how reliable you are with money. If you have a strong credit score, this tells the lender that you’re good with money. Therefore, you’re not likely to miss payments and the financial contract will be a success. If you have a poor credit score, this suggests to the lender that you could encounter repayment problems. After the financial crisis of 2008, this is something that most lenders want to avoid.

If you have a good credit score as a business and/or individual, you shouldn’t have any problems obtaining a loan from banks and other traditional lenders. Since you may have discovered this article after typing something like ‘semi-truck financing bad credit’ into Google, we’re sure that you want to hear about alternative financing (you’ll find everything you need with some more scrolling!).

If you see a lender offering a loan without a credit check, be careful. Normally, things that sound too good to be true are. For example, lenders that ignore credit scores typically sting the borrower with extortionate interest rates. Suddenly, you’re left paying much more than you initially borrowed.

Improving Your Credit Score

In a moment, we’ll investigate the reasons why you might want to avoid a credit check. First, we want to offer some advice to those who have a bad credit score. If you’re only avoiding a credit check because you’re worried about the score, we recommend exhausting all methods of boosting your score before giving up. As well as making traditional bank loans more obtainable, it could secure more favorable rates even with alternative funding methods.

While you might think that boosting your score is impossible, there are a couple of tricks that you can try. Firstly, although it might sound obvious, focus on paying all bills on time and in full. If you can’t, don’t just ignore the issue. Instead, speak with the company because you may be able to arrange something with them (something that doesn’t negatively impact your credit score!).

Alternatively, check your credit report because you may notice an error or mistake. If so, contact the credit reporting agency with proof of the error and they may strike it from your record. With this one simple tip, it could make the difference between getting guaranteed semi-truck financing and failing with all applications.

Finally, research online because credit repair services can help in these very situations. After reviewing your report, these services will fix errors before then providing advice on the best ways to repair your credit. Of course, this isn’t a great option if you need quick financing.

Reasons for Avoiding a Credit Check

Why would you want to avoid a credit check? Below, we’re going to explore just some of the reasons why you might appreciate the alternative financing methods in the latter part of this guide.

Poor/No Credit History

Perhaps most obviously, you might want to avoid a credit check because it will deter lenders from wanting to give the business any money. While most people instantly think of poor credit scores in this regard, having no credit history is just as damaging. Without a credit history, you’re potentially even more of a risk for lenders than somebody with a poor credit history.

Either way, your credit history could be the reason why you seek a financing method that doesn’t contain a credit check. If this is the case, don’t just assume that all lenders require a phenomenal credit score. If you’re buying an old vehicle, lenders won’t necessarily set the requirements too high because the risk isn’t high in itself.

Furthermore, some lenders will use whatever you’re purchasing as collateral, and this negates the need for personal assurances. For example, the lender could use a semi-truck that you wish to purchase as collateral for the loan. If you fail to meet repayments, the lender simply takes the truck, and it hasn’t lost anything.

If you’re avoiding a credit check because of a poor financial history, you’re hopefully starting to realize that it may not be as crippling as you first thought.

Brilliant Credit History

If you’re confused, allow us to explain. For some businesses, the problem is that their credit score is so good that they want to protect it at all costs. Although you may not realize it, all hard inquiries into your credit report affect the score slightly.

How much is this really a problem? Firstly, know that some lenders perform soft inquiries (without affecting your score) to either approve or reject your application before a hard inquiry. Therefore, you can find out whether you’re entitled to a loan before your score is hit.

Secondly, you should also be aware that a single hard inquiry tends to take around five points off your score, so it’s not a major attack. What’s more, this typically goes back to normal within around six months. So long as you do your research and don’t encourage several hard inquiries within a few weeks, the impact on your credit score is minimal.

Remember, it’s often a balance between taking a small temporary hit to your credit score or suffering from much higher interest rates. Which would you prefer?

Focus on Other Credentials

As we get closer to the proposed alternative funding tips, we want to briefly discuss the idea of prioritizing other credentials rather than your credit score. If you don’t want to go through a credit check, you might be able to persuade lenders with one of the following instead:

Annual Revenue - You might not have a great credit score as a business or individual, but you could get finance based on your annual revenue. With high revenue, some lenders will see this as enough assurance that they don’t need further checks. If your financial statements are strong enough, this could tell the lender that your position is good enough to repay loans and other debts.

