Despite large growth in the trucking industry, and a demonstrative ability to deliver in the face of adverse conditions and restrictive legislation, traditional lending channels are still apprehensive about approving financing for fleets. Loan turndowns are on the rise for the trucking industry, forcing large carriers and smaller trucking companies to seek viable alternatives.
The Increase in Loan Turndowns
More than a decade after the Great Recession, banks and other lenders are still raising their requirements for businesses across all industries, even though the economy is very strong. Over the past two years alone, the trucking industry has experienced interest rate hikes on loans, higher entry point levels for loans, and a greater rate of turndowns. Traditional lending channels are still focusing on bottom-line numbers, without looking at the larger picture. The United States has, and will, rely on the trucking industry to keep our economy moving. While other industries are still trying to keep up with a marketplace shift to e-commerce, the trucking industry already has a strategy, because logistics move goods at every level. Trucking is also the first industry, regardless of pushback, to implement new tech to increase productivity and make things more efficient from major shippers on down to the individual customer. Loan turndowns for the backbone of our economy make little sense right now, especially when our economy is poised for further growth. However, it is a reality, and the trucking industry needs to find a new route.
Reducing Risk and Getting Capital
Right now, the trucking industry is put at risk when loans are approved. Debt, collateral, impacted credit ratings, arbitrary interest rate hikes – all of these can place finances in a bind for trucking companies of any size. To ensure growth while minimizing risk, trucking companies are building up capital reserves through freight factoring. Freight factoring eliminates a number of uncertainties for trucking companies, such as staggered payment schedules and the need for collections. Freight factoring is also a debt-free process that allows trucking companies to preserve their credit ratings. At its heart, freight factoring is a process by which trucking companies and owner-operators convert receivables for immediate cash, which is made available within 24 hours. This removes any concerns about staggered payment schedules, boosts cash flow, and allows trucking companies to build up capital to take on larger clients.
Express Freight Finance has been providing comprehensive factoring services to the trucking industry for years, making us a leader in working capital solutions. If you want to minimize your financial risk as avoid the uncertainty of loan turndowns, talk to the professionals at Express Freight Finance today.