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Drive Your Business to Success with SBA Commercial Vehicle Loans: Everything You Need to Know

May 25, 2023
SBA Commercial Vehicle Loans

Do SBA commercial vehicle loans exist? Which lender has the best ones? How do you get this form of small business financing? Is there more than one way to get auto financing from the Small Business Administration? 

For the answers to these and other questions, read on to find out what our research for small business loans for vehicles turned up. It didn’t all come from the SBA. In fact, a lot of this financing does not.

Check out our Credit Suite Credit Line Hybrid, where you can get up to $150,000 to help your business thrive.

7 Best Commercial Vehicle Loans

Loan 1 – Ally Bank

Ally Bank offers specialty vehicle financing, including for heavy-duty trucks. They are also great because they will report to D&B, Experian, and Equifax, so you can build business credit while you finance the purchase, refinance, or overhaul of your fleet.

Terms for their heavy-duty truck financing go up to 75 months. This is financing for vehicles up to 6 models years old with up to 700,000 miles, depending on the collateral type.

They also offer a few different types of MasterCard. However, none of them is a business credit card. And, you can get a business line of credit through them as well.

In order to qualify with them, your small business will have to have its Fundability Foundation™ squared away. They want to see bank reference and fleet financing references. You must have a good D&B PAYDEX score of 80 or higher.

However, if you have no established business credit history, you can apply with a Personal Guarantee(PG). They will be looking for a minimum credit score of 640, and Ally will do a hard pull on your credit.

Note: this is not an SBA loan! This lender does not seem to offer financing via the SBA.

Loan 2 – Crest Capital

Check out Crest Capital for your next commercial vehicle loan. They offer a commercial vehicle loan, even for used vehicles. Their commercial lending offerings include leases. 

Get a credit approval within hours with no mileage restrictions and no paperwork required. In general, this is going to be a term loan, with 24 – 72 month terms. You can get up to 100% financing with this business loan.

Crest has a purchase option where the corporate vehicle title is kept in the name of your small business. Also, you can buy from a third party seller if you prefer.

And, they only offer financing for virtually any type of corporate vehicle, but not for passenger cars. So, do not look to them for a business auto loan.

Also, their financing is only for non-transportation industry companies. They cannot finance owner-operator trucks or trucking company fleets. A small business owner offering transportation services will need to look to a different lender for commercial vehicle financing.

Their typical business customers are established with over two years in business. These are companies with good credit. To qualify, Crest will look at a variety of factors, including business credit history, collateral, and the industry you’re in. They can finance over $500,000. 

If your loan amount is for $250,000 or less, they only want to see a filled-out online application and no other paperwork.

Loan 3 – National Business Capital

National Business Capital offers SBA loans. And while they do not specify the types, it is highly likely that their lending marketplace offers the SBA 504 loan, the 7(a), and possibly also SBA Express loans.

The minimum FICO score required is 685 or better. However, they will only do a soft pull on your credit. Your business has to be bringing in $100,000 or more in annual revenue, with two or more years in business.

NBC also offers other types of business loans not through the SBA. For those, you will have to be bringing in at least $120,000 per year in revenue. However, you will only need to be in business for a year at minimum, with a credit score of 580 or better.

Therefore, their other offerings (which can also be used for commercial real estate or the like) are better for entrepreneurs with bad personal credit. NBC also specifically touts these loans as being good for smoothing out cash flow irregularities. 

Their business lending team can help entrepreneurs choose among business auto loan offers. Their lender marketplace has over 75 lenders, so an entrepreneur may find that they end up with multiple small business loan offers.

Loan 4 – Bank of America

SBA Commercial Vehicle LoansYes, even a banking giant like Bank of America offers the equivalent of SBA commercial loans for vehicles!

Again, these are vehicle loans that are not offered through the SBA. This is always going to be a more conventional loan with an interest rate lock guarantee that lasts for 30 days. 

Therefore, you can apply for their commercial auto loan before you even find the right vehicle for your business.

