5 reasons why you need a business loan for your trucking company
Trucking businesses continue to be a profitable venture in the country today. According to statistics, almost 78% of all freight in the country is carried by trucks. However, just because many trucking companies are successful doesn’t mean that they don’t come with challenges. Maintaining a stable cash flow remains to be one of the greatest challenges that they face. That’s why small business loans for trucking companies are important.
With the increasing number of entrepreneurs going into the industry, trucking companies need to gain a competitive advantage among others. You have to be creative in marketing your business to your audience – even if it means taking out a loan. Though risky, business loans can offer a lot of benefits to a lot of businesses.
Getting into the freight industry can be an expensive venture. That is why you need all the help you can get if you want to be successful. Whether you’re planning to take out an equipment financing or a term loan, here are some reasons why you need to take out a loan for your trucking business:
1. Hire new operators
Your drivers are the most important people in your company. Without them, there’s no way that the shipments will arrive at their destinations. Hiring more operators is important because it makes your delivery process more efficient.
But the thing about hiring drivers is that it can be costly. For one, you would have to pay for a recruitment agency to help you find applicants. Secondly, you have to pay for their insurance and other fees associated with staff training and certification. Third, you’ll need to pay for their uniforms and additional equipment needed for them to do their jobs in the most efficient way possible.
Without business loans to back you up, there’s no way you can afford these costs without creating a huge gap in your company’s cash flow.
2. Maintain day to day operations
Trucking companies sometimes face cash flow gaps because of unpaid invoices. Since they may have to wait 60 to 90 days before the invoices are paid, they won’t be able to bring any cash in between the delivery and payment of the goods. As a result, it can be harder for them to meet the daily demands of their business operations.
Trucking business loans, on the other hand, can provide these companies with the funds they need to keep their company open while waiting for the invoice payments. They can also apply for invoice factoring where they can sell their invoice to invoice financing companies. The lenders will then do the payment chasing, so you’ll be free of that task.
3. Add more trucks
Essentially, the more trucks you have, the more freight you can deliver. In fact, according to the research conducted by the American Transportation Research Institute, companies with more fleets are most likely to get a larger return of investment (ROI) compared to those with a smaller fleet. And we all know that the greater the ROI is, the better the company’s chances are at succeeding.
Adding trucks to your trucking businesses is important. More trucks allow you to cater to more clients, therefore, increasing your profits and expand your market base. You can also save on fuel, tolls, insurance, and other fees. If you have more fleet, then you’ll more likely be able to survive the tough competition in the trucking industry.
4. Start-up costs are expensive
Without a doubt, the start-up costs of a trucking company can be steep. Even if business owners have enough working capital, it won’t be long until it runs out. Fuel, trucks, rent, office equipment can be expensive and other payables will keep piling up month after month. Without financing, there’s no telling when the business could run dry.
While others may have doubts about taking out a loan, business owners need to accept the fact that they will eventually need it if they want to survive. Additional financing not only helps you acquire equipment and pay your monthly bills, but it will also help fund your business’ growth and expansion.
5. Invest in better technology
With most businesses relying on technology today, you also have to make sure that you’re switching to better and automated systems, as well. Experts in the field are strongly encouraging trucking business owners to start switching to better technology. This doesn’t only ensure that they operate more efficiently, but it will give you a competitive advantage, as well.
If you haven’t updated your systems yet, now is the time to do so. Waiting longer will only result in your company’s underperformance and you’ll eventually be left behind. That’s why it’s important to start considering business loan options even before the need arises. This way, you’ll be prepared to take on any business opportunity that comes your way.
Looking for small business loans for trucking companies?
Going into the trucking industry requires a huge investment of your time and money. With the intense competition these days, it’s vital for businesses to be a few steps ahead of the others to survive. Whether they need equipment or upgrade their technology, small business loans for trucking companies will help them cover these expenses which could pave the way for their success.