The limousine business is booming currently. According to Manta, there are over 32,000 limousine services just in the United States alone. This is mainly because of the need for affordable transportation options for millions of travelers, entertainers, and people celebrating important milestones. Many limousine operators started out with just a single limo, but as business picked up, they’ve had to expand their fleets to keep up with client demands. It’s not uncommon for a limo company to have dozens of vehicles, all requiring special maintenance, drivers, and secure parking facilities. Then there is all that gas that keeps things moving 24/7. It can get expensive to say the least.
SMALL BUSINESS LOANS FOR LIMO OPERATORS
One of the many ways that limo operators stay afloat is by taking out small business loans for limousine services to pay for the expenses of maintaining a quality fleet of limos and vans, special licenses and insurance, plus employees to keep operations running smoothly. But when things aren’t as busy, it’s easy to get behind on paying bills and consequently, this can damage any limo operator’s credit history.
REASONS WHY LIMO OPERATORS HAVE TROUBLE GETTING SMALL BUSINESS LOANS
Limousine, Charter, and Tour Magazine advises that there are some common issue with limo business owners, which can get in the way of obtaining a small business loan through traditional means.
NOT PAYING ATTENTION TO THE FINANCIAL PICTURE
It has been said that while the limousine business is like other small businesses, operators are so involved in the day to day aspects of running the business that they sometimes forget to attend to routine financial audits and payables. They may not have a clear picture of profits and loss numbers, due to the way that earnings come in directly through clients and largely through cash sales.
RUNNING A LIMO COMPANY IS UNIQUELY CHALLENGING
It can be very hard to explain to a bank or other financial institution how distinct a limo business can be, which further makes it difficult to obtain a small business loan. It’s typical for a limo or livery service to have most of its equity wrapped up in vehicles, with a rented lot and separate facilities for mechanical support. Sometimes, income is tied up in long term contracts with cities and airports, with payments that can take months to credit.
BANKS MAY SEE LIMO COMPANIES AS TOO RISKY
Even if a limo company has done regular business with a bank for years, it may still be blacklisted from ever being able to obtain more than a few thousand dollars in credit or loans. Banks often have restrictions on the types of industries that they can lend to, based on above-average risk factors. This has been a problem more so since the recession when many limo businesses went under and could not repay their debts.
GET A SMALL BUSINESS LOAN FOR YOUR LIMOUSINE SERVICE
Whether your business has been affected by the economy, or you have just gotten behind in the past, you may think a bad credit score will prevent you from obtaining a small business loan. This is simply not the case. It is possible to expand operations and increase your earnings potential by following this advice.
CONDUCT A FULL FINANCIAL AUDIT
Before you consider any type of financing of your limo business, it’s important to hire a certified public accountant who has experience working with transportation related companies. Conduct a full financial audit of all your records, going back at least seven years. This will help to establish your baseline earnings and profit margins, so you can project your future earnings. In this way, you will have a better picture of how much of a loan you need.
UNDERSTAND YOUR LIMO BUSINESS WORTH
Along with general business financial projections, it’s good to have an idea what your business is worth by today’s values. Limousines lose value over time, so now could also be a good time to upgrade some of your fleet. Evaluate the value of your limo business equipment and furnishings. Consider the value of your clients too, such as how much business it represents in the industry.
PAY DOWN YOUR CURRENT HIGH INTEREST DEBTS
While you are looking for ways to improve your financial portfolio, take the time to review all your debts and focus on paying down those with the highest interest rates. You will also want to make things good with your vendors, so that you can ask for references during the loan application process. The less debt you have and the more current bills are, the better rate you can get in a small business loan.
EXPLORE BAD CREDIT SMALL BUSINESS LOANS
Connect with a reputable financial firm that provides bad credit small business loans, such as United Capital Source. You will be asked a few questions about your business finances and profits, but in most cases you won’t have to have a hard credit inquiry, to protect your current score. Then you will be presented with a few different options, based on your unique business needs.
CONSIDER ALTERNATIVE FUNDING METHODS
Today, there many more options to obtain small business loans, even with bad credit looming in your history. Since you may have large amounts of receivables tied up, you can generally obtain money through special factoring programs. If you accept payments using a point of sale credit card machine, common today with limo companies, you may be able to get a small business loan against credit card sales.
Fortunately, you have the opportunity to continue to offer the outstanding limousine services that you’ve offered to the community for years. Select a small business lender who works with those who have credit challenges to improve your financial picture and expand your fleet this year. United Capital Source has small business loans as unique as your limo service.