One major advantage of getting a business auto loan from a lending institution like Bank of America is that you can also get a business check through them, along with online banking.

This is also useful in case you eventually want a business loan for commercial real estate. Since BOA isn’t a specialty lending company, they have a lot more funding options. 

As a result, if your business pays its auto loan off on time and your business account is in good standing, then theoretically you should have an easier time getting a commercial real estate loan through Bank of America.

Bank of America also offers other business services (such as notaries) and will most likely assign a dedicated business loan officer to your business. Hence, they are a lender to consider.

Loan 5 – Balboa Capital

Online lender Balboa Capital offers a commercial auto loan whereby you only have to fill out an application if the amount is for $500,000 or less and you can provide hard collateral. 

However, if you have soft collateral to put up, then you can go with just a business vehicle loan application if the amount is $350,000 or less. 

Submit an online application for an auto loan to this lender, and you will get a decision during their normal business hours. 

You must be in business for at least one year, and bring in annual revenue of at least $100,000. An entrepreneur will need to have a FICO score of 620 or better. 

Balboa is also an SBA lender. You can get up to $5 million to finance your business. Their SBA lending is not specifically tied to any auto loan.

Unlike with a credit union, you do not have to be a member. It does not appear to be a requirement that your business have any sort of an account with Balboa Capital, either. 

All you will need to do is fill out their application if your auto loan request is under their maximum for only needing collateral.

Loan 6 – Funding Circle

Take a look at Funding Circle. They offer term lending, the SBA 7(a) loan, and various business lines of credit. Unless your company is organized as a general partnership, you should be able to apply without an impact on your personal credit scores.

Funding Circle is looking for two years or more in business, with $50,000 or more in annual revenue. Also, they want to see strong personal & business credit scores, starting at a 660 FICO.

Funding amounts start at $25,000 for term lending, and terms run from six to 84 months. Get funds in two days. 

Or get a credit line for up to $150,000. With their credit line, only pay interest on whatever funds you use. Once you have paid back their credit line, you can borrow from it again, on a revolving basis.

There is no prepayment penalty for either their credit line or their term lending.

Another option is their SBA 7(a) loan. You can borrow from $75,000 to $5 million, with term lengths of up to 10 years. Funds from Funding Circle are delivered three times faster than the industry average.

Therefore, they can be a very good choice if your business needs money in a hurry, for example, to cover cash flow issues on a temporary basis. 

Loan 7 – Regional Banks (Various)

Many smaller regional banks have great programs for SBA commercial lending for vehicles. Eastern Bank, below, is an example. 

Check out Eastern Bank. They offer SBA lending – 504, 7(a), and Express loans. 

They are more of a regional New England bank. However, they offer online digital banking, so their customers do not have to be local to them. All of their branches, though, are in Massachusetts and New Hampshire. 

Eastern offers specialized services for nonprofits and healthcare provider businesses. 

Eastern specifically states that the 7(a) is for for-profit businesses, including acquisitions.

But the 504 is for for-profit businesses looking to buy long-term assets such as land, buildings, or certain equipment with a net worth less than or equal to $15 million and an average net income not greater than $5 million for the past two years. The equity requirement is as low as 10%.

Hence either loan could potentially work for corporate vehicle funding. 

Beyond SBA lending, they also offer term loans for up to $100,000 and will make a decision within 5 minutes—but those loans are only for business owners in New Hampshire or Massachusetts. For loans of over $100,000, there’s more of a form to fill out.

Similar banks in other parts of the country include Texas Regional Bank, Byline Bank in Illinois, Shore United Bank (serving Maryland, Delaware, and Virginia), and Bank of Montana.

Check out our Credit Suite Credit Line Hybrid, where you can get up to $150,000 to help your business thrive.

Who can Apply for SBA Commercial Vehicle Loans?

In general, this will have to be a principal of the corporation. Often, when a lender is considering providing funding, they will only want to work with owners with at least a 20% stake in the company.

