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Wondering how to start a trucking company with no money? Your best bet would be to secure a commercial truck loan. Commercial truck loans enable you to afford the vehicles you need to jump-start your business – and more.
Here’s an overview of how commercial truck loans work, as well as ways to find affordable business financing solutions.
Can You Start a Trucking Company With No Money?
Yes, you can start a trucking company with no money by seeking financing, such as commercial truck loans. After all, you can’t make deliveries or transport goods if you don’t have a fleet readily available. Funding solutions can help fill the gap when you can’t come up with the capital on your own. Commercial truck loans enable you to purchase a truck or buy a used vehicle.
The great thing about commercial truck loans is that they function as equipment loans. Equipment loans use the underlying truck you are financing as collateral for the loan. Your loan will be secured by the vehicle, which can help make interest rates more affordable – especially if you have good credit. You’ll also need to pay for business registrations, licenses, employees, and even marketing materials. Business financing can help cover these costs as well.
How Much Does It Cost to Start a Trucking Company With No Money?
The initial cost for starting a trucking company can be anywhere between $10,000 to over $20,000 – but this doesn’t include the cost of the commercial trucks themselves. Trucks can cost anywhere from $40,000 on the low end to over $200,000 on the higher end. Trucking companies require more of a significant upfront investment compared to other types of businesses. By far, the biggest expense, in the beginning, will be purchasing the trucks. On top of this, you’ll also need to manage ongoing operational costs that can greatly eat into your bottom line.
For these reasons, the trucking industry, as a whole, tends to have smaller profit margins. According to data from New York University’s Stern School of Business, the trucking industry in January 2022 saw net margins of 1.85%. Despite relatively modest profit margins, trucking companies can command a significant amount of revenue. The trucking company, Cargo Transport Alliance, has publicly shared that the average gross revenue for most of their trucks is between $4,000 to over $10,000 per truck.
How to Start a Trucking Company With No Money
If you’re going to start a trucking company with no money, you’ll need to work with a lender willing to finance your vehicle fleet plus your initial start-up costs. You may want to look into various options for business loans, such as commercial truck loans and equipment loans. Applying with a lender is a process in and of itself. It helps to take the time to prepare some documentation beforehand and go over what to expect. Here’s a breakdown of some simple steps that you can take to start a trucking company with no money.
1. Register Your Trucking Company and Obtain Required Permits
You can’t go to a lender for business financing if you haven’t established your company yet. Registering your trucking company is the first step. Next, you’ll need to collect the legal documents and permits required to do business.
2. Create a Business Plan
Business plans are critical for conveying your business loans and helping lenders understand your approach. Make sure to include the following information in your business plan.
3. Choose the Right Truck for Your Business
The next step to start a trucking company with no money is to choose the right truck for your business.
With commercial truck financing, you’re free to decide on the type of vehicle you want to purchase. Take the time to look through different options. Once you’ve selected your truck, make sure to share the vehicle model and other information with your lender. Keep in mind that some lenders may impose requirements on age or mileage – especially if you’re buying a used vehicle.
4. Find a Lender
When it comes to commercial truck loans, you can choose to work with either online lenders or banks. Banks are well-known for having some of the most competitive market rates. However, they also maintain strict requirements and tend to be hesitant of financing newer businesses and early-stage start-ups.
Online lenders are much more flexible than banks when it comes to financing your business. They’re more willing to work with younger companies and startups.
They’re also more lenient on credit score requirements. Plus, online lenders offer a significantly faster and more straightforward application process than banks. In some cases, businesses can secure finances within 24 hours.
Should You Finance or Lease a Commercial Truck?
Most businesses prefer to finance a commercial truck rather than lease it. Financing allows you to build equity in an asset – your truck. Most trucks have longevity and can be used for years to come, even after you repay your loan. And while you will have to pay for repairs, you’ll also be able to sell your truck when the time comes to upgrade. In short, commercial truck financing can be a smarter financial move in the long run. Nevertheless, there are still scenarios where commercial truck leasing may make more sense.
For starters, commercial truck leasing is more flexible. There’s no long-term commitment, and you’re typically able to upgrade to newer models every 2 to 3 years. Plus, commercial truck leasing has significantly lower upfront costs than commercial truck loans. You won’t have to make a down payment, you won’t need to cover repairs, and your cash won’t be tied up in an asset for a number of years.
Commercial truck leasing also tends to come with lower monthly payments. It’s ideal if you’re a startup, struggling with cash flow, or just want smaller payments. So, if you are looking to start a trucking company with no money, this should be something that you will need to consider.
How to Apply for a Commercial Truck Loan
If you are looking to start a trucking company with no money, you can apply for a commercial truck loan. The process of applying for a commercial truck loan can be broken down into a few simple steps.
Compare Loans
Your lender may offer you more than one option for financing your commercial truck. There are also various different types of business loans to choose from. Plus, you may be able to select from different funding amounts or repayment terms. It’s also helpful to keep in mind that you’re not tied down to working with a specific lender. In fact, you may want to take some time to explore your options. Make sure to use National Business Capital as a resource and for browsing multiple financing offers at once.
Top 4 Transportation Business Financing Options for Truckers
ABOUT THE AUTHOR
Joe Camberato is the CEO and Founder of National Business Capital. Beginning in 2007 out of a spare bedroom, Joe and his team have financed $2+ billion for businesses nationwide. He’s made it his calling to deliver the educational and financial resources businesses need to thrive.
