SBA Commercial Vehicle Loans: The Essential Guide

SBA Commercial Vehicle Loans - A confident small business owner stands proudly in front of a newly acquired commercial vehicle, symbolizing the benefits of SBA commercial vehicle loans as a financing solution for business growth. This image represents the potential for success in the trucking industry, showcasing the importance of sound business purposes and competitive rates in financing options.

Key Takeaways:

  • 🚚 Loan Types: SBA 7(a) covers most vehicles (trucks, vans, semi-trucks); SBA 504 works only for heavy‑equipment vehicles (e.g., cement mixers, dump trucks).
  • 📉 Loan Size & Terms: Up to $5 million; 7(a) has up to 10‑year terms for vehicles, variable/fixed rates; 504 loans offer longer terms.
  • 💲 Down Payment & Guarantee: Typically 10–20% down; the SBA guarantees 75–85%, with the lender providing the rest with borrower equity.
  • 🧩 Pros: Low interest, long terms, asset secures loan, builds business credit via bureau reporting.
  • Cons: Lengthy & paperwork-heavy approval process, strict credit/revenue requirements, personal guarantee often required.
  • Qualification Needs: Good–excellent credit (≈650+), ≥2 years in business, ≥$360k/year revenue, US‑based operation.
  • 🛠️ Application Steps: Check eligibility → gather docs (licenses, statements, financials, vehicle invoice) → apply → wait ~3–5 weeks for approval.
  • ⚖️Alternatives: Non‑SBA equipment loans (1–10 yr terms, faster approval in days, lower entry thresholds: credit 600+, 1 yr business, $250k+ revenue).

Many small businesses need to purchase a commercial vehicle or a fleet of vehicles. You might need commercial vehicles as part of your primary business function, such as a semi-truck for a trucking company. Or you might need vehicles to support operations, such as delivery trucks for a wholesaler.

Regardless of the business purpose, one thing all commercial vehicles have in common is a high price tag. Those costs increase even further for specialty vehicles, such as food trucks or heavy equipment used in construction.

Most businesses lack the liquidity to purchase or repair expensive vehicles. Fortunately, you can potentially use SBA loans for commercial vehicle purchases.

However, these loans are challenging to qualify for and can take a considerable amount of time to fund. We can help you determine if an SBA commercial vehicle loan is right for your business by covering how they work, the qualifications, and the pros and cons.

Specifically, we’ll answer these questions and more:

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    What are SBA Commercial Vehicle Loans?

    The SBA does not offer a dedicated commercial vehicle loan; however, you can use SBA loans to purchase or repair commercial vehicles. You can also use the loans for working capital to support a trucking or transportation company. Participating lenders offer SBA commercial vehicle loans and are partially guaranteed by the U.S. Small Business Administration (SBA).

    Commercial vehicle loans fall under the umbrella of equipment financing. Borrowers can use SBA loans to finance an entire fleet of vehicles or multiple large construction vehicles simultaneously. The most commonly used SBA loan for equipment financing is the SBA 7(a) loan. You can purchase heavy machinery and other fixed-asset equipment with an SBA 504 loan.

    Small Business Administration (SBA) Loans

    SBA

    The US Small Business Administration is a federal government agency that provides various services for the nation’s small business community. One of its primary tasks is administering the SBA loan program.

    Small business owners cannot apply directly to the SBA for a loan. Instead, the SBA maintains a network of lenders it qualifies to offer the loans. You must apply to an SBA-approved lender.

    The SBA sets rules for lenders to follow, caps the interest rates and fees lenders can charge, and partially guarantees SBA loans up to 85%. With backing from the federal government, lenders can offer higher borrowing amounts at low interest rates and extended repayment terms. Many consider SBA loans the “gold standard” of small business financing.

    How do SBA Commercial Vehicle Loans work?

    As stated, the primary SBA loan to purchase commercial vehicles is the 7(a) loan. However, some businesses can use a 504 loan to buy certain types of heavy equipment, such as construction vehicles and semi-trucks. The average interest rate on commercial vehicle loans ranges from 4% to 12%.

    Let’s look at how each loan works.

    Standard 7(a) Loan

    • Maximum Loan Amount: $5 million.

