SBA 7(a) Loans for Trucking and Transport Companies
Right now, there are approximately 500,000 trucking companies in the U.S., employing 3.5 million people and generating nearly $700 billion in revenue each year. Between 2006 and 2015, trucking and transport companies took out more than $774 million in SBA 7(a) loans, with an average loan size of $106,000. And, since 7(a) loans have a variety of uses including funding working capital, owner-occupied commercial real estate, and equipment purchases, it’s not hard to see why they’re so popular for trucking firms.
SBA 7(a) Loans for Trucking Firms: The Basics
The trucking and transport industry can be tough for businesses who don’t have the funds they need. Fortunately, trucking entrepreneurs can use SBA 7(a) loans for purposes including:
Working capital: Running a trucking company can get expensive— and you might not always know when you’e about to get hit with a big charge. From truck repairs, to accidents, and driver overtime, an SBA 7(a) loan can provide the money your firm needs to ‘keep on trucking’.
Buying a competitor: The trucking business can be extremely competitive, and in some situations, it could be in your best interest to purchase the competition; acquiring their routes/clients, trucks, and some, if not all, of their drivers.
Refinancing business debt: If you want to refinance SBA-eligible business debt to reduce interest rates or free up cash flow, an SBA 7(a) loan can be an effective way to do so. However, the SBA stipulates the debt must currently be offered to the borrower on unreasonable terms, and needs to have been used for business purposes, not personal expenses.
Expanding your trucking company: If you want to expand to new routes, hire new truckers, or purchase new trucks, an SBA 7(a) loan could be a great way to do it.
Large Trucking Firms Can Also Benefit From SBA 504 Loans
Most trucking companies will likely find that the SBA 7(a) loan is the best fit for their needs. However, for some of the largest “small” trucking businesses, especially those that want to purchase commercial real estate to build a new trucking hub, an SBA 504 loan could be the best choice. While SBA 504 loans can’t be used for working capital, they other benefits, such as lower interest rates, and a slightly larger maximum loan amount, at $5.5 million.