Owner Operator Financing Options

Making the move from being a truck driver to being an owner-operator can be financially rewarding. However, it can also be very challenging. As a new business owner, you need to worry about things that your employer used to handle.

One of your greatest challenges is finding a way to finance your new company. However, finding the right financing is key to growing a successful trucking company. This article helps you with your three main financing challenges: financing your truck, your operations, and fuel.

#1 Financing your truck

Buying your truck is your largest start-up expense. Generally, you have two ways to get a truck: buy it (using a loan) or lease it.

Truck loans work much like any type of vehicle loan. You make a down payment, and then you pay the remainder in monthly installments. Once the loan is paid off, the truck is yours.

The second alternative is to lease (or lease – purchase) a truck. Leases can be structured in different ways and are often bundled with a purchase at the end of the lease. In some cases, you make monthly payments for a number of years and then make a balloon payment at the end of the lease to purchase the truck. Other leases are structured so that the truck is yours at the end of the term for a very small payment.

Each of these options has advantages and disadvantages. Your choice depends on how much money you have, your personal credit, and the type of truck you need, among other things. One suggestion we can offer is to comparison shop. Comparison shopping helps you to make an educated purchase and reduces the chances that you will overpay.

Note that Commercial Capital LLC does not provide financing to purchase trucks.

#2 Financing operations

As an owner-operator, you need to pay for all your business expenses. These expenses include fuel, repairs (varies if you lease), tires, and so on. Many of your costs are ongoing and affect your ability to run the business. For example, if your truck is down, you need to pay for the repairs before you can pick up a load. Making sure you have enough money to operate your business is critical.

Running a trucking company is much easier if your shippers offer transportation quick-pays. However, many shippers pay their freight bills in 30, 40, or even 60 days. Consequently, you, as an owner-operator, must be able to pay your business expenses while waiting for your shippers to pay. As you can imagine, this delay can be a challenge if you are low on funds.

One way to solve this problem is to finance your invoices using freight bill factoring. Factoring finances your bills and provides you with an immediate advance. You can use the advance to pay your expenses and run your business. This type of financing can be useful if you are just getting started and have not built a capital reserve. In many cases, this type of funding can be offered to businesses that have no credit or have bad credit – within reason.

This type of financing can also be useful if you use load boards and are constantly working with new brokers. The factoring line can help smooth out payment issues and provide ongoing funding.

#3 Financing fuel costs

The most significant ongoing cost for most owner-operators is the cost of fuel. Obviously, you need to have enough funds to pay your fuel expenses. Otherwise, you won’t be able to deliver any loads. Fuel costs can be a problem if you are new (or growing) and don’t have enough funds.

Factoring your freight bills can help. However, factors finance freight bills only once the load has been delivered. You can solve this common problem by working with a factoring company that also offers fuel advances. Fuel advances provide you with funds as soon as you pick up a load from an approved shipper. You can use the funds to pay for fuel and other expenses. Keep in mind that fuel advances can be expensive. As a result, it’s best to use them strategically.

Do you need factoring?

We are a leading factoring company and can provide you with a competitive factoring and fuel advance plan. For information, please get an online quote or call (877) 300 3258 to speak with an expert.