    • SBA Guarantee: Up to 85%.

    • Terms: Up to 25 years for real estate; 10 years for other purposes.

    Small businesses can use the 7(a) loan for various business purposes, including purchasing equipment, funding working capital, purchasing commercial real estate, and business expansion. The SBA guarantees 85% of loans up to $150,000 and 75% of loans exceeding $150,000. Loan funds can’t pay for personal expenses. SBA 7(a) loans can be utilized for refinancing existing business debt to lower interest rates or improve cash flow.

    When you use this loan for equipment financing, including commercial vehicles, the equipment is the collateral. This is known as a self-collateralized loan, which is similar to a consumer car loan. SBA 7(a) equipment financing mostly comes in the form of term loans. However, some SBA funding is available as revolving credit.

    The lender holds a lien on the vehicle title until the loan is paid off. You’ll have fixed monthly payments that include the principal, interest, and fees.

    The vehicle you’re purchasing must have a genuine business purpose and be used by the business at least 51% of the time. Examples of vehicles you can buy include:

    • Cars for business purposes.

    • Delivery trucks.

    • Construction vehicles (bulldozers, backhoes, cement mixers, etc.)

    • Semi-trucks.

    • Vocational vehicles (dump trucks, tow trucks, etc.)

    • Transportation vehicles (vans, buses, etc.)

    Most lenders require a down payment of between 10% and 20%. Additionally, the SBA requires the lender to provide capital for the loan. In this way, all three parties – the borrower, the SBA, and the lender – share some risk with the loan.

    This completes the three components of the loan as defined by the SBA:

    • The Equity Injection: What the SBA calls the down payment.

    • The SBA-Guaranteed Loan Portion: Anywhere from 50%-90% of the loan.

    • The Bank Loan: The loan portion that the SBA doesn’t guarantee.

    Variable Interest Rates

    For loans with a maturity under 7 years:

    • $0-$25,000: Prime rate + 4.25%

    • $25,001-$50,000: Prime rate + 3.25%

    • $50,001 or above: Prime rate + 2.25%

    For loans with a maturity of over 7 years:

    • $0-$25,000: Prime rate + 4.75%.

    • $25,001-$50,000: Prime rate + 3.75%.

    • $50,001 or above: Prime rate + 2.75%.

    Fixed Interest Rates

    • $0-$25,000: Prime rate + 8%.

    • $25,001-$50,000: Prime rate + 7%.

    • $50,001-$250,000: Prime rate + 6%.

    • Over $250,000: Prime rate + 5%.

    SBA 504 Loans – Heavy Equipment Only

    • Maximum Loan Amount: $5 million or $5.5 million for special projects.

    • SBA Guarantee: Up to 85%.

    • Terms: Up to 25 years for real estate; 10 years for other purposes.

    For the most part, businesses cannot use SBA 504 loans to purchase commercial vehicles, even if they’re buying a fleet. The only exceptions are vehicles that qualify as heavy equipment.

    Examples of heavy equipment vehicles include:

    • Cement trucks.

    • Dump trucks.

    • Custom-built heavy trucks.

    • Semis and tanker trailer trucks for the trucking industry.

    SBA 504 loans – or CDC/504 loans – are a specialized subset of the SBA loan program that provides long-term financing to purchase commercial real estate and other significant fixed assets that promote business growth. 504 loans also require working with Certified Development Companies (CDCs) and a third-party lender (TPL) to process the application and receive funding.

    CDCs are the SBA’s community-based partners that regulate nonprofits and promote economic development within their communities. Small businesses partner with CDCs to obtain funding for long-term significant fixed assets that encourage job creation and business growth.

    Loan amounts range from $125,000 to $5 million. Loans can go up to $5.5 million for special energy projects, but cannot exceed $16.5 million for three such projects.

    Repayment terms range from 10 to 25 years. In standard 504 loans, the funding breakdown goes as follows:

    • 40% of the loan funds come from the CDC.

    • 50% of the loan funds come from the private lender.

    • 10% down payment from the borrower.

    Examples of how borrowers can use the funds include the purchase or construction of:

    • New facilities.