SBA Commercial Vehicle LoansThe SBA has certain requirements for owners with a 20% or more stake in the business. This includes performing personal credit checks. But with federal anti-money laundering statutes, virtually every lender will require this.

Most lending institutions, and even credit unions, will want to see proof of company cash flow. So, again, this goes to principals having the most legitimacy when it comes to applying for an auto loan for a business.

Entrepreneurs should check on a lender’s qualifications including whether they exclude certain industries. For while any owner can apply for an SBA auto loan, the real question is which ones will get what they’re looking for.

Owners of higher-risk industries (such as over-the-road trucking) or vice industries such as cannabis may have a harder time of it. An entrepreneur may do better trying with a local credit union. 

Also, if the owner is a Navy vet, then the Navy Federal Credit Union could be one possible option.

What Can an SBA Commercial Vehicle Loan be Used For?

You can always use a corporate vehicle loan to buy a new vehicle, buy a used vehicle, or make repairs on an existing one. These can include cars, trucks, vans, and more. 

This is because even equipment such as front-end loaders is fair game—and the lines between vehicle and equipment loans are blurred with some lending institutions. 

But that’s for general vehicle loans. For loans from the SBA, there are a lot more restrictions as to usage. 

Since the SBA does not actually specify the use of its lending products for vehicles, there are significant restrictions, including the obvious one of having to use the proceeds for an actual business purpose.

Misusing an SBA loan in order to cover personal expenses or debts can bring with it criminal penalties and even jail time.

The 504 can be used for equipment with a useful life of at least 10 years, and vehicles certainly fill the bill. 

To truly be able to use a 7(a) SBA product for a corporate vehicle, your best bet is their International Trade Loan. Under this program, businesses can technically use these loans for real estate equipment.

Due to the program’s restrictions, an entrepreneur may prefer to get a more conventional loan for a vehicle and avoid the SBA.

Check out our Credit Suite Credit Line Hybrid, where you can get up to $150,000 to help your business thrive.

Usual Requirements for an SBA Commercial Vehicle Loan

The SBA has separate requirements for 504 and 7(a) loans. Since the 504 program is most likely to apply for financing a vehicle used for commercial purposes, that program comes with the following eligibility requirements:

  • A business must operate as a for-profit company in the United States or its possessions
  • Have a tangible net worth of less than $15 million
  • Have an average net income of less than $5 million after federal income taxes for the two years preceding your application

Also, a business will have to fall under the SBA’s size guidelines. Entrepreneurs must be able to prove they have qualified management expertise, a feasible business plan, good character, and the ability to repay the loan.

Often, these are proven with documentation such as tax returns (both personal and business), a professionally written business plan, licensing agreements (as needed), leases or deeds to land owned by the business, and character references.

Since 504 loans are available only through Certified Development Companies (CDCs), you will need to find a CDC in your area to make sure that you are dealing with a qualified lender. 

According to the SBA, CDCs are uniquely qualified to understand 504 loan program regulations and will help you navigate the lender channels to create your project financing. 

Takeaways

The SBA has restrictions on the use of its loans, so the 504 is your best bet for business vehicle financing. 

But if you want to avoid the bother of having to follow SBA regulations to the letter, there are other financing options available, including business credit

Why not contact us today to learn more about your business’s other options, and how improving your Fundability™ can open up an even wider range of financing possibilities?

About the author 

Janet Gershen-Siegel

Janet Gershen-Siegel is the Head Finance Writer and Content Manager at Credit Suite. She has been admitted to practice law for over 30 years, with a focus on litigation and product liability, and is a published author, with writing credits at Entrepreneur, FedSmith.com and BusinessingMag.com.

She has a BA in Philosophy from Boston University, a JD from the Delaware Law School of Widener University, and a MS in Interactive Media (Social Media) from Quinnipiac University.

She regularly writes for Credit Suite, which helps businesses improve Fundability™, build credit, and get approved for loans and credit lines.

Her specialties: business credit, business credit cards, business funding, crowdfunding, and law

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