The trucking industry sees plenty of ups and downs. It’s also a tough business where you can go weeks or months between doing the work and getting paid. Financial stability is everything when it comes to making it in the transportation industry. Yet, securing a loan is difficult. According to Bankrate, 35% of White business owners are more likely to get approved for an SBA 7(a) loan. Compare that to:
- 31.5% of female business owners
- 19% of Hispanic business owners
- 16% of Black or African American business owners
- 15% of Asian business owners
The loan approval numbers are even more jarring for SBA 504 loans.
- 54.5% of white business owners
- 36.9% of female business owners
- 13.1% of Hispanic business owners
- 12.8% of Asian business owners
- 3.6% of Black or African American business owners
Minority-Owned Trucking Companies: The Facts
In the U.S., more trucking companies are small and operated by a self-employed owner/driver. Companies with no more than four employees are the second most common trucking company size. While white owners are more common, that doesn’t mean that trucking isn’t a diverse industry. There are many minority-owned trucking companies.
- Around 25% of trucking company owners are Hispanic.
- Around 10% of trucking company owners are Black or African American.
- Around 10% of trucking company owners are women.
- Around 5% of trucking company owners are Asian.
The problem with these statistics is that the U.S. Census Bureau stopped the Survey of Business Owners in 2012. There is generalized information on minority-owned businesses, but it’s overall and not specific to the transportation industry. Those statistics are:
- 22.3% of business owners are women.
- 22.2% of business owners are Asian.
- 25.6% of business owners are Black or African American.
- 7.9% of business owners are Hispanic.
The other data set worth considering is how many minorities hold CDLs. This is important when it comes to owner-operator trucking companies.
- 16.4% are women.
- 15.3% are Hispanic.
- 15.1% are Black or African American
- 2.3% are Asian.
The Benefits of Freight Factoring for Minority-Owned Trucking Businesses
Because payments fluctuate, it’s hard to stay solvent when you’re constantly filling up your trucks, paying for maintenance and repairs, affording the necessary permits and licenses, and covering wages, taxes, and different insurances. A steady cash flow is essential. That’s where freight factoring comes in. Explore the many benefits.
Avoid the Common Barriers Keeping Your Company from Growing
When you factor your trucking invoices, you get paid immediately. You don’t have to take out a business credit card to cover monthly expenses until you get paid. You’re not facing late fees for not paying bills on time, and those late payments also impact your credit score.
Suppose you need to purchase a new truck, but you don’t have a high business credit score. You have a history of late payments because your clients pay late. You apply for the loan, already knowing that minority-owned businesses face lower odds of getting a loan approved. Like others of your minority, you’re denied.
Even if you are approved, a low credit rating increases the interest rate you pay. The average interest rate for a business loan ranges from 6.54% to 11.7%, but equipment financing rates range from 4% to 45%. If you purchase a new truck with a 45% interest rate, the amount of extra money it costs drastically reduces your cash reserves, which makes it impossible to grow your business.
Build Stronger Business Relationships
Freight factoring helps you grow your business relationship. You probably spend hours every month generating invoices, sending them to the appropriate person, and chasing late payment. How much time is left to check in with your clients and ensure they’re happy with the service you provide?
When you partner with a freight factoring specialist, you have someone else handling the invoicing and collections for you. Free up your time for important customer service practices and build strong relationships with your clients.
Enjoy Fair Rates Negotiated by the Freight Factoring Agent
Working with a freight factoring company helps you get advantageous per-mile rates. Because they’re able to negotiate fair rates for trucking companies, you enjoy higher rates when you take trucking jobs. Higher rates often end up covering the freight factoring fee.
There is a freight factoring fee, but it’s much lower than late payment fees or credit card interest. If your freight factoring company negotiates a higher rate per mile, you could end up making more money, even after the freight factoring fee. At Saint John Capital, fees start at 1.5%.
Gain a Steady Cash Flow
To factor an invoice, you pick up or deliver a load to your client. Take the bill of lading you generate and send that to a freight factoring company. They process your payment request by looking at the bill of lading, running a credit check of that client, and approving or denying your request.
If the client doesn’t have a long history of non-payment or a severely low credit rating, approval is likely. Once it’s approved, the freight factoring fee is subtracted from the amount due. You get paid that day instead of waiting until your client gets around to paying invoices for the month.
The other reason you gain a steady cash flow is due to the fuel discount you receive. Saint John Capital’s fuel card is accepted at more than 5,200 truck stops across Canada and the U.S. The fuel card also provides online access to more than 35,000 repair facilities.
Stop Spending Time on Office Work
Each bill of lading you have requires data entry or steps to upload it to your invoicing software. You need to verify the amount on the invoices before you send them out. If the month ends and you haven’t been paid, you have collections steps to follow.
It takes a lot of time, and your office staff has to dedicate their time to collections and invoicing instead of other important tasks like marketing and customer service. You’re already a minority-owned business, which means you must work harder to be taken seriously. Let a freight factoring company free up time by doing the billing and collections on your behalf.
Choose a Freight Factoring Company with Experience with Start-Ups
Growing a minority-owned company requires a freight factoring company with experience building trucking companies and negotiating fair rates. You also need a partner with the staff who speaks the language you know best.
Since the 1990s, Saint John Capital has helped many trucking companies go from small start-ups to major players in the transportation industry. Our experience and expertise in trucking operations, invoicing, collections, and loans help you get ahead of the competition.
Sign up quickly with our online form or call us to learn more. Once you’re factoring your trucking invoices with us, you get paid as quickly as the same day. Plus, Saint John Capital provides incredible benefits like unlimited free business credit checks, payment when you pick up a load, and low-interest business lines of credit.