    • Equipment and machinery for long-term use.

    • An existing building, land, or other fixed assets.

    What are the advantages of SBA Commercial Vehicle Loans?

    SBA financing options can provide up to $5 million to purchase a commercial vehicle or a fleet of vehicles. Borrowers get low interest rates and extended repayment terms. An SBA 7(a) loan can provide the money needed for truck repairs, accidents, or driver overtime.

    SBA lenders report on-time loan payments to the major business credit bureaus: Experian, Equifax, and Dun & Bradstreet. Successfully paying your loan will help build your business credit, making it easier to secure financing in the future.

    The low interest rate and long repayment terms mean your monthly payments are lower than most loan structures. This helps ensure that you maintain a strong cash flow throughout the life of the loan.

    Many SBA loans require collateral. The SBA requires lenders to collateralize loans over $350k to the “maximum extent possible.” Some businesses might struggle to provide collateral for working capital loans, but with equipment financing, the equipment serves as collateral.

    What are the disadvantages of SBA Commercial Vehicle Loans?

    The most significant disadvantage is the difficulty in getting approved. While you might assume that partially guaranteed loans are easier to qualify for, and it’s a logical assumption, the truth is often the opposite.

    Since the SBA doesn’t provide concrete qualifications, lenders can set their own standards, and some are more stringent than others. For example, commercial banks and credit unions tend to be more biased toward established companies.

    The loan application process for most SBA loans also requires a lot of patience and having enough runway to wait for approval. Aspiring applicants might wait weeks to get a determination on whether the SBA will guarantee the loan.

    It’s common to meet with several lenders and submit multiple applications. Some lenders may advise applicants to try again in a year once their finances have improved.

    Another disadvantage is the down payment. Borrowers must provide 10% to 20% of the vehicle or fleet cost upfront. The SBA approval process typically takes between 1 and 3 months on average.

    Pros & Cons

    Pros:

    • Small businesses can get up to $5 million for commercial vehicle or fleet purchases.

    • Low interest rates with long repayment terms.

    • The vehicle or equipment you’re financing is the collateral for the loan.

    • Low monthly payments in most cases.

    Cons:

    • Lengthy application and approval process.

    • Large amounts of paperwork.

    • Almost always requires a personal guarantee & down payment.

    • Requires good to excellent credit.

    How do I qualify for an SBA Commercial Vehicle Loan?

    The SBA sets specific requirements for borrowers, and each lender may also impose additional requirements. In general, businesses require good to excellent credit, a healthy cash flow, at least two years of operation, and substantial annual revenue. Lenders typically require collateral for longer-term financing, such as SBA loans.

    Approved businesses that UCS works with usually meet these minimum requirements:

    • Credit score of 650+ (some lenders say 680+).

    • $360k in annual revenue.

    • Two+ years in business.

    In addition, the SBA requires applicant businesses to:

    • The business must be a for-profit small business to qualify for SBA loans.

    • Do business and be physically located in the US or its territories.

    • Have invested personal time and money in the business.

    • Exhaust all other financing options (SBA loans are “last resort financing.”)

    How do I apply for an SBA Commercial Vehicle Loan?

    United Capital Source can help you apply to an SBA lender following these steps.

    Step 1: Ensure You Qualify

    You’ll need a credit score between 650 and 700 and a healthy, consistent cash flow. You’ll need a detailed plan of how the equipment purchase will help you invest in and grow the business.

    Step 2: Gather Your Documents

    Be prepared to provide:

    • The invoice for the commercial vehicle or fleet of vehicles.

    • Driver’s License.

    • Business license or certificate.

    • Voided Business Check (for business bank account information).

    • Bank Statements.

    • Credit Report/Statement of Personal Credit History.

    • Business Tax Returns.

    • Credit Card Processing Statements.

    • Personal Tax Returns – 3 Years.

    • Business Tax Returns – 3 Years.

    • Business Plan (Not in all cases).

    • Personal Financial Statement.

    • List of Real Estate Owned or Business leases, if applicable.

    • Business Debt Schedule/Loan/Rent/Lease Documentation

    • Deeds/Title/Ownership documentation for any collateral/Security

    • Current Profit & Loss Statements and Balance Sheet Year-to-Date

    • A/R and A/P Reports

    • United Capital Source 1 Page Application

    Step 3: Fill Out the Application

    You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.

