To run a chauffeured transportation company, you need money to start and run your business. Below are are some options that can help you with your financial decision. Make sure to discuss your different options with a certified financial planner or a CPA before making any huge financial decision like this.
Consistent cash flow is essential for maintaining company success. This is one of the primary shortcomings of businesses starting out, hence why it's strongly encouraged for entrepreneurs to save up money before starting a chauffeur transportation company. To start, it is said that you should have approximately 2 months expected revenue worth of cash - 3 if possible.
When companies require loans, banks and credit union loans are the way to go. Banks have established reputations and can offer low interest rates for people with good credit scores. Credit Unions, on the other hand, offer similar services as banks, but are typically non profit companies serving curated groups or communities. Since they are less established than banks, they often provide better rates on loans.
The SBA (Small Business Administration) helps businesses starting out acquire the proper resources to venture down a successful path. They don't offer loans themselves, but they connect businesses with private companies, thus resulting in lower overall rates.
Check out this list of SBA lending partners: https://www.sba.gov/partners/lenders/microloan-program/list-lenders
There are plenty of small nuances that may delay the process for small businesses to acquire loans from the typical sources. One typically requires collateral, at least 2-3 years in business, and a solid business and personal credit score. However, there are plenty more options, that though riskier, can prove worthwhile for companies starting out.
Owning a business card can prove to become very expensive due to their interest rate of 24% APR. If you get lucky, you may be able to acquire a card with a low intro rate or interest after signing up within in the first 6 to 18 months. One of the few downsides includes not being able to borrow as much money, but the card can cover other small expenses. What helps is when you choose a credit card that has a 1% or 2% cash back program, so that of each purchase you make, you get some money back.
There are several advantages to short term loans:
Finance charges are typically higher than those of traditional bank loans. Also, you are charged a factor rate in place of interest, with which you pay a fixed fee instead of a rotating fee. All interested investors need to see prior to lending money is proof of consistent cash flow within the company.
Owner operators tend to use this form of funding the most. With this, when you send the invoice, client has 30+ days to pay. This can potentially hinder cash flow - working with a freight factoring company can help free up some money.
Before borrowing money from any source, make sure you know your credit score and ways to improve a lower credit score. It's no simple feat to fund a small business, especially in the transportation industry; with the right resources and knowledge, you can embark on a successful path and save money along the way.
