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6 Business Loan FAQs for Transportation Companies

business loan transportation companies.jpgPeople around the world depend on the transportation industry to help them get from Point A to Point B and back again.

As with any other business, running a transportation company is an expensive undertaking. You need to purchase a fleet of vehicles and invest in their upkeep. You also need to cover insurance, gas, and oil expenses—which may fluctuate wildly. There are costs associated with hiring and training employees and marketing your business. And in the event an accident occurs, you have to spend money on repairs and possible insurance settlements, too.

Due to all the expenditures required to keep a transportation company open for business, it’s not uncommon for owners to encounter cash flow problems. In an effort to continue growing their business in the face of cash shortages, many transportation company owners ultimately decide to seek financing from a business lender.

As you begin your search for the business loan you need to get your transportation company’s financial house in order, you’ll soon realize you have a lot of questions on your mind. Let’s tackle six of the more common ones.

How long will it take me to apply for a business loan?

If you try to secure a loan from a traditional banking institution, expect it to take several weeks. First, you’ll have to collect and submit a mountain of paperwork, including financial statements, tax documents, and business papers.

As a small-business owner, you don’t have the luxury of investing a ton of time applying for a loan you’re unlikely to receive in the first place. Instead of looking for a bank to finance your transportation company, you have a much better chance of securing funding from a non-bank lender.

Non-bank lenders have streamlined the loan application process completely. They simply require business owners to turn over basic business information. You should be able to complete an application in 15 minutes or less.

If I’m approved, how long do I have to wait before money is in my account?

Whereas a bank may take as long as 60 days to fund your business’ bank account, a non-bank lender can send you money in as fast as 24 hours. Apply for a loan from an alternative lender, and you’ll be able to put your money to use right away.

Do I need to put up collateral in order to obtain a business loan?

In order to ensure that they’ll get their money back in the event a business folds, many banks require borrowers to put up collateral (e.g., property or equipment) in order to obtain financing. That way, if a borrower is unable to repay his or her loan, the bank can sell the collateral to recoup its losses.

Non-bank lenders, on the other hand, offer unsecured business loans, which do not require borrowers to put up any collateral. For this reason, loans from non-bank lenders usually carry slightly higher interest rates.

Can I qualify for a business loan even if I have bad credit?

Since banks are lending fewer and fewer dollars to small businesses in the wake of the 2007–2008 financial collapse, they generally only lend money to companies that have near-perfect credit scores.

Unfortunately, not everyone is blessed with an enviable credit score. Good news: Non-bank lenders are willing to lend money to businesses with less-than-perfect credit scores. A business just needs to have been open for at least one year and have the ability to demonstrate steady cash flow.

Will I be able to get the money I need to grow my business, or will I have to settle for less?

Since banks—with their deep pockets—are unlikely to lend money to small businesses, there’s a misconception that small-business owners will have to settle for less money than they need when they apply for a loan from an alternative lender.

It’s not true. Non-bank lenders are willing to give the right businesses up to $1 million in financing.

Are there any restrictions on how I can invest my small-business loan?

In order to get a loan from a bank, you’re required to tell it exactly how you intend to put the money to use. In the event your application is approved, you are then expected to invest the money as you said you would.

Loans from non-bank lenders carry no such restrictions. You can put the money to use however you’d like. Add more cars to your fleet. Hire more drivers. Invest heavily in marketing. Use it as a cushion. You get the gist.

Want to learn more about the small-business loan landscape? Read our free ebook.