Small business loans options for logistics and transportation companies – financing solutions.
This article will concentrate on small business loans options for logistics companies and transportation companies, looking to expand, purchase new equipment, trucks or IT infrastructure. As with most small business loans options, logistics and transportation is a challenging segment of economy. With fuel prices up by 200% over last 5 years, net cash flow of most logistics companies fell by 50%-60%. Therefore making money became much more difficult, hence financing became even more difficult. Wecanfinancial offers our clients small business loans for a purpose of acquisition of trucks and trailers, purchase or upgrade of IT infrastructure, operating capital, and sometimes we offer invoice factoring. Further we will discuss these in details.
The most common financing request we get from transportation companies is operating capital financing, or working capital financing. Entrepreneurs need cash every day, transportation companies need it even more. Operating capital is the most expansive type of cash flow financing. Furthermore operating capital obtained through small business loans programs offered by non-street lenders is very tough to get. Our advice for most business owners to have operating capital financing as a part of their business plan for every year of operations, with an interest of 7.5%-8.0%. The reason for it is the leverage of money that could be turned over several times a year with a yield of 50% or more, therefore carrying operating line of 8.0% is definitely worth it, especially if there is a volume of business to support the principal amount of operating line. Talk more to our associates to find out more about this financing option and you might be amazed to find out of what we can do. We’ve served several logistics companies over last 2 years, and their results after obtaining small business loan from us were at least 30% higher than in previous years.Small business loans options for logistics and transportation companies.
Very often entrepreneurs come to us with request of small business loan for a purchase of trucks or trailers. Because of limitations of standard small business loans programs, single loan can only fund up to 2 trucks and 2 trailers at the time. Some companies need much more for successful development, to increase their cash flow and asset base. For those who need more, we have abilities to structure leasing, and financing options for trucks and trailers on larger scale, some financial conditions apply obviously. Strategic plan of development for most logistics companies should include yearly or semi-yearly fleet expansion and rotation, therefore access to financing options for this purpose is super important. We suggest business owners actively developing and growing their business to consult with our associates to have all the tools available at any given point of time.
Also for companies in distress, or often in situations where invoice payments are regularly delayed by bigger/important clients, we offer invoice factoring. Invoice factoring is a form of financing of invoices. Wecanfinancial have a strategic alliance with several factoring firms, which are ready and able to factor any invoices from $2,500.00 to $250,000.00. For business owners who never worked with factoring we will explain what it is. Once the contract is delivered and entrepreneur issued an invoice to a client, client might take a really long time to pay the invoice. If the client is a small firm who depend on services business owner offered them, you can pressure for the payment and sometimes get paid fast. For bigger multi-million dollar companies this might not be the case for many reasons.
One you don’t want to look desperate, two – you want to keep the relationship, three – flexibility might bring more potential business. For transportation companies looking for small business loans, or temporary operating capital, waiting for 90 days might not be the option, gas is expensive after all. Financing the invoice and allowing a factoring firm to collect the invoice from the client directly in due time might be the best option for some clients. The costs of factoring typically is 2% per month for AAA invoices and higher. For new clients there could be a set-up fee, and administration fee, which has to be paid up front, but the costs are very small in comparison to potential benefits of this financing. Our advice to entrepreneurs to keep factoring and operating capital as integral parts of their yearly business plan to make the business as efficient as possible.
Please send us your questions any time and Happy financing every one!