Towing Service Financing Options up to $500,000
Towing services often need financing to support their business by buying new trucks, chains, straps, and more. If you’re looking into towing service financing options, you’re in luck! With Merchant Cash Advance, you can be approved for up to $500,000 in financing in under 48 hours.
Starting a towing truck business can be expensive. You need a truck, insurance, gas, and probably some repairs. That’s why it’s crucial to understand your towing service financing options and have a financing plan in place before starting your business.
Starting a new tow truck company can be challenging since, in most cases, a new tow company doesn’t have the cash they need to get started. However, many towing service financing options are available to new business owners.
What Are Towing Service Business Loans?
Car towing service loans give business owners a fair chance to build their businesses and are beneficial for business owners who do not have many personal assets. Tow truck business owners can use a tow truck loan for many purposes, including buying a tow truck, hiring employees, or marketing and advertising.
Even if a business owner has the money to invest in a tow truck or fleet, they should still take advantage of the towing service financing options available. Unintended expenses will always arise, so it’s best to prepare for them ahead of time.
Uses for Towing Service Finances
There are several expenses that towing businesses can use financing for.
Tow Truck Purchase- The most common use for truck towing service financing is to purchase a tow truck. Tow truck leasing or financing can help you increase the number of trucks in your fleet or upgrade to newer, more powerful trucks. It’s the most indispensable piece of equipment for any towing business and can be expensive. The price of a tow truck will depend on the size of vehicles you’ll be hauling.
Expect to spend a minimum of $50,000 on a used truck and up to $100,000 on or more on a new truck for models like the RAM 4500.
Marketing- Marketing and advertising are two essential practices for any business, especially a new one looking to gain new clients. Getting your name out there and attracting customers can cost money, but towing companies need to be visible to potential customers.
The best way to expand your clientele is through marketing and advertising. Some forms of marketing could be customized vinyl decals for your tow trucks, billboards, flyers, and online advertising. Setting up a website and ranking on Google SEO is an excellent example of getting your company name in front of prospective customers.
Working Capital- Working capital is the money a business uses to pay for everyday expenses such as fuel, insurance, repair bills, uniforms, and even phone bills. Having a cushion of working capital is crucial for tow companies because you never know when an unexpected expense will arise.
It’s always a great practice to be prepared and have the money available when needed.
Fuel- If your business relies on vehicles, fuel is one of the non-negotiable expenses, so ensure you set aside enough money each month to cover this expense. Considering the cost of diesel has increased and heavy-duty trucks require considerable fuel, you might want to calculate how many miles you and your employees can drive each month.
Insurance- Having insurance is mandatory for any business that uses vehicles. Insurance will protect your business in the case of an accident.
Towing companies can purchase many types of insurance, such as general liability, property damage, workers’ compensation, and business auto insurance. The insurance cost will depend on the coverage you choose and the size of your business.
Repair Bills- Vehicle repairs are a recurring expense that are inevitable for tow services. Tow trucks are no different than regular vehicles. You’ll have to repair and service them regularly. The fees associated with repairs will vary based on the type of truck you have, required upkeep/maintenance, and the severity of the damage if in an accident.
Uniforms- Uniforms are not mandatory, but they are an excellent way to show potential customers that your employees are professional and take pride in their work. Not to mention, company hats and shirts make your brand stand out.
Clients may not know the business’s name but can remember the colors and logos that help them remember. The cost of uniforms correlates with the number of employees you have and the type of uniform you choose.
Business Technology- Any business requires equipment such as POS systems, security systems, phones, and computers to run efficiently and safely, and towing companies are no exception. Tow truck financing can help business owners purchase this equipment and make updates when needed.
Funding Options Available to Towing Services tow
Tow truck financing can come in many forms, and depending on your business’s needs, you could utilize multiple options simultaneously. This is not an unheard of practice. The most common include small business loans, merchant cash advances, and equipment loans.
Small business loans are a popular funding option for small businesses because they offer a large sum of money that can apply to equipment purchases, marketing and advertising, or hiring new employees.
The interest rates on small business loans are usually lower than other types of loans, making them an attractive option for small businesses.
Merchant cash advances (MCAs) are a type of funding based on future sales and aren’t strict about a business’ credit history or score. The business owner agrees that a percentage of future sales will be paid back to the lender daily. This type of funding is popular because people can easily qualify for it, there’s no set repayment schedule, and no annual percentage rate. Your business can even be eligible for a Merchant Cash Advance with a personal credit score as low as 500.
Equipment financing is another excellent option for tow truck companies. Business owners have options here. They can use equipment financing to purchase new flatbed tow trucks, general tow truck equipment and supplies, or technology necessary for running the day-to-day side of the tow trucking business. The loan term is usually 3-5 years.
Tips for Towing Companies Trying to Qualify for Business Financing
There are a few things that towing companies can do to increase their chances of qualifying for business financing.
Have a Business Plan
Providing lenders with a strong business plan shows you are a serious, well-informed borrower. Your business plan should outline the company’s goals, strategies, and how the business plans to achieve them. The business plan should also include financial projections for the loan term.
Build Your Credit
Lenders will look at your business and personal credit score to determine the risk of lending money to the business. A higher credit score lowers the bank’s risk, making it easier to qualify for financing. Most traditional lenders require a minimum personal credit score of 720 or a business credit score of 75.
Provide Business Financial Information
It’s essential to have a detailed understanding of the business’s financial situation. Lenders will want to see tax returns, bank statements, and other financial documents to understand how the company is doing. Be prepared to provide a lot of information- it’ll increase the chances of qualifying for financing.
Towing Service Financing Pros and Cons
- Can purchase equipment and supplies needed to run the business effectively
- Can provide cash flow to cover expenses such as payroll or costly repairs
- Many financing types are available
- Traditional loans require a strong credit score
- Turn around for traditional loans is typically three weeks and three months
- Application processes can be extensive
Frequently Asked Questions on Towing Service Financing
Yes, you can use towing service financing to hire new employees. The money can also fund marketing and advertising, purchase equipment, or expand the business.
There are multiple reasons why a tow service may need financing, such as the need to hire new employees, purchase new equipment, or expand their business.
The cost to start a towing service will vary depending on the size and scope of the business. Expect to invest hundreds of thousands of dollars given the number of vehicles, types of vehicles, rent/mortgage, and the number of employees/drivers.
Traditional banks want a credit score of 720 or higher. Alternatively, Merchant Cash Advances are available to those with a credit score of 500 or more.
There are a few things to look for when choosing a lender for your towing service:
Ensure that the lender is reputable by checking for reviews from other recent borrowers.
Make sure that the lender has experience working with towing companies.
Get quotes from multiple lenders to compare interest rates and terms.
Towing Service Financing Can Grow Your Business
Many trusted towing service financing options are available to business owners who may not have the best credit scores. An experienced lender specializing in towing companies might be the perfect solution if you aren’t sure how to expand your company.
Make sure to compare interest rates and terms before working with a lender. With the right financing in place, you can grow your business and provide the best roadside assistance to customers.
Don’t Allow a Lack of Funding
to Hold your Business Back
It’s Time To Move Your Business Forward!