[dpFund]

As a well seasoned lender, I'd love my colleague's perspective on why so many lenders hate trucking companies. I spoke with one lender last week and his answer was that they find this is one of the verticals where their losses come from, so they stopped lending. I feel the same way about individual restaurants (even though a lot of lenders like them) which is why that is the only thing I will not look at.

I seem to be ending up with a lot of trucking deals coming across my desk, with some that look opportunistic.

What am I missing?

Would love to hear the input of my esteemed colleagues.

Thanks in advance,

Dan Page
dan@fundingstrategypartners.com

[Chambo]

half of these trucking companies only have one or two trucks. If one breaks down, they are toast

[FUNd]

half of these trucking companies only have one or two trucks. If one breaks down, they are toast

Agreed Chambo. And furthermore, many of them are dead set against paying bills on time, or at all. We always have called it 'trucker credit'... they just don't care....

[VFG]

I factor a lot of trucking companies and there are 3 types of companies in the industry:

- brokers: typically don't own trucks. They arrange loads for carriers. These guys typically operate with tops 15% margins. They can open and shut down on a fly since they don't have any skin in the game other than a computer and a phone. Any broker with less than 2 years in operations is high risk.

- carriers: carriers can be broken down into three categories:

1. Small fleet: 1-5 trucks. These guys burn a truck, file a claim with their insurance carrier and close the company and then run and get a new DOT number under a new entity just as fast as changing an underwear.

2. Medium fleet: 5-20 this is where the money is as it's harder for a company to change the entire fleet to another company.

3. Large fleet 20-up: these are home runs, if you fund them, but these are typically ABL prospects.

- the last one are carriers who operate as brokers: they use other people's trucks, however, the trucks run under the carrier's authority.

Happy to share some qualifying questions I use to help you guys determine which companies are good to pursue. Just let me know.

Hope this helps.

[VFG]

Smaller trucking companies tend to default much more given these companies do not collect revenues on a daily basis.

[bdshaw]

Nicly done VFG

[John Galt]

Please share. I have never gotten a trucking company approved.

[John Galt]

Admin, was trying to research sponsor fees but there is only a minimal amount of contact info and you have a really bad typo in your signature (end page). In ad materials. Will call Monday.

[VFG]

John,

Happy to share. Send me your email address and I will get the qualifying questions to you Monday.

[John Galt]

thanks....pmd you.

[John Galt]

Every trucking case I ever had was rejected.

[admin]

Lots of posts have been deleted from this thread. FUNd, stop trolling everyone please.

[cbs]

Finally Sean. I bless you. Not religious , but out of respect.

[dpFund]

I factor a lot of trucking companies and there are 3 types of companies in the industry:

- brokers: typically don't own trucks. They arrange loads for carriers. These guys typically operate with tops 15% margins. They can open and shut down on a fly since they don't have any skin in the game other than a computer and a phone. Any broker with less than 2 years in operations is high risk.

- carriers: carriers can be broken down into three categories:

1. Small fleet: 1-5 trucks. These guys burn a truck, file a claim with their insurance carrier and close the company and then run and get a new DOT number under a new entity just as fast as changing an underwear.

2. Medium fleet: 5-20 this is where the money is as it's harder for a company to change the entire fleet to another company.

3. Large fleet 20-up: these are home runs, if you fund them, but these are typically ABL prospects.

- the last one are carriers who operate as brokers: they use other people's trucks, however, the trucks run under the carrier's authority.

Happy to share some qualifying questions I use to help you guys determine which companies are good to pursue. Just let me know.

Hope this helps.

VFG - Thanks for your thoughtful answer. I have a couple trucking companies right now that claim to have 20-50 trucks each. I tend to see a combination of carriers and brokers, probably leaning toward carriers since they can grow quickly without major capital infusion. These two companies claim to own some trucks and also work with independent contractors (guys who own their own trucks, and haul for them). These companies get their loads from brokers and either haul themselves or sub it out to the independent contractors (as stated above, often a combination of both)

Interestingly, the trucking companies I look at claim to have very impressive net margins (20% - 40%) and are growing quickly. While that is enticing...I am cautiously suspicious. Robust growth is good, but quite often frantic growth can lead to some serious problems.

