Are you in the transportation industry?
If so, then you know just how expensive reliable equipment is to purchase. However, in the transportation industry, you are only as good as your equipment is which means, at some point, you will look to finance vehicles for your business.
Having access to the capital necessary to make these purchases is essential if your business is to grow and thrive. Fortunately, obtaining funding is easier than you may think.
Whether you’re a medical transportation company, or are doing last-mile deliveries and need a box truck, Capital Funding Partners has access to the funding you need.
This brief guide will go over your funding options for financing equipment for your business.
1. Determining Eligibility by Understanding Guidelines
Various lending programs will have different requirements to receive an approval – these are known as “guidelines”.
Here are some general and common guidelines you should keep in mind when seeking semi financing:
Minimum Credit Score: 500… Of course, the higher the score the better, but having bad credit is not a barrier to obtaining financing.
Down Payment: Well qualified buyers can sometimes finance with no money down… However, most borrowers should expect to put down between 5% to 30% depending on credit, length of time in business, and experience.
Do You Industry Experience: Are you a courier, or CDL driver who has documented experience in your industry? If you do, you have a leg up in obtaining preferable terms than owners who are entering a new industry.
Age of Equipment: Generally speaking, equipment purchases should be 10 years old or newer
2. Important Documents Needed
You might not need every document on this list – especially if you’re a startup – but these are common documents that you’ll need if you want to expedite the lending process.
· Business Registration Documents – Articles of Incorporation, etc
· Business Bank Statements – Number of months requested will vary
· Business Tax Returns – Number of years will vary
· Profit and Loss Statement
· CDL – If you have one
· USDOT Number – If applicable
· Motor Carrier Number (MC) – If applicable
3. Locating the Equipment
You must find the right truck, van, or another vehicle for your line of business – while keeping in mind the lending guidelines the truck has to fall under to secure approval. The older the vehicle or the higher the mileage, the harder it may be to get it financed.
In general, equipment needs to be:
· Under 700,000 miles
· Less than 10 years old
· Sold by a dealer
Keep in mind, however, there are exceptions to these rules. In addition, unless you’re using a business line of credit to purchase the truck, you will need a down payment. Down payments generally range from 5% on the low end to 30% on the high end.
Lenders will also want to know the following about the equipment
· Make, Model, and Year
· Mileage
· Condition Report
· Photos of the Unit
· Serial Number/VIN Number
4. Understanding Commercial Insurance
No matter if you’re buying an 18-Wheeler, Ambulance, Box Truck, or passenger vehicle it will need to be insured.
Having improper or insufficient insurance can and will bankrupt your business in the event of
an accident. Lenders won’t fund your purchase without proof of insurance.
In general, you will need some or all of the following:
· Primary Liability Coverage
· Physical Damage Coverage
· Bobtail and/or Non-trucking Liability Coverage (Big Trucks)
· Cargo Insurance to protect your loads (Big Trucks)
The costs of your insurance can be substantial. It is important to shop around and make sure you are getting the best coverage at the best rates for your business.
5. Choosing the Right Lender
There are many lenders that specialize in commercial vehicle and equipment, however, be very daunting to attempt to navigate the lending landscape. This is where we can help make the process of getting approved for truck financing easier for you.
Capital Funding Partners has direct access to multiple lending programs designed to get you approved.
If you’re ready to get the ball rolling, or have questions, give us a CALL or Book a Loan Consultation with us CLICK HERE