Most companies in the trucking business experience cash shortages at one time or another, and this can be critical because funds are always needed for operational expenses, the purchase of new equipment, and for making new investments.
One of the best options for securing funding is through asset-based loans, because they allow you to take advantage of of assets you own, such as equipment and accounts receivable, to receive immediate funds.
How asset-based lending can help your company
One of the real beauties of asset-based loans is the flexibility which they provide the borrower with, and the money you receive can literally be used for almost any purpose. You can apply the funds toward a leveraged buyout, to purchase equipment or other assets, to pay for daily expenses, and simply to improve your cash flow. Compared to traditional loans which you might receive from a lending institution like the bank, the entire process for arranging and asset-based loan can be concluded in two weeks or less, which makes it much faster than a conventional loan.
How it works
The manner in which an asset-based loan is setup will vary, depending on the asset which is being used as collateral. For Accounts Receivable, the funding could amount to approximately 85% of the gross amount of the receivables, and it would be structured to mimic a revolving line of credit. As soon as invoices and freight bills are created, the trucking company would receive funding for them, and the transactions are ultimately settled as the invoices are paid.
An asset-based loan which uses equipment as the primary collateral is usually set up in the same manner as a term loan. Your trucking company would receive an upfront amount of money which would then be amortized over a specified period of time. Generally speaking, assets will be financed at a certain percentage of their established liquidation value.
Asset-based loans for companies in the trucking business
Is your company involved in the trucking industry, and would it benefit by having a source of funding for growth and improvements? Contact us at Business Capital Providers if you answered ‘yes’ to this question, because we may be able to offer financial assistance.