If you are a commercial owner-operator, a major repair on your commercial truck can be very expensive. Here are three ways to finance a major repair on your commercial truck if you can't afford it out of your pocket.
#1 Working Capital Loan
If you know that you will be able to pay back the loan within six months to a year, a working capital loan is a good option for fixing your truck. With a working capital loan, a lender will give you a revenue advance. Generally, they will give you a revenue advance up to the amount of revenue that you earn in a month. It works in a similar way to payday loans; you will need to provide proof of your monthly revenue, and in return you will get a loan almost immediately. Unlike a payday loan, you have a longer period of time to pay the loan back. However, like a payday loan, you will face an extremely high interest rate. The high interest rate is the trade-off for the access to quick funds to fix your truck.
#2 Equipment Leasing Company
Many equipment leasing companies that lease out commercial trucks offer loans to commercial owner operators. With this type of loan, you are going to need to put your truck up for collateral. One of the good things about a loan from an equipment leasing company is that the interest rates are generally much lower than a working capital loan, and you are given a couple of years to pay off the loan, resulting in much lower monthly payments that will not take up all of your cash.
#3 Borrow Against Your Receivables
Finally, you can also borrow against your receivables for a loan. How that works is a financing company will give you the money that a customer owes you. For example, if a certain business owes you $20,000 dollars, but you will not get that money for 30 days, a financing company, through a process called factoring, can advance you that money. Typically, they will advance you part of the payment, such as $15,000 dollars, and when the bill comes in, the money that you earned from that customer will go to the company that advances you the money.
If you have not worked with a financing company that offers factoring before it can take a few weeks for you to get the money, which is not ideal if you need to fix up your truck right away. To learn more about commercial truck repair, contact a company like C L Enterprises.Share