Meeting the Funding Needs of Transportation Businesses

2015-02-18

Jeffrey Bumbales

Your transportation business is always on the move. And you probably know what you need to make it grow, but funding that plan may seem like you must navigate a very bumpy and challenging road. Without access to funding, capturing those business dreams might feel impossible. The good news is, business owners like you have a few small business funding options available.

 

Why a Loan?

Whether you are a start-up business or looking to grow, there are several reasons you may need additional funding to make it happen:

  • Starting up your business takes money. You need vehicles that not only are reliable but represent your company well in appearance.
  • Older vehicles or equipment may need repairs.
  • Sometimes daily operation expenses surprise you and your current cash flow does not cover the needs.
  • Hiring new or adding more employees is often needed to improve efficiency and help you provide fast, quality service to your customers.

 

Can You Bank on a Loan?

The quick answer is probably not. When the economy slumped in 2008, so did all the great loan options for small business owners. According to Forbes.com, most business owners don’t meet the banks’ new stringent criteria, so many businesses must now turn to funding outside of the bank. The good news is that a new market of lending solutions has been created to meet this demand.

 

Banks and the Small Business Association (SBA)

So we already know banks are nearly impossible to get a small business loan from, but what about the SBA? The answer is complicated. Basically, with the SBA in your corner, it is easier to reach a benchmark of approval than if you approached the bank on your own, but the SBA must first approve your application. Only then do they connect you to one of their partner lenders. This requires greater amounts of documentation and your credit worthiness is still a huge factor.

According to sba.gov, you should be prepared for the process to take at least 90 days. Also note:

  • You will need a detailed business plan with your application, which must include a full overview of your business, a list of your competitors, a strategic marketing plan, your tax returns and bank records.
  • Your credit score and credit history is a major part of the loan approval.
  • Collateral is usually required. If you default on the loan you risk your personal finances and property.

 

Alternative Lenders Meet the Credit Challenge

There are a few options outside of the bank that you can turn to:

Alternative funding looks more at the overall health of your business, and sees your potential, not just your credit score. It is perfect for small business owners with an entrepreneurial mindset because it will fund an opportunity for growth with speed and ease. With alternative business funding, what used to take several weeks or a couple of months can now be done online quickly and with ease.

  • You can apply online, with limited documentation and get answers faster than with other types of lenders.
  • Funding options can give you flexibility in your repayment schedule and can take your fluctuating sales into account.
  • Your credit score and collateral are not the focus in loan approval.

 

Lines of Credit

With a Business Line of Credit you only borrow exactly what you need and your interest is based upon what you borrowed, not the full amount available. Similar to credit cards, but usually with lower interest rates, lines of credit don’t require collateral or have long repayment time-frames.

 

Conclusion

If you have a desire to move your transportation business forward, there are funding options available to help you succeed. To learn more about creative funding solutions, contact Credibly today!