Apply for a Loan Today!

An Owner/Operator’s Guide to Financing During a Pandemic

A lot of things are up in the air in light of the COVID-19 pandemic. If your business had just decided to put money down on future investments, or didn’t have much squirreled away to begin with, it can be difficult to trust the market to keep your business going steady—no matter if you’re an independent O/O or a fleet owner.

A survey Overdrive sent out in May found that their readers’ number one concern was freight pricing. Their second biggest concern? Cash flow.

These issues are pretty severely entangled with one other. Recently, we’ve seen some owner/operators in the perfect positions, geographically, start making money hand over fist, whereas other O/Os (only a couple thousand miles away) lost money every day driving half-full or even totally empty trucks. While there is some strategy available to maximize your business success during this uncertain time in freight, there are some problems that won’t budge without a heap of capital behind them.

Below, read our guide on the best ways to find financing during the pandemic.

Start with a PPP Loan If You’re Eligible

Paycheck Protection Program loans from the government’s Small Business Administration are, hands down, one of the most cost-effective ways to finance your business. These loans are designed to help small businesses pay their employees while the economy is slowed due to the coronavirus. As long as you do the proper research and only spend PPP loan funds on designated expenditures, your loan will be entirely forgiven once the term ends.

Unfortunately, these loans don’t always have the best legs. For some employers, a PPP loan will make sure you and your employees keep getting paid, but only for a time period of two to three months. But if your business hasn’t picked back up by that time, what will you do?

Research Private Lenders

If you haven’t been able to get a hold of a PPP loan, or you’re worried about what will happen once that loan runs out, it’s time to start researching and comparing private lenders. Financing is an important part of the job as an independent owner/operator, fleet manager, or truck dealership.

Most people won’t have $40,000 to $100,000 lying around to purchase a new rig for their business outright, and dealerships will always need large amounts of capital to meet the fluctuating demand for different semi tractor-trailer models. As a result, financing purchases has become the norm for O/Os and dealerships alike. While it can be more difficult to find favorable options as a dealership owner, there are plenty of options available to someone looking for private financing for a dealership.

Keep Your Eyes Open for Bad Deals

When financing a new truck, it’s crucial to take the process slowly and read all of the literature given to you by the lender. For the most part, your options as a future owner/operator include either taking an upfront traditional loan to finance your truck, or you can lease a truck for a certain period of time. Often, the comparison between these two options can be where a bad faith lender will try to take advantage of truckers new to the game—so it’s especially important to research which of those options best suits your lifestyle before you ask for cash.

Long leases will generally be more expensive in total than conventional loans, and they’ll leave you with no property to sell at the end of the deal to help recoup what you’ve paid. But if you’re worried about the market or expect to spend only a fixed amount of time in trucking, leasing your truck has the potential to be the most cost-effective option.

If You’re Buying, Save as Much as You Can Ahead of Time

The logic here is simple: Any money you can put down on your truck on Day 1 is money you don’t have to pay interest on. In addition to your credit history, having a large amount of capital on hand can act as collateral and help you get the best possible loan package. Plus, truck costs won’t quit once you’ve got your truck all to yourself. The first months with a new truck will inevitably be filled with small optimizations—technology changes, small additions, and the occasional stylistic upgrade. In order to make your truck the most comfortable and efficient it can be, you’ll need some cash set aside.

Contact a Lender You Can Trust

Always choose a lender with a long history in the business. Mission Financial has been providing truck financing for decades to owner/operators, dealership owners, and even capital to help keep your commercial fleet up and running. Contact us if you still have questions about the best ways to stay afloat throughout the coronavirus pandemic.

How the Freight Industry Is Rebounding in the Wake of the Recession

The American economy took a serious hit in March, April, and May of this year, with unemployment spiking at nearly 15%. This percentage of people left without full employment in America was so large, you’d have to go back 80 years to find a comparable moment of economic strife. Much of the spike is attributed to the coronavirus pandemic, a serious public health crisis that required many industries to slow down or cease operations completely in order to prevent a widespread infection.

Luckily, there’s been good news on the job front. As of early July, unemployment decreased to 11%, indicating roughly 4.8 million people returned to work since the coronavirus pandemic began. This brings the rate of unemployment back in line with some more relatable markers in American history, not too long ago. The recessions of 1983 and 2009 both yielded unemployment rates of roughly 10%, which gives Americans who have lived through past economic downturns a small indication of how things might progress in America moving forward.

