Commercial Fleet Financing For Small Businesses: What Are Your Options?

Loan application form with pen on paper / financial loan negotia

As a small business owner, you require several resources to run your business. One such resource is vehicles. Vehicles will help you deliver goods and services to your clients efficiently.

Acquiring one or two company vehicles is often not challenging. But suppose you’re in the transport industry and require an entire fleet to meet your needs. How will you acquire all these?

Here’s where financing becomes the ideal option. It entails raising funds to meet certain needs. What financing options do you have for your commercial fleet? Here are some options to consider:

TRAC LeaseFleet of white commercial transportation trucks parked in a row

Terminal Rental Adjustment Clause (TRAC) leases allow you to adjust the payment length, terms, and residuals while the lease is active.

Regarding the payment terms, you can opt for lower monthly payments and a bigger residual. You can also opt for the reverse. Residual refers to the unpaid amount at the end of your payment period that monthly payments don’t cover.

On the other hand, you can decide to alter the lease length. After you’ve attained the minimum term length, you can opt to cancel the lease.

TRAC is an ideal automotive financing for businesses aiming to lease rather than buy commercial fleets. However, it’s possible to change your mind and opt to buy the fleet. All you need to do is pay the lease’s residual.

When planning to get a TRAC lease, find a lessor offering this financing option and get the relevant documents ready. These documents are bank statements, identification, and tax returns. Having these beforehand makes the process faster and smoother.


A loan is a money you borrow from a financial institution or a third party. The bottom line is that you’ll refund the money within an agreed period and at an interest rate. In this case, you’ll acquire a loan to buy your desired commercial fleet.

Although not common, you might require placing a downpayment before commencing the interval payments. Inquire with your lender about this.

With loans, you can opt for short or long-term ones. The difference arises with the repayment period. Short-term ones require repayment at least within a year while you can repay long-term ones over a long period.

Before applying for a loan, ensure you can repay the money within the said period. It’s also best to be comfortable with the interest rates.

Equipment Financing

Equipment financing is a loan you acquire to purchase any asset that’ll aid in running your operations. Commercial fleet falls under company assets, making this financing option ideal.

When acquiring equipment financing, you must have collateral to secure the loan. The fleet you are to acquire will act as collateral. Should you fail to pay the loan as agreed, the lender will seize the equipment you bought.

Before seeking equipment financing, identify the fleet you want to buy and the vendor from whom you’ll source. Doing this is crucial because most equipment financing lenders will pay the vendor directly.

It’s important to note that most lenders won’t pay for the entire fleet price. They’ll require you to pay a given percentage, often between 10 and 20%—they’ll pay the remaining. Therefore, it’d help to find a lender whose upfront costs you can afford. 

Sale And Leaseback Financing

Sale and leaseback financing doesn’t work like other options. Here, there’s no borrowing of money—you’ll sell an asset you own instead. The sale will give you cash to acquire your commercial fleet. However, you still need to use the asset you sold. Therefore, you’ll lease it back from the new owner and continue using it.

Seeking sale and leaseback financing is the best option if you aren’t in a position to get money to repay a loan.

Auction Line Of Credit

A line of credit refers to a borrowing limit that’s preset, which you can use at any time as long as you don’t exceed the limit.

There are many ways you can acquire your commercial fleet. You can buy from a physical shop or an auction. Suppose you opt for the latter and your desired fleet is on auction. You can acquire the fleet if approved for an auction line of credit. You’ll get a letter to prove the approval from a financial institution.

With the approval, bid for the fleet within your limit. Should you win, the financial institution will pay the auctioning company.


You have several options to finance your commercial fleet. Each option is viable—it all depends on your circumstances. It’d help to understand how each works and gauge whether it’s the best solution for your financing needs. Seeking expert advice will come in handy.

All in all, choose a financing option whose terms and conditions you’re okay with, both in the short and long term.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.