    Step 4: Speak to a Representative

    Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about surprises or hidden fees during repayment.

    Step 5: Receive Approval

    SBA Loans through our network generally take 3-5 weeks to process. Once your file is approved and closed, the lender will send the funds to the equipment vendor to purchase the commercial vehicle(s).

    Frequently Asked Questions

    Here are the most common questions about SBA commercial vehicle loans.

    Can trucking and transport companies use SBA loans?

    Yes, SBA loans are an excellent way for companies in the trucking and transport industry to acquire vehicles, equipment, and working capital to support and grow operations. SBA loan proceeds can be used for commercial truck loans to purchase new and used vehicles.

    However, your trucking company must meet the SBA’s size standards to qualify as a small business. Fortunately, the SBA provides a convenient Standards Tool to help you determine if you’re eligible.

    Trucking companies can utilize SBA 7(a) loans to finance trucks and trailers, thereby providing the necessary cash flow for their operations. Trucking companies can utilize SBA 7(a) loans to purchase competitors, acquiring their assets and routes.

    Can I purchase a Commercial Vehicle with an SBA 504 loan?

    Most small businesses are unable to purchase commercial vehicles with an SBA 504 loan. The only exceptions are if the vehicle qualifies as heavy equipment. For example, a trucking business might be able to use a 504 loan to purchase a tractor-trailer.

    What are my alternatives to SBA Commercial Vehicle Loans?

    While SBA loans are arguably the most advantageous small business loans on the market, many options exist outside the program. Many traditional and online lenders provide equipment financing, which you can use to purchase vehicles. While SBA loans offer the lowest interest rates, many small business loans offer competitive interest rates.

    Equipment Financing

    Equipment financing provides the necessary cash flow for new businesses to seize opportunities or tackle unexpected emergencies. Equipment financing through UCS’s network of lenders offers the following features:

    • Funding amounts: Up to $5 million per piece of equipment.

    • Factor rates: Starting at 3.5%.

    • Terms: 1-10 years.

    • Speed: 3 -10 business days.

    Obtaining a non-SBA equipment loan for a commercial vehicle purchase may also be more accessible. Approved businesses we work with typically meet the following minimums:

    • Credit score: 600+.

    • Time in business: 1 year+.

    • Annual revenue: $250k+.

    Freight Factoring & Asset-Based Loans

    Trucking businesses often face payment terms from clients that can cause cash flow challenges. Freight factoring allows trucking companies to receive immediate payment on their invoices. This financing solution is a type of accounts receivable factoring tailored specifically to trucking entrepreneurs in the transportation industry. Freight factoring is beneficial for covering weekly expenses such as fuel and payroll.

    Asset-based loans allow trucking companies to secure a revolving line of credit using their assets as collateral. Asset-based funding typically comes in the form of fixed-rate loans.

    Other Small Business Loans

    There are also a variety of other small business loans you could potentially use for commercial equipment or other business purposes. You might be interested in one of the following small business loans for trucking or other businesses:

    SBA Commercial Vehicle Loan – Final Thoughts

    A truck driver stands proudly in front of their semi-truck, having successfully secured an SBA commercial vehicle loan to finance their business. This financing solution supports their trucking company, helping to manage associated costs and improve cash flow for day-to-day operations.

    SBA loans provide some of the lowest-cost financing available for small businesses. You can use SBA 7(a) loan funds for most business purposes, including equipment financing and the purchase of commercial vehicles. Most lenders also let you purchase used vehicles if they’re in good working condition.

    The drawback to the loan program is that it can be challenging to qualify. While SBA loan qualifications are often not as strict as bank or credit union qualifications, they’re much more challenging to qualify for than alternative business loans.

    Even so, it would be worth applying if you think you might qualify. If not, alternative equipment loans are available to purchase commercial vehicles.

    Contact us if you have further questions about SBA commercial vehicle loans or would like to apply for a small business loan. Our loan executives can help you find the best funding options for your commercial vehicle needs.

    We will help you grow your small business.

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