How to Start a Trucking Company: Are you looking for a way to start a trucking business without any money? A commercial truck loan is your best option. Commercial truck loans allow you to purchase the necessary trucks to get your business off the ground.
This overview will explain how commercial truck loans work and provide information on ways to get affordable financing for your business.
1. Is it possible to start a trucking business with little money?
You can open a trucking business with little capital by borrowing money, such as a commercial truck loan. You can’t transport goods or make deliveries if there isn’t a truck fleet. Funding solutions can fill the gap when you don’t have the capital.
You can purchase a truck or buy a used car with commercial truck loans. Commercial truck loans can also be used as equipment loans. Equipment loans are secured by the car that you finance.
The vehicle will secure your loan, making interest rates less expensive, especially for those with good credit.
In addition to business registrations and licenses, you will also have to pay for employees and marketing materials. These costs can also be covered by business financing.
2. What is the cost of starting a trucking business without any money?
Starting a trucking business can cost anywhere from $10,000 to $20,000, but that doesn’t include the cost of the trucks. Trucks can range in price from $40,000 to $200,000 at the lower end to $200,000 at the upper end.
The upfront investment required for trucking companies is higher than for other business types. The purchase of trucks will be the most considerable expense in the beginning.
You’ll also have to manage your ongoing operational expenses, which can significantly impact your bottom line. Trucking has a lower profit margin overall.
The New York University Stern School of Business data shows that the January 2022 net margins for trucking were 1.85%. Even though they have meager profit margins, trucking companies can still generate significant revenue.
The Cargo Transport Alliance trucking company has made it public that their average gross revenue per truck is $4,000-$10,000
These estimated expenses can help you understand the cost of starting a trucking business without money.
2.1. Commercial-truck
Costs for trucking vehicles range from $100,000 up to $200,000. You can find used trucks for as low as $40,000 and up to $200,000. You don’t have the burden of paying for all of these costs.
2.2. Permits and licenses
You could quickly spend thousands on licenses and permits to start your trucking company. These costs will be charged to your account upfront and annually. These documents include the following:
- Register your business
- Federal DOT and Motor Carrier Authority numbers
- Unified Carrier Registration (UCR)
- International Registration Plan (IRP), Tag
- International Fuel Tax Agreement (IFTA), Decal
- BOC-3 Form
- Standard Carrier Alpha Code (SCAC)
2.3. Insurance and taxes
To protect your vehicle fleet and the financial interests of your lender, you will need insurance. Commercial truck insurance can cost between $9,000 and $12,000 per year.
However, the amount you end up paying will depend on where you live and the truck you buy.
Additionally, you will need to pay taxes at the state and federal levels. The heavy vehicle use tax can run up to $600 per truck annually. You may also need to pay state taxes which can average $500 annually.
2.4. Operating expenses
After you have purchased your fleet and paid all required permits, insurance, taxes, and fees, you will still need to pay operating expenses. This includes:
- Fuel
- Tolls on the highway
- Additional equipment, such as freezers and specialized storage units, can be added to your transportation.
- Vehicle repairs and maintenance on an ongoing basis
- Benefits and wages for employees
- Marketing
- How to start your own trucking business without any money
You will need to find a lender to finance your trucking business and your initial costs. Consider exploring other loan options, such as equipment and commercial truck loans.
It is not an easy task to apply for a loan. It is a good idea to ensure you have all the necessary documentation and know what to expect.
This list of simple steps to open a trucking business without any money.
3.1. Register your trucking company to obtain the required permits
If you don’t have a company, it’s impossible to go to a lender for financing. The first step is to register your trucking business. Next, collect all the necessary permits and legal documents.
After you have sorted out these technicalities, applying for commercial truck loan applications will be easier.
3.2. Create a business plan
Business Plans are essential for securing business loans and helping lenders understand you. They can also help you envision your journey toward achieving your business goals.
Include the following information in your business plans.
Executive summary: A summary of your company and its goals. Be specific about the timeline for your goals. Business plans are usually drawn at least two to three years in the future.
Company Overview: A brief introduction to your company, including your target customers, the services you plan to offer, and your overall objectives.
Market analysis Discuss the critical elements of trucking and give an overview of possible top competitors. It would help if you were specific about how you will position your business in the larger market.
