SBA Loan for a Semi Truck Owner Operator - Ultimate Guide

August 18, 2023

Adam Hoeksema

There are roughly 350,000 owner operator truck drivers in the US according to OOIDA.  This makes truck driving one of the most popular forms of entrepreneurship in the US.  I spent over a decade working at an SBA lender in the Midwest and by far our most popular loan application was for an owner operator looking to get a loan to purchase a truck or for working capital for their trucking startup.  During my time there we approved millions of dollars in SBA loans for owner operators.  Based on that experience I wanted to write what I hope will be a detailed playbook for owner operators looking to get an SBA loan for their business.  

I plan to cover the following:

Top SBA Lenders for Semi Truck Businesses

The Huntington National Bank takes the lead as the primary SBA lender in the Semi Truck Businesses sector. They have approved a substantial 19,556 SBA loans, with an average loan amount of $196,310. Below, you'll find a list of the top 10 SBA lenders for Semi Truck Businesses based on data from 2018 to 2023.

Lender # of Loans Approved Average Loan Amount
The Huntington National Bank 4069 $82,385
Wells Fargo Bank, National Association 656 $52,905
U.S. Bank, National Association 545 $92,038
TD Bank, National Association 525 $54,086
JPMorgan Chase Bank, National Association 330 $142,209
Manufacturers and Traders Trust Company 219 $75,807
BayFirst National Bank 203 $218,273
Celtic Bank Corporation 161 $1,020,181
KeyBank National Association 151 $127,715
Readycap Lending, LLC 139 $609,614

Top SBA Lenders to Finance a  Semi Truck Acquisition

Live Oak Banking Company leads as the top SBA lender for semi truck acquisitions, with 2,517 approved loans and an average loan amount of $1,505,822. Below, you'll find the top 10 SBA lenders for financing semi truck acquisitions.

Lender # of Loans Approved Average Loan Amount
Live Oak Banking Company 2,517 $1,505,822
The Huntington National Bank 742 $721,289
Celtic Bank Corporation 531 $1,485,988
Hanmi Bank 490 $808,823
Byline Bank 457 $1,421,825
Stearns Bank National Association 441 $449,747
Wells Fargo Bank, National Association 424 $734,480
Bank of Hope 382 $666,630
Umpqua Bank 355 $870,077
United Midwest Savings Bank, National Association 354 $1,283,279

Top SBA Lenders for a Semi Truck Business Start Up

If you're planning to start a semi-truck business, The Huntington National Bank has been a prominent SBA lender. They've approved 3,658 loans for semi-truck startups, with an average loan amount of $277,658.

Resource: See the Top SBA Lenders for Startups in all Industries

Below, you'll find the top 10 SBA lenders for financing semi-truck business startups based on the provided data.

Lender # of Loans Approved Average Loan Amount
The Huntington National Bank 3,658 $277,658
United Midwest Savings Bank, National Association 2,836 $141,167
Manufacturers and Traders Trust Company 1,055 $185,275
Stearns Bank National Association 1,035 $288,484
KeyBank National Association 847 $473,961
Wells Fargo Bank, National Association 689 $726,707
Live Oak Banking Company 629 $1,627,923
United Community Bank 560 $632,286
Cadence Bank 538 $543,807
Citizens Bank 507 $537,252

Resource: Find an SBA Lender that is the perfect fit for your situation

What is an SBA Loan? 

An SBA loan is a type of business loan guaranteed or supported by the U.S. Small Business Administration, a government agency dedicated to supporting entrepreneurs and small businesses.

A Brief Overview of the Small Business Administration (SBA)

Founded in 1953, the Small Business Administration, commonly referred to as the SBA, is an independent agency of the U.S. federal government. Its primary mission? To aid, counsel, and protect the interests of small business owners. By doing so, the SBA plays a pivotal role in strengthening the nation's economy, ensuring small businesses get the necessary support they need to grow and thrive.

Introduction to SBA Loans

While the SBA offers a myriad of resources, one of its most recognized offerings is the SBA loan program. Unlike traditional lenders, where funds are directly provided by the bank or institution, the SBA acts as a guarantor. This means the SBA promises to cover a portion of the loan if the borrower defaults. This guarantee reduces the risk for lenders, making them more inclined to offer favorable terms and conditions to small businesses. As a result, many businesses that might find it challenging to secure traditional financing often find success with SBA-backed loans.

