The problem is timing, not profit
A carrier with two trucks can gross $400,000 a year and still run out of cash in February. The load is delivered on Monday. The broker pays in thirty, forty five, sometimes sixty days. Diesel is paid at the pump, the driver is paid Friday, the insurance premium is due on the first, and the truck note does not care what the broker is doing. Nearly every financing question in trucking is a version of that gap.
Three instruments close it, each suited to a different part of the business: factoring for the receivables, equipment financing for the trucks and trailers, and a line of credit or an advance for everything else. Most carriers that grow past five trucks use at least two of them. Picking the wrong one for the job is where the money goes.
Factoring: the receivable, funded tomorrow
Factoring is the instrument built for trucking, and the trucking industry is where most factors learned their trade. You deliver the load, upload the bill of lading and the rate confirmation, and the factor advances 90 to 97 percent of the invoice the next business day. The broker pays the factor in forty five days. The factor sends you the remainder, less a fee of 1.5 to 4 percent of the invoice, lower as your volume rises.
Two things matter in a trucking factoring agreement. Recourse or non-recourse: with non-recourse the factor eats the loss if the broker goes under, which in this industry is worth the extra half a percent. And the exit: some factors lock you in for a year with a termination fee and notice periods. We read that clause before you sign it.
Factoring suits a carrier whose brokers are solid and whose growth is limited by waiting. A fuel card tied to the factoring account, which most factors offer, takes the pump out of the cash flow problem as well.
Equipment financing: the truck pays for itself or it does not
A 2021 Freightliner Cascadia with 350,000 miles costs $70,000 to $95,000 depending on the spec and the market that month. A trucking lender will finance it over three to five years with 0 to 15 percent down, at annual rates from about 9 percent for an established fleet with clean credit to the low twenties for a first truck and a thin file. The truck is the collateral. The lender's question is whether that truck, on your lanes, earns its note plus fuel plus driver plus insurance plus a margin. If the answer is not an easy yes on paper, it is a no in practice.
Lenders in our network finance new and used tractors, dry vans, reefers, flatbeds, dump trucks and vocational trucks. Used equipment is financed to about ten years of age; older trucks need a larger down payment or a specialist. First time buyers with CDL experience and a credit score above 650 are financeable; the same buyer at 580 will need 20 percent down and will pay for the risk.
Lines of credit and advances: for everything that is not a truck or an invoice
Tires, a transmission, an IFTA bill, a deposit on a new lane, a driver signing bonus. These do not fit factoring or equipment lending. A line of credit of $25,000 to $150,000, drawn when needed and repaid in weeks, is the right shape. Non-bank lenders approve them in a day for carriers with six months of statements and $15,000 or more a month in deposits.
A revenue-based advance does the same job faster and at a higher price. It makes sense for a one time opportunity with a clear return, a trailer at auction, a contract that needs a second truck on the road in two weeks. It does not make sense as a monthly habit. A carrier making daily debit payments on two advances is one breakdown away from parking the fleet. We will not place a third.
What funders look at in a carrier's file
Three months of business bank statements, with deposits from brokers and shippers visible. The MC number and how long it has been active; most lenders want a year, factoring companies take new authorities. Insurance in force. The equipment list with years, makes and mileage. For equipment loans, the specific truck. For factoring, your top five customers and their payment history.
What hurts: large cash withdrawals that lenders cannot trace, more than three overdrafts in three months, an MC number under six months old without a factoring partner, and existing advances with daily debits. What helps: dedicated lanes, a fuel card showing consistent miles, and a bookkeeper who keeps the personal and business accounts separate.
A plain recommendation
Under a year old with one or two trucks: factor, and finance the next truck when the first has six months of clean deposits behind it. One to three years old with three to ten trucks: factor or a bank line for receivables, equipment loans for growth, a small non-bank line for surprises. Over three years with a fleet: it is time to talk to a bank about a real line of credit and SBA terms for the next expansion, and we will prepare that file with you.
Whatever the structure, the offer page you see from us shows the whole number: the amount, the total repayment, the payment schedule, every fee. If the truck does not clear its note on your lanes, you will hear that from us first.