Employment in the Freight Industry

Trucking in America has gotten a lot of positive attention from the federal government from the very beginning of the pandemic. Truckers were declared essential workers by the White House with little delay. This kept owner/operators’ jobs secure, to some degree, but also created new challenges for workers in an industry becoming more isolated by the day—with truck stops and highway restaurants shutting down left and right due to the pandemic and necessary practice of social distancing.

The following months were a mixed bag for O/Os, with notable difficulties for freight owners and logistics companies. The American supply chain became severely lopsided overnight, with demand for medical supplies and food products spiking in urban areas, causing full truckloads to enter metropolitan areas at an increased rate, only to find there wasn’t anything to fill their trucks with on the way back out to a factory or distribution center (and we all know how fast you bleed money driving an empty semi-truck). This caused per-mile rates to be wildly inconsistent across different areas of the country, with some O/Os making money hand over fist, and others finding out they’d make more money if they chose not to drive at all.

Good News for Truckers As of July

We’re starting to see a steady rebound in trucking rates all across the country. According to data gathered by DAT Freight & Analytics, Los Angeles and Chicago have continued to improve, with substantial rate increases on nearby high-volume freight lanes.

Note: The rates listed below are averages from the beginning of June, based on actual transactions between carriers, brokers, and shippers.

  • Chicago to Columbus, OH, rose 19 cents to $2.34 per mile
  • Chicago to Detroit gained 15 cents to $2.78
  • Chicago to Allentown, PA, was up 13 cents to $2.32
  • Los Angeles to Denver jumped up another 25 cents to $3.09
  • A. to Seattle climbed up to $2.74

In addition to this good news, there was another increase on the lane from Charlotte, North Carolina, to Buffalo, New York, where the average rate increased by 20 cents to $2.31 per mile.

Prices from Atlanta down into Florida are on the way up as well. Produce season is starting to end in the southern states, so demand has begun to shift away from outbound and back toward inbound traffic. The rate from Atlanta to Lakeland, Florida, was up to $2.41 per mile at the start of June as a result.

Overall, 72 out of the top 100 van lane rates have increased, while 16 others maintained their previous levels. This makes it a great time to be on the road, and gives O/Os good reason to watch rate changes with a sharp eye in order to maximize their route efficiency.

Trucking’s Long Term Trajectory

It’s no secret the freight industry has been seeing troubling signs for a couple years running. Class 8 sales have dipped, and even before COVID-19 there were prominent news outlets writing about the freight industry being in recession.

Press surrounding trucking can be a tricky subject. It’s true transport stocks haven’t been doing well for a long time. The SPDR S&P Transportation ETF is down more than 24% year to date as of June 9, an abysmal return when compared to the S&P 500 and Dow Jones Industrial Average. This ETF is well-diversified, and a commonly used indicator for the health of the freight sector. The holding includes planes, trains, and auto companies. Uber Technologies (UBER) and Lyft (LYFT) are in the ETF now, along with the usual suspects, such as United Parcel Service (UPS), the Union Pacific railroad (UNP), trucking firm J.B. Hunt Transportation Service (JBHT), and JetBlue Airways (JBLU), among others.

While XTN is a good indicator of the transportation industry on the whole, it also includes a healthy percentage of some of the worst performers in 2020 like airlines and rideshare companies, both of which suffered monumental losses as a result of COVID-19.

The trucking industry on the whole hasn’t suffered the same level of constriction that airlines have, and the health of the industry isn’t well measured by the health of public companies. As a matter of fact, more than 95% of carriers have less than five trucks. The country is full of small, independent truck operators, and as long as rates increase, it’s expected they’ll come out just fine.

The bottom line is trucking companies are the lifeblood of America, and there’s no indication the demand for truckers is going to decrease any time soon. If you’re interested in getting started as an owner/operator, contact us at Mission Financial.

How the Payroll Protection Program is Helping Truckers

Photo Credit: Yahoo

The Payroll Protection Program (PPP) is a form of federal relief that was provided to cash-starved small businesses as a response to the economic troubles caused by the COVID-19 pandemic. When the federal government signed the CARES Act into effect at the end of March of this year, it created two immediate forms of financial relief, the first being the Payroll Protection Program, a loan available to smaller businesses that delivers up to 2.5 times the amount of a business’ monthly payroll. PPP loans can be fully forgiven if spent correctly based on the government’s guidelines: payroll, rent, utilities, and mortgage interest payments.