Types of SBA Loans and Their Benefits

The SBA offers a variety of loan programs, each tailored to cater to different business needs:

  • 7(a) Loan Program: The most popular and versatile, 7(a) loans can be used for a broad range of purposes, including working capital, equipment purchases, and even real estate.
  • CDC/504 Loan Program: Ideal for businesses looking to make significant capital investments, like purchasing land or heavy machinery. This loan combines lender financing with CDC (Certified Development Company) financing, backed by the SBA.
  • Microloan Program: Designed for smaller capital needs, Microloans are perfect for startups or businesses looking to expand on a smaller scale.
  • Disaster Loans: These are specifically for businesses and homeowners recovering from declared disasters.

Each of these loan types comes with its own set of benefits, from low-interest rates and long repayment terms to smaller down payments and flexible fund usage. They're designed to empower small businesses, allowing them the financial breathing room they need to navigate the often tumultuous world of entrepreneurship.

Why consider an SBA loan to buy a semi truck? 

Opting for an SBA loan to purchase a semi truck can offer several compelling benefits for owner-operators and small trucking businesses. Here are some reasons why considering an SBA loan for this purpose makes sense:

  • Favorable Terms and Interest Rates: Due to the SBA's partial guarantee, lenders often provide more advantageous terms and lower interest rates than those found in conventional loans. This can translate into lower monthly payments and extended repayment periods, making the cost of financing more manageable.
  • Higher Loan Amounts: SBA loans often come with higher lending limits, ensuring that owner-operators can cover the full cost of a new or used semi truck, including any additional equipment or upgrades required.
  • Flexible Collateral Requirements: While a semi truck can serve as collateral, the SBA's guarantee often provides lenders with additional reassurance. As a result, some lenders may have more lenient or flexible collateral requirements.
  • Extended Repayment Periods: SBA loans typically come with longer repayment terms, allowing owner-operators more time to pay back the loan. This can ease the financial burden, especially in the initial years when businesses are still stabilizing or expanding.
  • Use of Funds: While the primary purpose is to purchase a semi truck, the broad use-of-proceeds allowance in many SBA loan programs may enable borrowers to also use funds for related needs, such as initial maintenance, insurance, or even hiring.
  • Support and Counseling: The SBA doesn't just offer loans. Borrowers can also benefit from the agency's array of counseling services, training, and resources, all designed to ensure the success and sustainability of small businesses.

You might decide to finance the purchase of your truck through a truck dealer or directly from the manufacturer, but there could still be a need for an SBA loan to help cover working capital. 

Using an SBA loan for working capital for a trucking company

Trucking companies also have a need for working capital, and an SBA loan can be a good fit for working capital. In the context of a trucking business, working capital has some specific connotations.

  • Operational Expenses: For a trucking business, working capital ensures smooth day-to-day operations. It can cover expenses such as fuel, maintenance, repairs, and salaries for drivers and support staff.
  • Fuel Costs: One of the most significant expenses for a trucking company is fuel. Given the fluctuations in fuel prices, it's essential to have adequate working capital to manage potential price surges.
  • Equipment Maintenance and Repairs: Trucks require regular maintenance, and unexpected breakdowns can be costly. Working capital provides the liquidity to cover these costs without disrupting business operations.
  • Licenses and Permits: Operating in the trucking industry requires various licenses and permits, which may need annual renewals. Adequate working capital ensures that these essential licenses and permits can be renewed promptly, avoiding potential operational halts.
  • Insurance Premiums: Trucking businesses need multiple insurance policies, including vehicle, cargo, and liability insurance. Working capital can be used to cover these premiums, especially if they have significant lump sum payments.
  • Account Receivables Gap: In the trucking industry, there's often a gap between when services are provided and when clients make payments. Working capital helps bridge this gap, allowing businesses to continue operations even if clients are late with their payments.
  • Seasonal Demands: Some periods, like the holiday season, might see a spike in demand for trucking services. Working capital allows businesses to ramp up their operations during these times, meeting increased demand by perhaps hiring additional temporary drivers or renting extra vehicles.
  • Contingency: The trucking industry can be unpredictable. Road accidents, severe weather conditions, or even global events can disrupt operations. Working capital serves as a safety net, allowing businesses to weather unforeseen challenges.

Eligibility requirements for SBA loans as a semi truck owner operator

Securing an SBA loan as a semi-truck owner-operator requires meeting certain eligibility criteria. While the specific requirements can vary based on the type of SBA loan and the lending institution, here are some general eligibility requirements for SBA loans in the context of a semi-truck owner-operator:

