So, you’ve been driving for your employer for awhile now, and each payday you see how much money is going to your employer versus you. After careful consideration you decide that you want to go into business for yourself. Your family and friends are in full support of this new endeavor. During your initial business set up you have spoken to several companies or auto repair shops and have some contracts already lined up. Let’s face it, all that you need now is the dang tow truck to get going! Next you will need to look into financing so you can make your business a reality. But there are a few items listed below that you will need to consider and review before applying for a loan.
- How is your personal credit?
- Have you checked it recently?
- Do you have any willing cosigners?
There are a lot of lenders who can work with challenged credit, but when you are a startup company with challenged personal credit, it can make the process extremely difficult and expensive. Unresolved tax liens or back due child support will ultimately kill any chance of getting a loan from any financial institution. If these problems apply to you, then you will need to be in touch with the agency and have at the very least a payment plan set up to show you are doing your do diligence. You must have DOCUMENTATION to prove it.
Another thing to consider is- have you saved any money for your new business venture? Many lenders will require startups to put 10-20% down on a new or used tow truck. In addition to a down payment, there is often a documentation fee between $150-$500. Other important costs to consider are gas, insurance, and maintenance. You will need to ensure you plan for those costs as well.
Prior to applying for financing you will want to look into any trucks you would like to consider using for your business and it will need to be no older than 10 years. The main reason you will want to have this basic truck information is because many lenders not only have to approve your personal credit, but they have to approve the truck as well. Everyone loses when a customer drives away with a bad truck that breaks down, but especially the customer. Choosing the truck you want prior to applying for a loan makes the process 99.9% smoother and faster for everyone involved.
Hopefully these tips were helpful if you are considering going into business for yourself as a towing company. If you have any questions or need help with your financing requirements we are happy to help you in any way we can. If you are ready to pull the trigger and apply for financing, click the link below inquire about your options.