SBA Loans to start a trucking company

here's a reality check for breakdowns. 2013 Freightliner. DD15 engine. 300,000 miles.

left tuesday morning at 10 a.m. loaded. made it halfway through the nevada detour around arizona because of freeway washout. heater hose to bunk sleeper burst. lost coolant. TA from parowan utah came out. 120 miles. to replace hose and coolant.

$1300.


wednesday morning we running. made it to vegas. fueled up truck. checked antifreeze level.

$800.

125 miles later we're in baker california. fuel pump light comes on. fuel in antifreeze. towed to fontana.

$1500.

warranty repair. 7 days motel plus rental car.

$800.

downtime. no revenue being generated.

???????

190 gallons of fuel discarded. only used 30 gallons to baker.

$850 disposal and hazmat fee.

truck gets fixed. and barely makes it 5 miles to truckstop for fuel.

$850. AGAIN.

i'll let you all do the math. but that's just ONE TRIP. 700 MILES. $2500 for fuel which is actually more like $2800 when account for the entire trip.

if the truck had 500,001 miles. add another $5,000 out of your own pocket. warranty expires at 500,000 mile mark.

 

To start with, it is a very, very, bad idea to start any business without money set aside. Most lenders will usually want to see a couple of years history with any business before lending money to the company. Things might be different today, but at one time you had to have money and assets to qualify for an SBA loan. There are a lot of hoops to jump through when you deal with the SBA. Personally, I would look at a different direction than dealing with the government when starting out. With any lender you will need financials and good credit. Hopefully, you have some trucking experience. One thing you didn't mention is what you plan on doing with the truck. Do you plan on getting your authority or leasing to a carrier? What type of operation do you want to run? Do you plan on buying a trailer in the beginning? As a start up, your loans will probably require that you personally guarantee the loans. Banks are even requiring most established corporations to personally guarantee loans to the company.

There may be some lending sources that is available to you as a woman. If you are black, that may also help in finding lenders. There are funds available only to minorities and women that men, especially white men, cannot access. Sometimes being a vet can also help.

I gather from your post that you don't really have any of your own funds in which to start your new venture. If you don't have at least some of your own resources, then perhaps it would be a good idea to wait until you can save enough to have a cushion in case you need it. If you have a good down payment, usually 10-20%, some experience and decent credit, you should be able to finance your purchase without getting involved with the government. That would be the best way for you to go, from what you posted. If you borrow everything and don't have the funds to get going and to help you through the slow time of year, then you could be out of business before you start. I am not trying to discourage you, but there is a right way and wrong way to start a business. Most any lender will not want to take a chance on someone who has nothing in the deal. They will assume that if you don't have the discipline to save for a good down payment and some working capital, that you probably won't be able to make your business work. Lenders don't like to make loans with high risk. Remember, this is your dream, not the lenders. Lenders are in business to make money. They only make money when a loan is repaid.

 

I've never heard of a SBA loan for a trucking business.

Keep us informed.

Good Luck

 

Wells Fargo is a lender that provides SBA loans. Not only are SBA loans difficult to get they require a ton of paperwork and followup. Wellls Fargo also has "equipment" loans for business. Move or open your business accounts with them and they will work with underwriters to get you some money to fund your start up. It isnt a guarantee by any means but its worth a shot. Since Im a new venture they asked me my household income and checked my credit and went to work. I was asking for enough to fund a truck and trailer so I didnt have to finance it through a dealer (intrerest rate is better from the bank) and Id have a little more negotiating power since I wouldn't neeed the dealer to purchase the truck. In the end I got a little less then half of what I asked for but it was a decent amount considering the fact that I am a new business.

 

I too, being a veteran, am looking at the same path. I have been doing a crap ton of homework on this as well. SBA loans are nice, except that you have to have PERFECT if not next to EXCELLENT credit in order just to be considered for them. It is posted and advertised on SBA's website for that as well. Now as for grants, unless your transferring to green energy technology, your screwed out of grants from I have come up with.

Now as for LLC compared to sole proprietorship, its really up to you on want to do. LLC comes with quarterly federal filings, state tax recognition and filing monthly (in most states) and more paperwork. Now as an LLC you can file as a Domestic LLC and be the organizer/owner and still have the same aspect as a sole proprietorship, just more of a headache. Another thing that also helps is that when you are an LLC, that qualifies you for a D&B number. What that does is it organizes a credit rating under your COMPANY name and not yours! Therefor separating your company and personal credit situations and it is easy to build up, more so than personal credit. The liability factor, basically a LLC takes the liability away from you and puts it on the company as a whole if you were to have litigation brought against you. So they can't sue "Susy Joe" directly, but instead Susy Joe Trucking for that accident you just got in.

With a sole proprietorship, its nice because you can just do yearly filings and lose a bunch of the headache.

Now when it comes to trucking, I am here just like you to listen to these veterans of the road, but business I am somewhat smart in. Right now I already had an existing LLC from a custom electronic gig that I was getting up off the ground, but lost interest. So now I have liquified all assets, going to be doing a name change and have an established LLC with good BBB rating that I can start out with. What I am doing now is I am going to be going on the road through a school, getting my CDL back (7 yr Army career with a job that had NO civilian equivalence) and saving up. Now during this time I will be just filing a "No earning" statements with fed and state until I get established.

I guess it all comes down to what you want to do and what you are expecting to get out of it as the "business" aspect goes. For myself I will be looking at getting a couple trucks over the next 5-10 yrs and trying to establish something running out of the ports of Savannah, GA running containers off the rails and ships.

ALSO, thanks for the advice everyone. I have learned so much about the trucking industry from the O/O and L/P programs just from jumping on here. A wealth of knowledge and very much appreciated from a soon to be greenhorn like myself.

