Credit Loans

Trucking Business Loans for Bad Credit

Starting your own business is not something to take lightly. It’s a difficult financial endeavor that can take years of hard work and dedication. No matter what kind of business you have in mind, you can be sure that it will take a lot of time and money to begin. A trucking business is no exception to this rule. And if you are one of the many Americans with a poor credit score, it can be even more difficult. Read on to learn more about trucking business loans for bad credit.

If you have experience in the trucking industry and you’re a motivated self-starter, then it might make sense to start your own trucking company. But be aware that there are many steps between the initial idea and owning a successful trucking company.

Luckily, CreditNinja is here to help. We want to make sure you have all the information you need to make an informed decision about starting your business.

How To Start a Small Trucking Business

The first step for starting any business is to have a very clear idea of what you want it to be. It’s always a good idea to focus on an industry that you’re familiar with. And make sure that your vision is detailed and precise. For example, instead of thinking, “I want to start a trucking business,” start thinking about what type of trucking company you’d like to own. What will you specialize in? How large would you like the company to be ideally? What will your mission statement be? These are all essential questions to answer in the beginning stages.

There’s also a general process for starting a small business, and it applies to any business you have in mind. Below are some general steps you’ll need to take before your trucking company hits the road:

Do Your Research

This is the first step in your trucking business journey. It’s imperative to research the industry, other trucking companies, and the market you’ll target. Is there a high demand? Does your idea stand out above the other businesses already in the market? These are essential questions to answer before continuing on your journey.

Create a Business Plan

Your business plan is like the blueprint for your entire idea. It’s the road map that explains how you plan to build your business, how it will be run, and how you’ll grow it long term. Having a clear business plan is key to creating the vision of your trucking business.

Fund the Business

Once you have your business plan laid out, it’s time to raise the money you need to start the business. The amount you need to get started should be listed within the business plan. Once you know how much you need, you can borrow the money with a loan or raise funds through investors and donors.

Choose a Location

This is another crucial step in the process. Do you want to have a brick-and-mortar or storefront location? Maybe you can operate the entire business online? These choices will affect other things like your overall profits and taxes.

Choose a Name

This may seem like the easy part, but a good name for your business could help with brand awareness and set you apart from the competition. Make sure to put plenty of thought into what you want to call your business. You’ll also need to do some research to ensure that another company isn’t using the name.

Register the Business

Now that you’ve chosen the perfect name for your company, you’ll need to register your business with the government. If the name you select is different from your name, you need to register with the federal government and possibly your state/local government.

Get Your Tax IDs

Once you pick the company name and register your business, you must also apply for an employer identification number (EIN). You’ll need this number to pay taxes and open up a business bank account. Of course, you might also need to get a tax ID number, but that will depend on which state you live in.

Get Licenses and Permits

Obtaining the proper permits and licenses for your business will help you stay legally compliant and avoid any issues that could shut you down. The types of permits and licenses you need will depend on your specific industry, location, and several other factors.

Open a Bank Account

Having a bank account for your small business is essential for staying organized and properly managing your company finances. In addition, it’s critical to have a separate bank account for your personal finances and your business expenses.

Finding the Money You Need for Your Trucking Business

Funding your trucking business can be one of the most challenging steps on the list. And if your credit score is low, it can be even harder to get a business loan. After all, having a poor credit score makes it difficult to get approval for loans, line of credit products, and even credit cards. But just like with any other business, trucking companies will need funding to start hauling. So, where does a borrower with a low credit score turn?

Trucking Business Loans

As we’ve mentioned, getting a business loan to start a trucking company isn’t easy with bad credit. That being said, many lenders, banks, and credit unions will have their specific policies for who to approve and who to deny. So being approved will depend on your credit history and the lender’s qualifications.

If you have a decent or good credit score, you can likely obtain a loan for your small business from one of these institutions. Banks, credit unions, and other types of lenders offer loans like these to potential business owners. And some of these places even work with the Small Business Administration to provide loans to worthy borrowers.

The Small Business Administration is a government agency that supports small businesses and entrepreneurs. One of the ways that they do this is by working with different banks and lenders to secure loans for business owners.

The SBA provides an added layer of security for the lender. If the borrower fails to pay the loan, the SBA may reimburse the lender for a portion of the loan. This guarantee allows the lender to take more chances on borrowers that they may have otherwise denied. But even with the help of the SBA, you will likely need a decent credit score.

Trucking Business Line of Credit

A line of credit is another product you may hear about when it comes to running a trucking business. But, as opposed to a small business loan, a line of credit is not a lump sum of money given to a borrower. Instead, a line of credit is more like a credit card. It’s a total sum of money that the borrower has available to them for when expenses arise. Yet, they only have to repay what they spend.

A business line of credit can help with expenses that arise throughout the running of your business. While a business loan is provided based on a specific purpose or purchase, a business line of credit can be used for any costs that come up throughout the running of the trucking company. For example, trucking companies may choose to use a line of credit for operational expenses, payroll, equipment financing, and more.

The main difference between trucking loans and lines of credit is that a loan is one large lump sum payment that the borrower receives and makes payments each month. And with a line of credit, you only need to repay what you pull out. Unfortunately, just like trucking loans, you will likely need a decent credit score to secure one.

Crowdfunding and Donations

Some trucking companies may have luck funding their business through donations and crowdfunding. This is becoming much more common now than it used to be.

Crowdfunding is precisely what it sounds like—allowing family, friends, and the general public to donate to your business to cover the costs of starting your trucking company. And this solution may be exactly what you’re looking for if you can’t secure a business loan due to your credit score.

While loans for trucking businesses and other companies can be hard to come by, donations and crowdfunding are an alternative to loans with no credit check. So if you’re able to fund your business from these sources, you can avoid having to apply for loans, business credit, or business lines of credit.

Several websites allow you to start a crowdfunding campaign, including Indiegogo, SeedInvest Technology, GoFundMe, and StartEngine. Just make sure to research each one and what they offer. Many of these sites will require you to pay them a percentage of your proceeds for the service of using the platform.

Can You Get Trucking Business Loans With Bad Credit?

Small business loans are by no means easy to secure. Many lenders and financial institutions only want to offer money and financing options to borrowers with good credit. Unfortunately, the entire process of starting your trucking business is much more difficult if you have a poor credit history and no cash flow.

So the short answer is that it’s not likely to secure a trucking company loan with bad credit. However, it’s much more likely that you will get the money you need through donations, investors, and crowdfunding. But using these sources will still take a lot of work.

No matter what your business is, whether it’s a trucking company, bakery, or IT services, getting a business loan will take time, research, and hard work. Business loans are challenging to secure in some cases because the lender wants to be sure they will make their money back. This means that you need to have all of the details of your trucking company completely planned out before seeking funding. This will make securing a business loan much more accessible.

The bottom line is that having bad credit makes your life and your finances much more challenging to manage. So while it might be possible to get business loans with a less-than-perfect score, it certainly isn’t likely. Instead, you’ll be more likely to find the money you need through donations and crowdfunding.

No matter which route you take, whether it’s a business loan, donations, or investors, it will take a lot of hard work on your part to make your company a reality.

References:
Trucking Business Loans
Carrier Startup Guide
Small Business Loans