Can You Use Small Business Loans to Buy Commercial Vehicles?
One decision that many business owners hesitate to make is whether to purchase a commercial vehicle. Because they’re uncertain about investing in a vehicle, they continue to use a private car or truck for business travel to make deliveries or pick up supplies. Are you in the same situation?
Undoubtedly, purchasing one or more commercial vehicles may seem too expensive for your budget, and you’re concerned about draining your cash flow. Auto loans are costly, and you must also set aside money to cover maintenance, registration and licensing, and unexpected repairs.
A cheaper solution you may not have considered is to apply for a small business loan. But before we talk about how to use one of these loans to finance a car, let’s identify the benefits of owning a commercial vehicle.
Essential reasons to buy commercial vehicles
Commercial vehicles are heavier and designed to haul goods, passengers, and supplies. Because they usually are wider and have powerful engines, they can carry hefty cargo or transport 9 to 16 or more people at one time.
When deciding on which type of commercial vehicle to buy, you can choose a commercial car, SUV, truck, or van most suited for your type of business.
For instance, a building contractor needs a large vehicle to haul tools and construction materials or pull a trailer. In comparison, a courier service needs space to transport packages and documents.
If you routinely travel between client locations, a smaller commercial car doesn’t cost as much to operate as a large van or truck. There’s enough space to carry small cargo, and most cars are designed for towing a small trailer. Some commercial vehicles are even available as station wagons or have folding seats that lay down flat to provide more storage.
Another reason you may be thinking about getting a commercial vehicle is because there isn’t enough room in a standard vehicle.
Employees may complain that there’s limited space to stock tools, and they waste time looking for misplaced items. Likewise, personal vehicles aren’t designed to include organization shelves and don’t have sufficient space to transport ladders and heavy-duty equipment like power washers or generators.
Employees are most likely unhappy about using their personal cars to carry out business activities for you even though they’re reimbursed for mileage. No one likes extra wear and tear on their vehicles which contributes to replacing a vehicle sooner.
Additionally, you can take advantage of business tax deductions by purchasing a commercial vehicle. In most situations, business owners can deduct a large portion of the cost of the vehicle in the year it was purchased. You can deduct repair, insurance, and registration costs, loan interest, and other expenses incurred to operate the vehicle.
A commercial vehicle helps your business run smoother because it enables you to be more organized and complete jobs quicker. Plus, you could pay less tax and keep more profits by taking advantage of tax deductions.
You don’t need to transfer items from the trunk of your car to your business office and back again. Likewise, owning this equipment asset communicates to customers that you’re a professional entrepreneur who excels at running a business.
Get the finances your business needs
If obtaining financing is holding you back, there’s no reason to put off getting the vehicle you need to help your business thrive.
As mentioned earlier, look into the benefits of applying for a small business loan. For some lenders, commercial vehicles count as business equipment. Therefore they’ll allow you to use a small business loan to get a car for your company.
You will quickly discover that owning a commercial vehicle is more affordable than you think. How would new and better vehicles help your business? Is a small business loan the tool you need to achieve that future?