The second form of financial relief presented came in the expanded form of Economic Injury Disaster Loans, which offer up to $2 million with a fixed low interest rate of 3.75%, coupled with a longer repayment period of up to 10 years. This loan requires collateral if the requested amount exceeds $25,000.

If you’re looking to borrow a small amount of money for your business, Payroll Protection Program Loans are superior in every way—as they always have the potential to be entirely forgiven—whereas Economic Injury Disaster Loans can only be forgiven for up to the first $10,000 borrowed, for the rest of the amount to be repaid over the loan period. For the most part, EID loans are primarily directed toward businesses too large to apply for a PPP loan, which means small businesses that qualify for PPP loans should generally pursue that avenue.

How Truckers Can Make the Most of a PPP Loan

While full forgiveness of a PPP loan is an unbelievably sound financial offer, the drawbacks on spending your PPP loan on something outside of the explicitly approved channels aren’t as bad as you might think. According to information found on the U.S. Small Business Association’s website, PPP loans have an interest rate of only 1%, which is beyond competitive when compared to loans you could have found on the private market.

A large part of driving a semi-truck is managing the up-front costs. For most people starting out in the business, it’s unlikely you’ll get seated in a capable machine without having to find additional financial resources somewhere, somehow. The great thing about trucking is that it doesn’t usually take long to start paying off big chunks of your just-starting-out loans, but it’s always a good idea to prioritize paying off those loans as quickly as you can to avoid paying too much additional interest. For some people, paying off your private loan one year earlier can make a four-figure difference in terms of just how much your rig cost to own outright.

This is where the PPP loan can come to the rescue. If you’re experiencing financial hardship, it can be a strong strategy to take out the largest PPP loan you can be approved for and use that to pay your higher interest-rate debts. This is a form of roundabout refinancing that’s legal under the guidelines for PPP loans, and it’s a practice that private lenders have been encountering and actively encouraging for drivers who have fallen into delinquency on their loans.

PPP Loans Across the Country

As more than 95% of freight carrier companies in America consist of fewer than five trucks altogether, it makes sense that PPP loans have been a large part of keeping these small businesses afloat during the economic downturn. The Commercial Carrier Journal compiled data on the subject, finding that around 100,000 trucking companies received funds of all sizes, some of which were in excess of $5 million. Local and long-haul trucking companies received $12 billion total, which is more than 2% of all the capital handed out by banks in the United States under the PPP loan program.

In a CCJ survey conducted in June, more than 60% of the fleets that responded said they had applied for PPP funds, with some carriers describing the money as vital for surviving the  post-pandemic economic landscape. Another recent survey, conducted by Overdrive, of smaller outfits (independent owner/operators and fleets operating no more than nine trucks), found more than 50% claimed to have applied for PPP loans.

In an interview with CCJ, Mike Kucharski the co-owner and vice president of JKC Trucking, the largest refrigerated trucking fleet in the Chicago Metro area, said his business would have endured layoffs without the more than $2 million loan JKC received through the PPC program. Kucharski said he used the money for payroll, a condition that should allow the loan to be forgiven, but he’s not worried even if things don’t go as expected.

“Even if it doesn’t get forgiven,” Kucharski said, “I think the interest rate they’re going to charge us is a pretty good deal.” Either way, he sees it as a win-win situation.

If you have questions about semi-truck financing, come to the experts. Mission Financial has loan officers well-versed in public and private loan practices who can help you make sense of your next best move.

Truck Driver Sun Damage – The Gritty Reality of Decades on the Road

While being a truck driver is one of the highest-paying jobs that doesn’t require a college degree, living the trucker life doesn’t come without challenges. Considering the long hours, and weeks that truckers often spend away from their families, it’s a career path that might not suit everyone equally.

One of the things that many people don’t consider before getting involved in trucking is the effect it might have on your body— your skin to be specific. Reports have surfaced throughout the years that show how dramatic the impact of sun damage can be on a truck driver’s skin..

It’s likely you’ve seen the image that began circulating a couple years ago that showed a truck driver whose face looked very different on his left side compared to his right. The side that faced his window looked almost 10 years older, with heavy wrinkles that had resulted from years and years of damage from the sun.

If you’re a truck driver, there is a significant chance that you’ll have to manage your sun exposure over the course of your career— but just how big of an impact does this exposure have on your overall health?

