Readily available access to working capital is one of the best strategic defense strategies against the growing financial pressures of a struggling economy. Your trucking company has highly valued equipment assets. Use them to secure financing with a fast, flexible equipment refinancing solution built to maximize your working capital.
Equipment refinancing is an effective funding option used by trucking companies to help stabilize operations, consolidate debt, or grow the business. Leveraging the equity tied up in your assets provides a significant influx of cash which can be reinvested in your business to increase efficiencies or build greater resilience to economic pressures.
It can be extremely challenging for trucking companies to utilize older equipment to secure against financing unless they are working with select transportation financing specialists such as eCapital. With exceptional industry expertise and focus, these financing specialists have more favourable criteria towards accepting your company’s used trailers as collateral, to extend credit when conventional lenders won’t. Flexible lending terms and easy qualification processes are designed for fast, easy approvals and disbursement of funds.
The sourcing of capital through asset securitization is a growing trend. Trucking companies of various sizes and in all stages of business development choose equipment refinancing as a financial tool to fund growth or stabilize their financials. This form of asset-based lending offers numerous advantages:
- Fast access to large cash reserves
- Qualification is easier than traditional lending
- Flexible terms and repayment schedules
- Your working equipment becomes your collateral security
- No restrictive covenants or borrowing base monitoring
How will equipment refinancing benefit your trucking company?
The trucking industry is struggling with declining freight demand and dropping rates, hampered by increasing inflation costs. A leading reason companies fail is a lack of sufficient funds to operate the business over an extended period. Many industry experts anticipate a great purge in trucking over the next year.
The ability to accumulate and hold capital in reserve is a common challenge to most trucking companies – and it’s about to get much more difficult as the economy continues to struggle! High operational costs, including maintenance, fuel, and payroll, consume the bulk of revenue, leaving little profit to contribute toward capital reserves. Quarterly and yearly tax obligations draw heavily on whatever reserves the company does manage to accumulate.
Trucking companies that utilize effective financial strategies to maintain access to working capital gain a competitive advantage. As other carriers battle to ward off bankruptcy, many will commit service failures with shippers and brokers. Trucking companies with healthy cash reserves have the agility to respond quickly to these opportunities allowing them to pick up new freight and new customers.
Who uses Equipment Financing?
Owner-operators, small and large fleets wanting a significant influx of cash, or a means to consolidate existing debt refinance trailer equipment to improve the company’s financial structure. Trucking companies with equity tied up in one or more trailers leverage the equipment’s equity value to:
- Support expansion
- Augment their existing fleet with newer equipment
- Counter significant reduction in cash flow
- Achieve greater liquidity
- Invest in turnaround strategies
- Restructure current debt to better align with current and future requirements
How does equipment refinancing work?
Refinancing is very simple if you work with a flexible lender specializing in transportation financing. The lender reviews the equipment, assesses its financial worth, and proposes a loan solution of up to 70% of the appraised value.
Fleet of 10 Dry Van Trailers
- 2010 Utility 4000D-X Dry Van (53 ft., Sliding Axle)
- Qty 6 @ appraised value of $18,500.00 per …………… $111,000
- 2015 Great Dane Dry Van (53 ft., Tandem Axle)
- Qty 4 @ appraised value of $39,900.00 per …………… $159,600
Total Appraised Value = $270,600
Available funds: $270,600.00 x 70% = $189,420
The assessed value of your equipment is established by a written appraisal conducted by an industry-recognized third-party appraiser. It is the estimated value after sales expenses are considered that your business would receive if the trailers were liquidated in an organized manner over 6 to 9 months.
Based on the above example case, a lender offering 70% of the appraised value of the equipment will provide up to $189,420.00 in lending funds. The loan’s terms and interest rates are defined in the loan proposal.
To accept the loan, the trucking company signs a loan agreement and grants security interest on its rolling equipment to the lender. Funds are then quickly deployed.
You’ve worked hard to reach a level of business success that has allowed you to accumulate working equipment. Until you take steps to unlock it, the equity tied up in your trailers is untapped value. Refinancing equipment can help you restructure debt to better suit current and future needs or build working capital reserves to maintain operational agility.
Having access to capital reserves in a struggling economy is a competitive advantage. Working with a flexible lender specializing in transportation financing to refinance working equipment is an effective strategy for accessing significant capital. Utilize equipment refinancing to stabilize operations, take on new contracts, manage revenue fluctuations, fund new equipment acquisition, or finance a turnaround situation.
Whatever the reason for using equipment refinancing, be sure to work with an experienced and reputable transportation financing company to ensure the best value. Their expertise and industry connections will translate to high appraisal values, better lending terms, and simple processes to complete the deal quickly.
eCapital is a trusted transportation financing company helping trucking companies reach their goals and build success. Our mission is to make the lives of truck company owners easier with flexible financing options such as freight factoring, lines of credit, equipment refinancing, and more to place control of your company finances in your hands.
We support everything from start-up companies that need flexible financing to long-standing businesses that may have recently faced financial challenges. Our team of transportation finance experts can get you the funding you need with flexible funding solutions to achieve your business goals.
For more information about how our industry-specific financing solutions support trucking businesses through all stages of development, visit eCapital.com