Working Capital for Trucking and Freight
Fuel, drivers and repairs get paid this week. Shippers and brokers pay in 30 days or more. Before you compare offers, work out whether you have an operating-cash problem, an equipment purchase or a factoring decision, because each has a different right answer and a very different cost.
Three different questions
Search for "trucking loans" and you'll mostly find truck financing. That's one of three separate problems:
| If the problem is… | It's usually… | How it's repaid |
|---|---|---|
| Fuel, drivers and insurance run ahead of customer payments | Operating capital: a business line of credit, or term or revenue-based funding | From operating cash flow, on a schedule |
| Getting paid faster on invoices you've already billed | Invoice factoring, or a broker's quick-pay program | Your customer pays the factor; you pay a fee per invoice |
| Buying or replacing a truck or trailer | Equipment financing | Over years, secured by the equipment itself |
Mixing them up is where the money goes. A truck bought with short-term working capital gets repaid in months from operating cash it was never going to produce that fast. A permanent payment-terms gap covered with a one-time lump sum comes right back once the lump sum is repaid.
A new contract, worked through in dollars
An established carrier wins a dedicated lane with a new shipper. Illustrative numbers, not an offer:
That $85,000 isn't a one-time hump. As long as the lane runs on net-60 terms, about two months of costs are always out ahead of collections. The financing question is how to carry a standing float on a lane that earns about $52,000 a year before overhead.
Three ways to carry the float, and what each costs
All three are illustrative, not offers. The point is how differently they're priced.
| Factor the lane's invoices | Line of credit | Revenue-based funding | |
|---|---|---|---|
| Price | 3% fee per invoice, illustrative | ~20% APR on the drawn balance, illustrative | 1.35 factor rate on $85,000, illustrative |
| Cost in dollars | about $17,000 a year ($330 a week, for as long as you factor) | about $17,000 a year if the full $85,000 stays drawn all year | $29,750 over roughly 6 to 9 months ($114,750 paid back) |
| Does the float come back? | No, invoices keep turning into cash | No, you can redraw as you repay, as long as the lender renews the line | Yes, once it's repaid you're carrying the same $85,000 again |
| Who qualifies | Largely depends on your customer's credit | Depends on your own history, revenue and credit; set it up before you need it | Mostly depends on your deposits |
Read the numbers against the margin. A $1,000-a-week lane earns about $52,000 a year, so factoring or a fully drawn line costs about a third of it, and an advance costs more than half a year's margin, repaid in six to nine months, while leaving the float in place. That doesn't mean don't take the lane. It means negotiate shorter terms or a fuel surcharge if you can, use the cheapest structure you qualify for, and be sure the lane still pays after the money costs.
Revenue-based funding fits better for a one-time need with a clear payback, such as a repair that has a truck off the road and losing revenue every day. For a standing float, a structure that stays in place usually costs less. How factor rates work shows the math behind the advance column.
If you already factor: read this first
Many carriers already factor some or all of their invoices. Before taking any other funding, pull out the factoring agreement and check three things:
- The lien. Many factors file a lien on all of your receivables, not just the invoices they buy. Revenue-based funding buys a share of those same future receivables, so the two can conflict.
- Exclusivity. Some agreements require you to factor every invoice from listed customers, or forbid other financing secured by receivables without the factor's consent.
- The exit. Notice periods, minimum volumes and termination fees decide what it costs to leave or switch.
Taking funding that breaches a factoring agreement can trigger a default with the factor. Count your factoring agreement when the application asks about current funding, and have the agreement ready so a lender can account for it before making an offer.
What lenders look at
Fundangle's application asks how much you need, what it's for, your monthly revenue band, time in business, and any current funding. No documents to start. If you move forward, a lender decides what it needs, and carriers are usually asked for some of the following:
- Your last three months of business bank statements. It's the first thing every lender asks for.
- Your USDOT number (and MC number, if you run for-hire authority) and how long you've been operating.
- Any factoring agreement and the latest factoring statement.
- An accounts receivable aging by customer, so a lender can see who pays and how late.
- An equipment list showing which trucks and trailers are owned, financed or leased.
- Balances and payments on current financing, including truck notes and any advances.
Fleets, owner-operators and freight brokers look different to a lender. A broker carries the gap between paying carriers and collecting from shippers, without owning equipment, so the receivables and customer list matter more than the trucks.
When not to borrow
- The lane doesn't pay after fuel. Financing a lane that loses money makes it lose money faster.
- Your factoring agreement forbids it. Fix that first, or the new funding can put you in default with the factor.
- You're buying a truck. Use equipment financing, so a long-life asset gets a long-life payment.
- You'd be stacking. Adding a new advance on top of existing daily or weekly payments compounds cost and risk fast. If you're already paying on one or more advances, consolidating what you have is usually the smarter move.
- Anyone promises you approval or a guaranteed rate. No one can. Only the funder decides, after review. Treat guarantees as a red flag.
See your options in two minutes
Tell us what the money is for and what you're already paying on, and we'll show you a plain-dollar estimate before we ask for anything else. Checking options won't affect your personal credit.
Get my funding optionsNew authority, or financing for the first time
An established carrier that has never financed anything beyond its trucks is a normal starting point. Steady deposits count for a lot, and you'll see the cost in dollars before you decide anything.
Brand-new authority is different. Most working-capital products want some operating history and a run of deposits first. Carriers in their first months usually start with factoring, fuel cards or a broker's quick-pay program, and add working capital once there's history to show.
Common questions
Can I get working capital if I already factor?
Sometimes. It depends on what your factoring agreement allows and whether the factor has a lien on all receivables. Share the agreement up front so any option accounts for it.
Is factoring cheaper than a loan?
Not automatically. Compare dollars per year against your margin. Factoring is priced per invoice for as long as you use it; a line of credit charges for the balance and the days you hold it. Which is cheaper depends on your terms, your fee and how long the need lasts.
Should I use working capital to buy a truck?
Usually not. Equipment financing spreads the cost over the truck's working life and uses the truck as security. Short-term money wants to be repaid from operating cash in months.
Will checking my options affect my credit?
Checking options won't affect your personal credit. A lender may check credit later in its own review, and we tell you before any credit inquiry.
Run your own numbers
Two minutes, one question at a time. You'll see the total in dollars before we ask who you are. Checking options won't affect your personal credit.
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