Business Credit History - While some business owners don’t want to undergo a personal credit check, they might have a strong enough business credit history to secure financing. Often, business owners don’t realize that their business also has a credit history that some lenders will explore. Has your business borrowed money responsibly and repaid it in time? If so, you could get no credit check semi-truck financing this way instead.

History with Lender - Finally, another alternative credential that a lender may consider is previous relationships. If you have borrowed from a lender before and repaid on schedule, they’re more likely to offer another source of financing without a credit check. Of course, you’ve got even less of a chance if previous relations turned sour.

Types of Semi-Truck Financing

At last, we come to the section that you’ve all been waiting for - the types of semi-truck financing that your business can explore. As well as semi-truck financing with bad credit, we’ll look at various other options.

Bank Loan

If you can use your business credit or improve your credit score enough, bank loans are still one of the most reliable financing options for semi-truck companies. Generally speaking, the best rates are available through the bank. However, there are obvious problems with this solution:

• The requirement of a credit check (and solid credit history)
• Long waiting times
• Complex applications

SBA Loan

In the past, many trucking companies that were unsuccessful with the bank found that their luck changed with an SBA loan. If you haven’t seen this before, the Small Business Administration helps businesses to get loans and microloans by securing a percentage of the amount. If you were to default on the loan, the SBA would take a hit rather than just your business alone.

Yet, the SBA still needs some level of security, and this means long applications and certain requirements. If you don’t meet the requirements, SBA loans are often no better than traditional bank loans.

Line of Credit

Now, we’re entering the realm of alternative financing, and solutions that could help your business without following the traditional routes (some businesses don’t even know that alternative funding exists!). With a line of credit, your business opens an account through which it can access funds whenever required. If you don’t use the line of credit, nothing happens - this works in a similar way to a personal credit card.

If you want to borrow money to buy equipment, you’ll withdraw from your line of credit and pay interest. So long as you repay the amount in time, the account essentially resets and it’s ready for the next time you need funds.

If you’re to choose this route, make sure you can return whatever you borrow each time. Otherwise, the interest payments will steadily grow, and the lender could even restrict the amount you borrow each time. If you manage the account well, you’ll have a source of finance for many years to come.

Asset-Based Financing

If you have assets, either belonging to the business or you as an individual, you could use these assets as collateral for financing. As you monetize the balance sheet, it could open doors that wouldn’t exist without the assets. Remember, choosing this route means that you’re putting an important asset on the line. If you fail to make repayments, the lender has the right to take your property.

Some examples of assets you can use for asset-based financing include the following:

• Accounts receivables
• Invoices
• Personal real estate
• Commercial real estate
• Equipment

Invoice Financing

Speaking of invoices, some trucking companies use a form of financing also called invoice factoring and invoice discounting. If you have clients who just won’t pay up, you can sell the invoices to the lender. Although the lender won’t pay the full amount, you could receive up to 85% of the invoices. When the client pays, it goes to the lender rather than your business.

Trucking Cash Advance

Outside of the trucking industry, you’ll see this option referred to as an MCA (merchant cash advance). If you’re looking for semi-truck financing with bad credit, this could be one of your best options. Instead of a loan, this option will see you sell a percentage of all future revenue. Rather than selling existing invoices, you’ll promise the lender a percentage of all future income.

Equipment Leasing and Financing

Finally, those in need of equipment could consider leasing or financing. With leasing, you pay a monthly fee to rent the equipment from the manufacturer. On the other hand, financing is more like a phone or car contract. Throughout the contract, you’re the owner of the equipment. On your final payment, you’re then free from the lender. In either case, the equipment is taken back if you miss repayments.

Summary

If you’ve stayed with us throughout this article, you’ve taken in lots of information. If you want guaranteed semi-truck financing (or as close as you can get), feel free to contact the South Florida Funding Group for advice today. Our friendly team is informative and passionate about helping those who need funding to survive and thrive!