A Potentially Deadly Illness

In addition to the superficial drawbacks, the trucker tan can cause serious health issues. Ultraviolet (UV) radiation exposure is the leading cause of skin cancer, and it’s easy to get huge doses of UV radiation as a trucker. Research has found skin cancer to be the single most common form of cancer in the United States, with one in five Americans being diagnosed with the condition in their lifetime.

Despite popular belief that the numbers must be higher in southern states, the truth is quite the opposite. Environmental Protection Agency (EPA) data shows that northern states (like Washington, Oregon, and Vermont) have a higher rate of melanoma diagnosis than southern states on the whole. In fact, Texas is one of the states with the lowest number of skin cancer diagnoses per year.

New England Journal of Medicine’s Trucker Photo

To make a point and hopefully give you the incentive to take proper measures to protect yourself from the UV rays, here is the photo mentioned above. It was taken for a New England Journal of Medicine study on dermatoheliosis (aging that results from UV ray exposure). It shows a 69 years old trucker suffering from unilateral dermatoheliosis, the result of his 28 years spent behind the wheel.

Image by New England Journal of Medicine

For U.S. Drivers, the Left Side of the Body Is at Risk

UV exposure in the left arm is five times greater than the right for truck drivers. Exposure on the left side of the face is a staggering 20 times greater than the right. This results in wrinkles, sagging, and brown spots on the left side of the face.

Research also suggests that all types of skin cancer are more prevalent on the left side of the body. About 75% of melanomas are diagnosed on the left side, according to skincancer.net.

Hot or Cold Weather Doesn’t Matter

UV skin damage doesn’t progress only on hot summer days. To understand why that is, it’s important to understand how UV rays function.

There are two types of UV rays: UVA and UVB. The latter causes the skin to tan, but the former, UVA, has much more penetrating power and is the one that causes premature skin aging.

Windows and cloud cover aren’t effective in blocking out UV rays, and when there’s snow on the ground, the UVA rays are reflected by the snow (something skiers should be very familiar with). The information above indicates that drivers need to take measures to protect themselves from permanent skin damage, premature aging, and in the worst case, cancer.

How Do I Avoid UV Radiation Damage as a Truck Driver?

Use Sunscreen

Sunscreen is the go-to way to prevent sun damage to the skin. Sadly, it’s often underutilized by truckers. It’s strongly advised to put a layer of sunscreen on before every trip, whether it is up North or down South. Even though you may not be seeing any significant damage, you risk premature aging and skin cancer in the long run.

Wear Long Sleeve Shirts, Hat, and Sunglasses

When it comes to sun damage, it is all about layers of protection. Wearing clothing that covers more of your body will naturally provide more layers of protection. A long-sleeved shirt is an obvious choice here, but if you do not stand wearing one during the summer, get a sun-protective sleeve for your driving arm.

The same goes for sunglasses – get ones comfortable to wear while offering protection for your eyes.

Keep the Window Up

Many truckers tend to drive with their windows rolled down because it feels refreshing – but it is more dangerous than you thought. It is even more dangerous if you prefer to drive with the arm on the window ledge, as it will be directly exposed to sunlight.

Avoid Driving in Peak Sunlight Hours

If your route allows for driving outside peak hours, we suggest going for it. Peak hours vary from state to state; however, it has generally been taken to be from 10 a.m. to around 2 p.m.

Get Your Windows Tinted

Some types of window films have been proven to offer the same protection as sunscreen. Additionally, tinted windows will keep the temperature lower inside the cab, reduce the glare effect, and provide some additional privacy during sunny days.

However, a disclaimer is in order here: Tinted windows are illegal in some states, so be sure to check the state’s laws before getting your truck windows done. Untinted UV window shields are an alternative option that can be used everywhere, however.

Get Frequent Check-Ups with a Dermatologist

If you’ve been on the road for some time, it’s likely you’ve been affected by UV rays to some degree. The obvious signs are permanent tan lines on your body, tick patches of skin, rapid face aging, freckles, and appearance of moles. Scheduling frequent check-ups at a dermatologist will give you peace of mind and guidance to protect your health and youth.

Final Words

Although trucking has its pros and cons, driver health will always be an issue. Plenty of drivers don’t pay attention to their well-being until it is too late, but that doesn’t have to be your fate. Sun damage is only one of the health issues truckers face every day on the road, and it only takes a little extra effort to increase your quality of life on the job.

Guest post written for Mission Financial by Mile D. from TruckerJobUSA.com


Contact Us
close slider