That's what I call confidence in your risk assessment :lol: but so true. I went to my bank, the one that had approved the SBA loan, earlier this year to get a line of credit. They said they don't approve lines for companies in that industry. Guess they're getting smarter.

 

They are getting smarter. A dealer told me once that a driver came in and purchased a brand new Volvo. He drove the trucks for 6 months, didn't make one payment. Of course, the bank couldn't catch him in one spot to repo it. On the 7th month he brings the truck back to the lot and says, "I don't want this truck anymore, I found somthing more affordable" lolz He had no intent on paying for it. He just wanted to make some capital to get moving.

He made his money, probably enough to go buy himself a cash truck, and said screw paying a payment. It's stories like that which makes financing for trucking companies difficult.

 

I was told SBA didn't make loans on trucks because other financing is available. If you are buying a running business, that may be another story. I looked at SBA and talked to others who have gotten loans through them. You need to jump through a lot of hoops and there is a ton of paperwork. If you have decent credit you are much better off going to a bank. As a second resort you could go to a finance company or third party lender. Those will charge a higher interest rate, but may get the job done for you. Navistar, Mercedes or Chrysler Credit and Paccar will finance trucks other than their own brand if you meet their requirements. I had one of then tell me you need a credit score of at least 650 along with other requirements to qualify.

Since you are wanting to buy an existing company with real estate that is probably the reason SBA will consider making you the loan. It is my understanding that SBA guarantee's the loan through a local bank. As far as I recall, they don't make direct loans. As Steve noted, they like real estate to secure their interests. Unless you have strong assets and good credit, it may be difficult to work your way through the maze of paperwork. I would consider going to your bank or a bank who specializes in commercial lending. You may qualify for a line of credit and get a loan on the value of the real estate. They may even be able to make a wrap around loan to include the equipment. Lenders don't like taking risks. Trucking is a high risk industry. Banks have taken a bath from those who could not make it work. They will look at your background and experience in the industry in which you are asking them to risk their money. Sometimes having a good relationship with your banker will sway their decision in your favor. Business can be volatile. You will need resources to make payroll and pay overhead for several months should business not meet your expectations. A business plan is critical to their decision making, whether it is a bank or the SBA. You may also consider bringing in a partner who has money and will be willing to take some risk along with you. An existing business will have a track record you can use to talk to your bank. You will also likely need to include pro forma's in your business plan for 3-5 years. Pro forma's is estimated figures you think you can achieve. They usually need to be done by a CPA. It is like a profit and loss for future earnings. It is what you feel the business will look like during those future years.

You can lease your equipment, but will pay higher interest rates than if you buy outright. It may preserve some capital, but you can buy less expensive equipment and keep your monthly overhead costs lower.

One other note. Whether you go to a bank or the SBA, you will probably need to tie up all your assets to make a loan of this size work. You will need sufficient capital or assets to more than cover the loss should you default. Banks always look at the down side when it comes to making loans.

 

We have an SBA line of credit. It's not linked in any way to my house- I double, triple, quadruple checked on that... No way was I putting my house up as collateral for a business loan!

It's there as a safety net- but it's SBA. It's a large line- not just a coupla thousand. But I suppose that's still different from financing a truck, though.