Lately we’ve been receiving more and more calls from first-time semi truck buyers looking to finance a class 8 truck (semi-truck/tractor trailer) that do not hold a CDL (commercial driver’s license). Our industry refers to these type of buyers as “investor buyers.” As you might have guessed, there are some programs available for non-CDL business owners. Later in this post we’ll discuss the available programs and what to expect when trying to finance a Class 8 truck without a CDL.
Let’s first discuss why there are more restrictions and less programs available for business owners who don’t have a CDL. When lenders and banks look at a credit package that shows the asset being financed requires a special license, they will always want to know if the business owner(s) holds that special license. In this case, it will be a Class 8 truck and the special license would be the CDL. Some programs even require the business owner to have a specific experience time with the CDL. It’s important to understand which semi truck financing programs are right for you.
Why do lenders and banks have these requirements?
Financing companies are in the business of risk versus reward, the higher the risk the higher the rate and down payment requirement will be. The lower the risk, the better rate and terms that can be offered. The finance company will consider a business owner without a CDL higher risk.
It’s about risk versus reward.
The reasoning behind this is if you could imagine, what happens if the business owner loses his driver? It’s not like the business owner can jump in the truck to make those loads. The business owner would have to find another driver, and how long will that take? How much loss of revenue will there be? Is there a chance of defaulting on the payment?
Even if the business owner holds a CDL, there are some semi truck financing programs that require them to have a certain length of time with the CDL. Obviously, a driver with 5 years CDL experience would be considered lower risk than someone who just obtained their CDL last week.
Semi Truck Financing for Business Owners Without a CDL
Option 1: CDL Driver Guarantee
This option does not require the business owner to hold a CDL; however, they will require the CDL driver to also personally guarantee and sign the finance agreement. This is usually for husband-and-wife team business owners. Sometimes the wife will be the business owner and run the business, paperwork, and coordinate the loads, and the husband will be hired as an employee to do the driving. In this case, the driver is the husband and most likely will have no problem signing the finance agreement. Please note that this might not be a good option for business owners hiring drivers through traditional means.
Option 2: Local Haulers
This option is only for local haulers (under 300 miles) that have been in business for over 5 years. The business owner must have a minimum credit score of 675 and comparable past credit. Down payment for this program can be as little as zero! Yes, nothing down – though there would be admin and doc fees due at closing.
Option 3: In Business for at Least 3 Months
This is a great option for business owners who have been in business for a least 3 months and that have been making some decent income. This program will allow business owners to hire drivers who holds a CDL. So, the actual business owner will not be required to have a CDL. However, this does require the business to be producing income. We will consider the gross deposits for the last 3 months and take the average to qualify the amount financed. This program will not allow sleeper trucks or Over The Road transportation, this is strictly for local hauling trucks. This program will allow for lower credit scores and blemishes. The minimum security deposit for this program is 10%.
Option 4: Two Years, Three Trucks
This option is for business owners who have been in business for a minimum of 2 years and that are operating a minimum fleet of 3 trucks. This program isn’t necessarily just score-driven; we look at both the score and credit history itself. We also will look at comparable past credit. The score we’d like to see is 580, but that’s also assuming there haven’t been any late payments on any account that reports to both personal and business credit. The down payment for this program is a minimum of one month’s payment due at closing.
Option 5: Three Years of Experience
This option is for business owners who might have more challenging credit, and do not hold a CDL. If the business owner can prove they have experience in the industry for a least 3 years their application will be considered. So, a good example would be someone who’s been in the freight brokering industry or dispatching the past 3 years and they are wanting to start their own transportation business. The down payment requirement for this program typically starts at 35%.
Option 6: Bad Credit
This option is for business owners who have very challenging credit and that do not hold a CDL. Even if there was a recent bankruptcy discharged and no credit score, your application will be considered! This program requires the largest down payment of 40-50%. But the turnaround time is fast!
Get Prequalified for Financing a Semi Truck Without a CDL Today!
Please keep in mind that our programs are constantly changing, and the best way to verify if you are eligible for financing is to speak to one of our advisors. It just takes a few minutes to get prequalified over the phone! Ready to get prequalified? Simply call us at 888-615-7623 today!
Financing a Semi Truck Without a CDL | First Capital Business Finance