Whether you are a small trucking company looking to expand it’s fleet or a large corporate shuttle service with dozens of employees, transportation funding is often needed to fuel commercial growth. Traditional lending institutions have tightened their lending requirements in recent years, making access to capital more difficult to come by. The good news is that there are alternative methods of financing available that allow more companies to get the cash they need. These transportation funding groups offer financing solutions that streamline the approval process so businesses may continue to operate, strategize and grow.
While a commercial loan can be challenging, you can enjoy a simplified and streamlined application process when you work with the highly knowledgeable and experienced lending team at Halo Capital Group. Our goal is to connect you with the right transportation lenders that offer affordable financing suitable for your needs. For more information, fill out the form to the right and someone will get back to you within a few hours to discuss your options.
The Advantages of Working with Transportation Factoring Companies
Factoring invoices to access immediate operating capital is a common business strategy and one of the fastest growing financial services in a rapidly changing global market. There are many times where additional cash flow is needed to support seasonal transportation growth and project demands. Transportation factoring assists in helping to meet these demands. It essentially is the sale of accounts receivable or invoices to a factor (third party commercial buyer). In other words, it allows invoices to be sold at a discount in exchange for immediate cash. Transport factoring is not a loan, as no debt is assumed in this type of agreement. When working with private lenders, the funds you receive are often unrestricted and businesses are offered more flexibility than from a traditional lender.
Transportation factoring companies lend cash to businesses that have outstanding invoices, which allows the transport operation to receive cash quickly, rather than wait 30, 60, or 90 days for customers to pay them. It also allows receivables may be managed without adding additional staff. Since cash flow is not tied up or interrupted, the business may continue to:
• Grow and restructure
• Capitalize on supplier discounts
• Fund payroll
• Access cash without relinquishing company equity
• Allows daily access upon request
Many factoring companies offer recourse factoring, which is built on the promise that borrower will eventually assume responsibility for the invoice payment if it can’t be paid back by the customer. Factoring may increase and decrease based on current business size and needs.
How is Transport Factoring Used and Measured?
Factoring spans all industries, including trucking / transportation, manufacturing / distribution, textiles, and oil and gas. Companies use the cash generated from factoring to pay for inventory, new equipment, employees, and expanded operations.
Each transportation factoring company establishes its own fee structure. They may charge an overall factoring fee based on monthly volume and customer creditworthiness. Or additional fees may be charged to cover money transfers, shipping, collateral and other costs of doing business. Typical factoring fees range between 2.5% and 3.5% per 30 days, or .1% per day the invoice is unpaid after factoring. Keep in mind that factoring fees are tailored to the individual needs of your business and customer base.
Most factoring companies purchase invoices and advance funds within a few days. When transferring the funds, they provide the business the reserve balances of the invoices, minus a fee for assuming the collection risk. The factor also provides back-office support.
Businesses can qualify for a transport “loan” without providing personal guarantees or hard assets as collateral. Granting working capital to fund a transportation company is primarily based on your clients’ credit worthiness, not yours. Personal credit or business credit is typically not a prime consideration.
Some additional examples of companies who are prime candidates for this type of program:
- Start up operations and transitioning businesses
- High-growth companies having a bad year
- Change of ownership
- Failure to acquire transportation financing from another lender or traditional transportation funding group
Transportation Finance Services: A Solution That Fits Your Needs
Transport finance services typically include operating leases, single investor leases, leveraged financing, sale and leaseback arrangements, and loans secured by equipment. The Halo Capital Group can not only assist in providing factoring services but alternative business loans as well. If your company has a history of success, we can offer a performance-based model which analyzes the volume of cash flow in your business, which is a better indicator of your company’s financial health than your personal credit score. This allows us to lend to viable transportation businesses that would otherwise be locked out of fairly priced capital.
This type of transport financing is based on the business’ annual revenue. This is a non-restrictive loan, allowing the company the ability to spend the full amount of the loan any way it deems necessary, including equipment purchase, debt repayment, personnel, or marketing.
Transportation Equipment Financing Solutions for a Variety of Industries
Transportation equipment financing clients are typically in airline, railroad, global vessel / shipping industries, and other middle- and major market companies coast to coast, Alaska to Texas, Australia to Hong Kong. Factoring and associated transportation funding sources can greatly improve the cash flow needed to purchase much needed equipment for these industries.
Sources of Government Transport Funding
The majority of US transport funds comes from federal, state, and local public funding sources. Most transportation revenue comes from assorted taxes and fees. Most local funding is from property taxes, general fund appropriations, and mass transit fares as well as fuel taxes and motor vehicle taxes, fees, and bond proceeds. One-third of surface transportation funds is from motor fuel taxes. Vehicle and other taxes and fees, including sales taxes and property taxes, generally provide another 25%. General funds, tolls, and fares / facility-specific user charges make up the remainder.
Through a public-private partnership, a contractual agreement between a public agency and a private sector entity allows for greater private sector lender participation in the delivery and financing of transportation projects. To this end, recent legislation and finance mechanisms have helped projects leverage private funds and redistribute project risk.