  • Size Standards: The business must meet the SBA's size standards for a small business, which typically considers factors like annual revenue and the number of employees.  A single owner operator should have no trouble meeting this requirement. 
  • Profit Motive: The business should be a for-profit venture. Non-profit entities typically don't qualify for SBA loans.
  • Business Location: The business must operate in the United States or its territories.
  • Invested Equity: Owner-operators should have invested their time or money into the business, indicating they have a personal stake in the business's success.
  • Loan Usage: The loan proceeds must be used for a sound business purpose. In the context of a semi-truck owner-operator, this would typically mean purchasing or repairing trucks, but it could also include working capital, refinancing existing debt, or other operational needs.
  • Repayment Ability: The owner-operator must demonstrate the ability to repay the loan. Lenders will typically assess this through a combination of credit history, financial statements, and projected financials. You can demonstrate your ability to repay with this trucking financial projection template
  • Credit History: Both personal and business credit histories are considered. While perfect credit isn't always necessary, a decent credit score and a history of timely debt repayment can improve chances of approval.
  • Collateral: Depending on the loan amount and type, the SBA and the lender might require collateral. For semi-truck owner-operators, the truck itself often serves as collateral, but other business or personal assets might also be considered.
  • Specific Business Plan: Lenders often require a detailed business plan, especially for startups or when the loan is intended for expansion. This plan should outline the purpose of the loan, projected revenues, and a strategy for repayment.  Check out our free trucking business plan template
  • No Defaults: The borrower should not have any past defaults on government-backed loans. This would include student loans, or past SBA loans. 
  • Legal Considerations: The business should be legally registered and must operate legally. Additionally, there shouldn't be any legal issues that could jeopardize the business's ability to repay the loan.

SBA loan application process

The SBA loan application process, while comprehensive, is straightforward. The process can vary slightly depending on the lending institution and the specific SBA loan program. However, the general steps in the typical SBA loan application process are as follows:

  1. Determine Eligibility: Before diving into the application process, ensure that both you and your business meet the SBA’s criteria for the loan program you're interested in. This involves ensuring you meet the SBA's definition of a small business, and your business is a for-profit venture located in the U.S.
  2. Choose an SBA Loan Program: The SBA offers various loan programs, such as the 7(a) program, CDC/504, and the Microloan program. Select the one that best aligns with your business needs.
  3. Select a Lender: While some businesses approach the SBA directly, most go through a bank or a specialized lending institution. The SBA has a network of approved lenders. It might be beneficial to work with one of these approved lenders as they are familiar with the SBA loan application process.
  4. Prepare Necessary Documentation:
  • Business Plan: A detailed plan outlining the purpose of the loan, business goals, revenue projections, and strategies for repayment.
  • Financial Statements: This includes both personal and business financial statements, profit and loss statements, and cash flow projections.
  • Personal Background and Financial Statement: Information about personal assets, debts, credit history, and other financial details.
  • Business License and Registration: To prove the business is legal.
  • Income Tax Returns: Typically, the last three years of business and personal tax returns.
  • Resumes: For the main business owners or managers.
  • Loan Application History: Information on any loans the business has applied for in the past.
  1. Fill Out the SBA Loan Application Form: This form will ask for details about the business, the owners, financial details, and the purpose of the loan.
  2. Collateral: Determine what you will offer as collateral. For many businesses, it might be the assets they plan to purchase with the loan. For others, it could be existing business assets or even personal assets.
  3. Submission & Review: After gathering all the necessary documentation and completing the application, submit everything to your chosen lender. The lender will review your application, which may involve additional questions or requests for further documentation.
  4. Loan Processing: Once the lender approves, they will forward your application and their decision to the SBA. The SBA will then review the application. If the SBA approves, they'll guarantee a portion of the loan.
  5. Approval & Terms: After the SBA review, if everything is in order, you'll receive a formal offer, which will detail the terms and conditions of the loan.
  6. Loan Closing: If you accept the terms, the next step is the loan closing. You might need to provide additional documents, such as a bill of sale or lease agreement. Once all paperwork is complete, you'll receive the loan amount.
  7. Repayment: Adhere to the repayment schedule as outlined in your loan agreement. Timely repayments can bolster your credit and create opportunities for future financing.

SBA resources for owner operators

The SBA also supports a number of SBA resource partners that can provide support to your trucking business.  The SBA Resource Partners include:

  • Small Business Development Centers (SBDCs): These provide a wide range of business advisory and training services. This includes drafting business plans, navigating regulations, and management techniques.
  • SCORE: Formerly known as the Service Corps of Retired Executives, SCORE is a nonprofit that pairs entrepreneurs with mentorship. You can get free or low-cost advice from experienced business professionals.
  • Women’s Business Centers (WBCs): These centers support female entrepreneurs, but many of their resources and training events are open to all.
  • Veterans Business Outreach Centers (VBOCs): For veterans transitioning to the business world, VBOCs offer training, mentoring, and referrals.

If you need any help with your SBA loan application for your trucking business, we would love to help!  Check out our Trucking Business Plan Template and Trucking Financial Forecast Spreadsheet and please reach out if we can help at all! 

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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