Key takeaways

  • Equipment loans are a common way to finance a semi truck, but you can use a variety of other loans for a semi truck.
  • SBA loans are designed to help business owners struggling to get conventional financing, which can help them get a semi-truck loan.
  • You can find alternative semi-truck loans from banks, credit unions and fintech lenders.
While semi-truck loans offer an accessible way to finance a crucial piece of your business, the downside to semi-truck loans is that they may not provide the terms or flexibility you need. Fortunately, you’re not limited to an equipment loan as your only financing option.

Make sure to compare multiple types of loans, including semi-truck loans, to see which one provides the best interest rates, repayment terms and loan features.

Term loan

Similar to a semi-truck loan, a business term loan pays a lump-sum amount and is repaid over a set time, such as two or five years. This loan charges a fixed or variable interest rate that gets calculated on the loan amount before each repayment.

The main difference between a semi-truck loan and a term loan is that term loans can be used for a variety of purposes, while semi-truck loans have to be used to buy a semi truck. Semi-truck loans, also known as equipment loans, are nearly always secured by the semi truck as collateral. But term loans can be unsecured or secured. 

An unsecured loan means you won’t have to use collateral to back the loan. It typically comes with higher interest rates and more strict eligibility requirements than a secured loan.

Equipment loan

An equipment loan provides a lump-sum amount for your business to purchase commercial equipment. Repayment terms are fixed, typically ranging from 12 to 60 months.

This loan is similar to a secured term loan because the equipment secures the equipment loan as collateral. The lender can sell the equipment to repay the loan if you get in a tight spot and can’t make repayments.

While semi-truck loans are equipment loans, some direct lenders specialize in financing semi trucks specifically. You can use equipment loans for any business equipment, including semi trucks.

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Bankrate insight
Compare the best equipment lenders to fund your equipment purchase, and see which lender gives you the best loan offer after applying. 

Equipment line of credit

An equipment line of credit is an equipment loan with revolving terms, which means you can borrow against it, repay and borrow again as long as the line of credit remains open. The lender will set the credit limit, the maximum amount that you can borrow, based on your business’s creditworthiness.

Once you draw funds, you may pay a draw fee, and then the repayment term starts. Repayment terms range from six to 18 months for business lines of credit. As you repay the loan, your credit limit resets, and you can borrow again as additional business expenses arise.

An equipment line is different from a traditional business line of credit since the equipment secures the line. This loan works well for business owners that need funds accessible for truck repairs.

SBA loans

An SBA loan is a loan that’s partially guaranteed by the U.S. Small Business Administration and offered through SBA-approved lenders. The SBA guarantees anywhere from 50 percent to 90 percent of the loan amount, depending on the type of loan.

7(a) loans are the most commonly used SBA loan, while 504 loans are designed specifically for equipment purchases.

SBA business lines of credit may also be a solid option since they can give you access to revolving credit, which means that the loan amount replenishes so that you can use it again in the future. SBA business lines of credit can also come as a non-revolving loan.

The SBA also sets lending requirements for businesses to qualify while capping the amount of interest lenders can charge. SBA loans help businesses that don’t qualify for conventional business loans get access to funding.

Equipment leasing

Equipment leasing is a type of financing that lets you rent a semi truck. Leasing often comes with lower upfront costs, such as low-to-no down payments. It may also lower the monthly payments compared to a semi-truck loan, though you’ll want to compare loan and leasing offers to be sure.

The leasing company may also offer maintenance and repairs, helping you get on the road worry-free. You can choose between two types of semi-truck leases:

  • Operating leases let you rent the truck for a set period and then return the truck to the leasing company. You won’t be able to buy the truck at the end of the lease.
  • Capital leases offer business owners the chance to purchase the truck at the end of the lease agreement. The truck is considered a business asset for tax purposes, and lease payments are treated as a debt liability. Owner-operators can take tax deductions for both depreciation and the interest paid on lease payments each year.

Where to find alternatives to semi-truck loans

Owner-operators and transport business owners can turn to both traditional and fintech lenders as a source of financing for their semi truck, even without getting an equipment loan specifically. Here’s what to expect from each type of lender:

Banks and credit unions

Banks and credit unions offer a wide range of loans that small business owners can use to finance a semi truck. These traditional lenders typically offer lower interest rates than online lenders.

Credit unions operate as a not-for-profit entity, which helps to keep interest rates low, though you are required to become a member.

Both banks and credit unions provide in-person support at physical locations and can tailor the loan to fit the borrower’s needs. But they keep tight lending criteria to extend loans only to the most creditworthy borrowers.

Fintech lenders

Fintech lenders are lenders that provide banking and lending products online. They offer streamlined applications and loan approvals but may have limited loan options and customer service.

Fintech lenders often use technology to assess a business’s creditworthiness, including pulling alternative data sources. This allows fintechs to approve businesses with a higher credit risk than traditional lenders would normally turn down.

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Bankrate insight

According to the Federal Reserve Banks’ 2023 Report on Employer Firms based on the 2022 Small Business Credit Survey:

  • 87% of employer firms use a small or large bank for financial services
  • 24% use a nonbank company like a fintech
  • 13% use a credit union

Bottom line

A semi-truck loan may seem like the most straightforward option for financing a semi truck, but it’s not the only option available. You may look at other types of business financing if you don’t qualify for a conventional equipment loan or need additional flexibility for truck repairs. 

The best small business loan will have other right repayment terms, interest rates and other features that your business is looking for.

Frequently asked questions

  • Yes, equipment financing is typically an easier loan to qualify for as a startup than other types of loans in terms of credit history and time in business. Online lenders often approve those with only six months in business, though traditional lenders may require one to two years.
  • Many lenders approve equipment financing for business owners with a fair or poor credit score, such as 550 to 640, though it depends on the lender. Lenders are more likely to accept the additional risk because the loan is secured by the equipment in case of default.
  • Equipment loans typically offer repayment terms from 12 to 60 months, aiming to match the usable life of the equipment. Some lenders extend terms as high as 84 months.