Tidying up Your Company's Credit

10 Steps to Make Your Next Truck Loan Application Easier and Less Stressful


By: PACCAR Financial

It may seem like the only companies that can get credit to buy new or used trucks are those that don’t need it, particularly in a recovering economy.

However, by taking proactive steps, such as gathering financial statements, dusting off the company business plan or completing one, and improving or maintaining your company’s safety fitness ratings, there’s little reason why companies shouldn’t be able to get a loan, said Karen Pembroke, director of credit for PACCAR Financial. Particularly if they work through a lender that understands trucks, fleets and the trucking industry.

“It’s a good idea to share your company’s story with your truck dealer so that the dealer can share your goals and needs with the lender,” Pembroke added. “We’ve had applications from companies working in the construction market in depressed parts of the country. And because they showed how they worked through those difficulties, their loan applications were successful.”

Pembroke said it’s also important to show lenders how you generate your income. Who do you haul for and how long have you been hauling for your customer(s)? Lenders are looking for longevity and stability when they consider whether to approve loans.

Pembroke offers a list of 10 tips that can help fleets improve their chances of an approval when they apply for a new or used equipment loan. Here they are:

 

Step 1 – Safety Pays: Examine your safety assessment on the CSA website.

Companies that operate interstate truck and trailers or that are required by their state department of transportation to have a federal DOT number on their trucks should examine their fleet’s safety assessment on the U.S. Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability (CSA) program web site:

http://ai.fmcsa.dot.gov/sms/.

“An unsatisfactory carrier safety rating could make you too much of a credit risk,” Pembroke explains. “If you have a checkered safety history, lenders will wonder about your ability to operate safely and efficiently and your commitment to repay the loan.”

If something shows up on their safety assessment, Pembroke recommends companies contact the FMCSA through the web site at https://dataqs.fmcsa.dot.gov/login.asp on how to best address the issue.

 

 

Step 2 – Gather your most recent financial statements from this fiscal year and from the last three fiscal years.

Some of the most important pieces of information that will help your company establish whether it can borrow money for new equipment are its financial statements.

Pembroke said the recent downturn in the economy may have wreaked havoc with your company’s profit and loss statements. If that’s the case, it may be important for your company to go back further and show financial statements from the past several years, particularly if they show your company was doing well before the downturn in the economy, she added. If your company has seen dramatically improved results in the last several months to a year, be sure to point that out. And explain how you think those results will continue. The key is to have statements readily available to provide to the lender.

 

Step 3 – Dust off your company business plan and update it. If you don’t have a business plan, consider drafting one.

It’s important for lenders to understand your business, who are your customers, how you operate, your company’s mission and future plans, Pembroke said. Your company’s business plan should explain where your company operates, how it operates, how it generates income and from which customers.

“If most of your company’s revenue comes from one or handful of customers, you should explain your company’s relationship with those customers, and why you think those customers will remain with you,” Pembroke advised. “If your company is planning to move into new markets in the next several years, that should be something included in your company’s business plan.”

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