Your business goals and strategy: Describe the steps you will take to achieve your goals in the following months and years. What number of vehicles are you planning to hire first? This number could change as time goes by. What about employees?
Costs While it is essential to outline the steps you will take to achieve your goals, it is equally important to estimate how much each stage in development will cost. Estimates for buying commercial trucks, hiring workers, licensing and permit costs, taxes, and operating expenses are all included.
3.3. Choose the right truck to fit your needs
Next, select the right truck for your business to start a trucking firm.
Commercial truck financing allows you to choose the vehicle that you want. It would help if you took the time to compare different options. After you have selected the truck that suits your needs best, could you share it with your lender?
Some lenders may restrict your age or mileage, especially if you buy a used car. Before approving your funds, lenders may review the truck’s and vendor’s conditions.
3.4. Locate a lender
You have two options when it comes to truck loan financing. One is online lenders, and one is banks. The best rates in the market are known to be offered by banks. They also have strict requirements and are reluctant to finance newer businesses or early-stage startups.
They prefer to see at most 2 years of solid income before approving a business loan. If you have good credit and a substantial down payment, you might still be eligible for a commercial truck loan.
Online lenders can be more flexible than banks when it comes to financing your company. They are more open to working with startups and younger companies.
Online lenders are also less strict with credit requirements. Online lenders are much faster than banks and offer simpler application processes. Sometimes, online lenders can provide financing for businesses within 24 hours.
Online lenders often offer equipment loans and commercial truck loans. You can also find other financing options, such as lines of credit and invoice financing.
1. Do you need to finance or lease a truck commercially?
Businesses prefer to finance commercial trucks rather than lease them. Finance allows you to increase your equity in a valuable asset, such as your truck. Trucks are durable and can be used for many years, even after repaying the loan.
While you need to make repairs, you can also sell your truck when it is time to upgrade. semi truck financing is a better financial decision in the long term.
Commercial truck leasing is much more affordable than commercial truck loans. There is no down payment, and you don’t need to pay for repairs. Your cash will also not be locked up in an asset for many years.
Leasing commercial trucks come with lower monthly payments. This is ideal for startups struggling to make ends meet or those who need smaller monthly payments. This is an excellent option if you’re looking to start your own trucking business.
2. How to apply for a truck loan
A commercial truck loan is available to help you start your trucking business. It is easy to apply for a commercial truck loan. You will likely encounter additional requirements and hurdles if you work with banks.
Online lenders and fintech platforms like National Business Capital are much faster and more efficient in getting the funds you need.
Working with National’s fintech marketplace is a great opportunity because you can view different offers for financing within one platform.
You don’t need to submit multiple applications or contact different lenders. National provides an instant overview of all the options available in the market.
Here’s how the application process for a truck loan can look in general.
5.1. Collect paperwork and submit
After selecting the commercial truck you want to finance, it is time to prepare all the documents and paperwork for the application process.
You should at least have information about the vehicle’s make and model, the dealership you plan to work for, and your business plan.
If you have an existing trucking business, you will need financial documents, such as bank statements and tax returns. It is also a good idea to finish your business plan.
5.2. Make your down payment
Your vehicle will be used as collateral, but your lender might ask for a down payment.
It is usually a fixed percentage of the vehicle’s sale price. A 20% downpayment is the norm if you work with a bank.
There may be exceptions to this rule. You may be able to get a commercial truck loan without having to pay a down payment. However, you will need good credit to make this happen.
Knowing what kind of down payment you can afford is a good idea. This will impact the vehicle you can buy and your loan amount.
5.3. Work with your lender to submit an application
Every lender has its requirements regarding the documents they require and your qualifications. Discuss the details with your lender to ensure you are prepared.
You can avoid making mistakes and ensure you have the correct forms to complete your application process more manageable.
National offers an easy-to-use online application portal. It takes only 60 seconds to complete. For added simplicity, you can upload your business information directly to the online platform.
After your submission, a business finance advisor will reach out to you to discuss the customized funding options.
6. Compare loans
Your lender for your commercial truck may offer you more than one financing option. You also have a variety of business loans available. You may also be able to choose from different repayment terms or funding amounts.
