Trucking company financing: match the money to the truck and the invoice

Janover Capital editorial team · Checked November 9, 2026

Short answer

Finance the truck with a loan matched to its working life, and the wait for freight payments with a line of credit or factoring. A 7(a) loan can finance equipment; a 504 loan excludes trucks (13 CFR 120.884(e)).

Two different needs, two different tools

Finance the truck with a term loan secured by the truck. Finance the wait for freight payments with a line of creditA credit limit you can draw on, repay and draw on again. or by selling the invoice to a factor.

A trucking company has two cash problems. The truck is a long-lived purchase. The freight bill is a short wait for money you have already earned.

The OCC describes factoring as buying your receivables, the invoices your customers owe you, at a discount, usually without recourse. The factor focuses its checking on your customer rather than on you (pp. 33-34).

Recourse changes the price and the risk. Without recourse, the factor carries the loss if your customer does not pay. With recourse, you owe the factor. Ask which one you are signing.

A worked example: financing a $140,000 tractor

Suppose you buy a $140,000 tractor, put 10% down and finance $126,000. Assume 9% a year with monthly payments. This is an illustration, not a quote.

60 months. Payment: about $2,616 a month. Total paid: about $156,933. Interest: about $30,933.
84 months. Payment: about $2,027 a month. Total paid: about $170,287. Interest: about $44,287.

The longer term cuts the payment by about $588 a month and adds about $13,354 of interest.

Turn the payment into a cost per mile. Suppose you drive 8,000 miles a month. The 60-month payment is $2,616 ÷ 8,000 = about $0.33 a mile. The 84-month payment is about $0.25 a mile.

Then check the term against the truck's working life. A payment that outlasts the truck leaves you paying for a truck you have already replaced. Choose the shortest term whose payment your slowest quarter can carry.

A worked example: factoring one freight bill

Suppose you haul a load billed at $4,000. A factor advances 90%, or $3,600, and charges a 3% fee, or $120, when the broker pays 45 days later. Assume those terms, because every factor sets its own.

Cost of the advance: $120 ÷ $3,600 = 3.3% for 45 days.
Scaled to a year: 3.3% × 365/45 = about 27%.
A credit line at an assumed 12% a year costs $3,600 × 12% × 45/365 = about $53 for the same wait.
On 20 loads a month, the factor's fees total $120 × 20 = $2,400.

Factoring costs about $67 more per load than the line in this example. It earns that premium if you cannot get a line, or if faster cash lets you take loads you would otherwise decline. If a line is available, price it first.

Check the contract for how the factor counts days, the minimum volume and what happens if you stop using it. Factoring agreements are not eligible for refinancing with a 7(a) loan (SOP 50 10 8.1, App. 14, Para. A.2).

What SBA can and cannot do for a trucker

A 7(a) loan can buy fixed assets, and SBA's collateralProperty a lender can take and sell if a loan is not repaid. rules address vehicles bought with loan proceeds (Sec. A, Ch. 3, Para. A.1.f; App. 19, Para. A). SBA does not require a lien on a vehicle that already has one. It also does not require one on a vehicle worth $20,000 or less when the loan number is assigned.

Equipment terms run 10 years, or up to 15 years if the IRS asset class useful life supports it (App. 17, Para. A.2). The schedule does not name vehicles, so ask the lender how it classifies a tractor or a trailer. A 504 loan excludes automobiles and trucks (13 CFR 120.884(e)).

For the wait on freight bills, an SBA Express line can run 10 years, including any term-out period. On SBA Express, the lender makes the credit decision without prior SBA review (App. 17, Para. B.3; Sec. B, Ch. 2, Para. C.1.b).

A Working CapitalMoney for day-to-day costs such as payroll, rent and inventory. Full definition CAPLine is built for businesses with receivables or inventory, and the lender takes a lien on them (Sec. B, Ch. 4, Para. A.1 and F.4). It suits a carrier that bills on credit and wants a revolving limit.

When trucking finance is a bad idea

A term longer than the truck's working life. The payment continues after the truck is gone.
A cash advance for fuel and repairs. The cost is a fixed dollar amount on spending that never stops. Suppose $20,000 costs $4,000 at a factor rate of 1.2. Renew it every four months and you pay $4,000 × 3 = $12,000 a year to keep fuel and repairs funded. Forum panelists told the FTC that advances can have estimated APRs in the triple digits.
Payments sized to your best months. Test the payment against your slowest quarter, not your average.
Factoring when a line is available. The example above costs about $67 more per load.
More trucks before you have the freight. A truck payment is due whether or not the truck is loaded.

If a carrier offers a lease-purchase, read the agreement closely. Check who owns the truck and who sets your loads. Check what happens to your payments if you leave.

What a trucking lender looks at

A lender for a truck loan looks at the truck, your history and your freight. A factor looks mostly at who pays your invoices.

Your history. On a Standard 7(a) loan above $350,000, the lender reviews three years of tax returns or financial statements plus an interim statement (Sec. B, Ch. 1, Para. C.2.a). SBA Express and 7(a) Small loans follow the lender's own procedures for similar non-SBA loans (Sec. B, Ch. 2, Para. C).
Your customers. The OCC says factors focus most of their checking on the customer who owes the invoice, not on the business selling it (pp. 33-34). Slow-paying or weak brokers can limit what a factor will buy.
Your cash flow. SBA calls cash flow the primary source of repayment. The lender must decline a loan that lacks reasonable assurance of repayment from business cash flow, whatever the collateral (Sec. B, Ch. 1, Para. C).

Requirements for time in business, truck age and mileage vary by lender. None of the sources cited here sets them, so ask each lender for its current rules.

Questions to ask before you sign

Does the lender take a lien on the truck only, or on all business assets?
Is there a prepayment fee, and does early payoff cut the interest?
If you factor, is the sale with recourse, and does the fee run per invoice or per 30 days open?
Does the factor tell your brokers and shippers to pay it directly? The OCC says factors frequently notify customers to pay them directly (p. 33).
What are the minimum volume and the contract length?

None of the sources cited here lists typical freight factoring fees, so get the schedule in writing.

Sources

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