 

I know exactly how you feel.

Thats what I like to call the "WTF?" moments.

I've been pretty lucky with my truck and the mileage I have, that I havent had too many. But the one I did have really cost me.

I came home and put the truck into a shop that belonged to a friend's father. He said he dad would take care of me. So I asked for a full PM service for truck and trailer. Check my batteries and anything else that might need attention. I also need the A/C repaired.

Truck is supposed to be ready. I set up a load and a partial coming out of Florida. A/C is working great. Truck seems to be running ok. But I'm noticing a minor miss and it seems to be down on power climbing the hills. Hoping for the best I carry on. $2800 all said and done. Battery service, AC components, filters, labor, yada yada.

I make a few runs and I'm now picking up a couple fire trucks in Wa State not too far from Spokane. They are going to Baltimore and paying a ridiculous rate. So I am very happy. I'm on 90 heading up Look Out Pass in Idaho just before the Montana line and the truck just shuts off for no reason. In my infinite wisdom, I'm looking at the fuel gauge. Wanted to wait and by cheaper fuel on the other side of Montana. I was at 3/8 tank. Never had a problem before. Not exactly sure what to do I call a service truck out and explain my situation. He's like " Oh yeah,.. happens all the time. I'll bring you some fuel". 45 mins later he shows up with 50 gals of fuel. Truck doesnt want to start. Manually priming the turd snot out of it, its cold and raining, wife isnt happy, I'm less then thrilled. Truck starts, but still wont climb the hill. It shuts off. Get a short to to his shop in Montana. Take a look at the batteries and the wires are a mess. The ground wire for the ECM has corroded off, the other wires are swollen and corrosion all over. Problem here is that I paid for a battery service while the truck was in Florida. My friends dad screwed me. He gave me the green light and I trusted that the truck was good to go.

So now,.. $650 for the tow, $800 for the service call, fuel and battery wires repaired. Back on the road. Truck doing ok. Make it to Baltimore, unload the fire trucks. I pick up an ok paying load heading to Indiana. I had to wait 6 hours to get loaded, its hot, I'm idling the truck the whole time. I manage to get 4 hours detention pay approved. I make it a little past Cumberland and poof, nada. I have the truck towed to Freightliner in Hagerstown. 3 days in hotel. Turned out the ECM fried and 1 injector is not firing.

ECM alone was $2100, Towing was $1300, all said and done the bill was $6700, not counting my 3 days down time plus days days in hotel. The broker wanted to repower my trailer and I'm supposed to chase it down in Indiana??? Fffff that. My wife writes up a liability clause for the trailer and faxes it to the broker. They refuse to sign and return it. Guess what,.. I refuse to allow my trailer to be repowered. Broker is upset threatening to charge me and sue me,.. blah blah blah. Just sign the liability sheet and its all yours. Whats the problem? If you think I'm allowing my 2013 trailer to be pulled and left with out someone taking responsibility your wrong. So they ended up hiring a wrecker service to unload the trailer and put it on someone elses trailer. So now I'm not being paid squat for this load or the fuel spent thus far.

So here I was,.. Out almost $12k in under 2 weeks.

Oh,.. and I stop in a shop for PM service in Texas, oil and filter change, chassis lube etc,.. they discover my front drive axle is 2 gallons low. Now didnt I pay for this already in Florida? Yeah,.. you just cant trust anyone.

Not a good way to start off the summer with your wife in the truck.

But,.. I was prepared. I am constantly putting money away into my 'WTF' account for moments just like these. From crooked mechanics, to break downs, you never know.

Even now, my trailer is in the shop while on my home time. Needs new drums and shoes. I need the hanger for my ramps welded, it cracked. I had someone hit my trailer while at a truck stop in Las Vegas. Came out to find my end stake pocket crushed in and the side marker peanut light crunched. No one saw anything. Yeah right. Plus I had an axle seal leaking on the outside. Oh, and the windshield washer isnt working. Winter time coming up, I need that working. So here's another $1500.

I cant express the difficulties enough against starting a business with no money or just enough money. Its a disaster waiting to happen.

Its difficult, my method was to put any and all money aside for what I wanted. Took me almost 4 yrs, and even then I borrowed money from my mother inlaw afterward. All said and done, I had my mother inlaw paid off inside of 6 months, I paid cash for the truck. I lease the trailer and soon to purchase my first trailer next spring and if all goes well, I should also be purchasing a second truck. All this from hard work and earned money. If a dope like me can do it, then anyone can.

Hurst

 

Hurst, crazy set of circumstances certainly. Your attitude and determination to grow in this industry are admirable. You see a lot of ppl who plainly complain often or want to quit. Ive known drivers who have quit the industry about 3 times and end up coming back. I guess they cant succeed overall.

I'm more about just doing what you have to do for as long as you possibly have to do it (shorter time if you work smarter) to reach a better level of pay, profit, satisfaction, growth etc.

 

Start with $0? No way, wouldn't even think about it. Even with SBA loans grants whatever. I would have some cash stashed away before I started.

 

Starting with zero is crazy to a lot of us....but reality a lot of folks started and still going strong with nothing but fuel in the truck and a prayer. I bought my first truck 15 years ago, traded a 72 chevy pickup and $1500 for that old Pete cabover. My first trip out I had full tanks and that was it. It was a risk no doubt, but I wasn't the first and sure won't be the last guy. Trucking has it's ups and downs, dad always told me you are rich one day and broke the next. Seems to be a lot of truth to that. Times are much tougher and diesel is much higher than when I started, nobody had a cell phone so if you broke down another driver would help without asking. Across the back of my sleeper wrote "I started with nothing and still have most of it left".