From your post, I take it that you are wary (and even flat out avoid) the carriers? If so, what if someone has a combination of both?

This is an interesting vertical, since so many avoid it. Conventional wisdom would suggest to avoid it also, but the little contrarian bird keeps tweeting to at least take a look at it.

Still very interested in everyone's feedback.

[TMR]

I love them. I found a nice list on line and have funded 2 of them in the last 5 months, premium providers too. I'm not sure why they were consider while others are having issues, maybe it's just timing throughout the year.

That crest hill guy two weeks ago was talking about an influx of submissions for truckers. He was asking if any major house has recently taken them off their list.

[bdshaw]

Dan, freight is too complex to generalize about and must be looked at on a case by case basis.
However there was a post last evening that was a pretty good guide.
I've never had good luck with brokers unless they generated all the invoices. There are a number of cases I'm aware of where brokers have shut down and reopened under a new name. On the other hand I've had good luck with long term haulers.
You might want to develope a relationship with one of a number of factors who specialize in this market. The costs are low and many offer additional services such a fuel cards.
Bob

[BB_Cooper]

Trucking is tricky, but it remains a favorite vertical for Cooper. VFG's comments are spot on! More of us need to take the time to understand the sub-industries our merchants make their living within. Analyzing the difference between a 4 truck general freight hauler and a dedicated industry specific rigger/hauler is equivalent to saying body shops tend to default at different rates than nail salons. If you take the time to peel the onion, there's plenty of opportunity in trucking-

Robert S Bloink
EVP of ISO Partnerships
Direct: 313-218-4663
Email: bb@cooperasset.com
Web: www.cooperasset.com
logo-01smaller.jpg

[VFG]

DPfund - I actually like funding trucking companies and my company factors anywhere between 15-21 trucking companies per month of all sizes. The issue with transportation is that these companies don't see money coming in daily and with cash advances they tend to overdraft and at times default depending on the type of company.

I honestly prefer to arrange factoring for trucking companies, given most factors who fund transportation deals understand the industry pretty well and are more tr

[VFG]

I honestly prefer to arrange factoring for trucking companies, given most factors who fund transportation deals understand the industry pretty well and are more transactional and get involved in the day to day operations of these companies (verifying invoices, checking credits on brokers, etc)

Another risk is the type of loads these companies haul. One example is refrigerated, which carries a higher risk, due to temperature requirements, GPS, etc. LTL loads also carry another risk as the carrier hauls smaller loads for several companies.

At the moment due to lower gas prices, the industry is somewhat challenging as the price of loads has significantly gone down and there seems to be higher competition and lower margins on each load.

Happy to arrange a conference call with anyone who would like to learn more about the industry and how we work with the industry.

Hope this helps.

[VFG]

Sorry my post got cut low signal where i am.

[dpFund]

Thanks VFG, Robert Bloink and Bob Shaw - Agreed on all fronts. We look deep into every client and do not make knee-jerk decisions. Which is ultimately the reason I started this thread...to see if there was something I was inadvertently missing about an industry in trouble. But it sounds like classic underwriting, where we are very comfortable.

FYI: Oftentimes we work in tandem with factors where their clients are growing and have an opportunity to snag more business and the factor wants to factor those invoices, but the client needs expansion capital to secure the new contracts. We will provide them a bridge to land the new business, and the factor gets the invoices. We simply do an Intercreditor agreement with the factor. Nice partnership.

[FUNd]

Lots of posts have been deleted from this thread. FUNd, stop trolling everyone please.

Wasn't trolling anyone. In fact, some people appreciated my candor. I'll just keep the political discussions off of here I suppose. Obviously this isn't the place for it. Good evening, have a profitable week.

[cbs]

No one cares what a dumb fk you are.

[cbs]

More importantly you are just stupid and broke funds .... As well as an ass.

[FUNd]

More importantly you are just stupid and broke funds .... As well as an ass.

Look bud, just bc you went ballistic over my Syrian comment, looks like it hit home, and now who's trolling who? And making totally stupid assumptions? I'm not interested. Neither is anyone else.