Commercial Vehicle Loans for Small Business Owners


Vehicle expenses can make up a huge chunk of total expenses if your small business requires transportation. Many small business owners make the mistake of rushing into big purchases without considering the different financing options, especially when it comes to commercial vehicles.

A smart small business owner knows to explore the different financing alternatives, especially when it comes to large acquisitions like commercial vehicles. Different options, like equipment leasing or equipment loans, give small business owners flexibility when it comes to commercial vehicles or other equipment necessary to get the job done.

In this article we are going to go over a few options for commercial vehicle loans for small business owners, cover the basics about equipment financing, and talk about the benefits of commercial vehicle loans for small business owners.

Commercial Vehicle Loan Options for Small Business Owners

There are many different financing options available for small business owners. Some are more appropriate for certain types of purchases, but a successful small business owner knows how to utilize multiple funding sources to keep capital on hand.

While a business line of credit provides small business owners flexibility, and multi year term loans are great for new growth opportunities, equipment financing options are best when it comes to commercial vehicle loans for small business owners. Equipment financing options are perfect for any purchase to cover any expense that is essential to business operations.

Equipment Financing

Equipment financing refers to either an equipment lease or an equipment loan. For an equipment lease, a small business owner basically rents equipment from the equipment company, making payments over the terms of the lease. At the end of the lease, the business owner can either stop making payments and return the equipment, extend the terms of the lease, or buy the equipment outright from the lender.

For an equipment loan, the small business owner borrows a lump sum of money from a lender to purchase new equipment. The equipment financing company covers the entire purchase, and the small business owner makes payments to the financing company while they use the equipment.

Equipment Financing for Commercial Vehicles

Equipment financing is perfect for commercial vehicles because of the type of item that a vehicle is. When it comes to financing equipment, lenders like to finance items that are essential to operations or that hold value. Think big machinery or expensive equipment that are needed to do functions crucial to the job.

Commercial vehicles are usually critical to the functions of a small business, and they usually retain value pretty well over the time that a small business needs to use them. Because vehicles are a perfect combination of value and utility, lenders usually will set up reasonable terms with small business owners.

Benefits of Commercial Vehicle Loan for Small Business Owners

The biggest benefit that equipment financing and commercial vehicle loans can provide small business owners is flexibility. Making a large equipment purchase, like purchasing a new vehicle, is a big move for a small business owner, and usually comes with sacrifices. By utilizing a commercial vehicle loan and using equipment financing to cover the purchases of new vehicles, small business owners can leave working capital open to leverage new opportunities or for day-to-day operating expenses.

Especially with the buy-back options that many equipment lease programs run, there is still an option for small businesses to purchase the equipment outright. Some lenders offer a $1 buyout lease, where at the end of the payment terms, the lender sells the title for the equipment to the small business owner for $1.

Commercial vehicle loan and equipment financing provide small business owners with the flexibility to acquire the equipment and vehicles needed to operate, without having to make large purchases outright. This saves small business owners working capital to operate and leaves capital available for growth opportunities as they come up. If your small business needs vehicles to operate, consider commercial vehicle loans.

Speak with an SMB Compass Lending Advisor today so we can help expedite the loan application process for you. Apply today!