Minneapolis Equipment Lending Trends
MINNEAPOLIS — While some equipment lenders have reduced their involvement in the transportation sector recently, others are actively seeking financing opportunities.
In the third quarter, 21 freight carriers filed for Chapter 11 bankruptcy, following 20 in the previous quarter. This trend underscores the ongoing downturn in the freight industry. Challenges such as rising operational costs, low freight rates, strict lending standards, and tariff uncertainty continue to affect the trucking sector.
Proactive Financing Strategies
According to Eduardo Cruz, president of Commercial Equipment Financing in Addison, Texas, lenders must be “always proactive, not reactive” to achieve growth in financing despite market hurdles. Speaking at the National Equipment Finance Association Conference, he elaborated on the importance of identifying funding opportunities.
“When you’re reactive, you’re trying to find a new bank for a deal. I don’t find a bank for a deal. I find a deal for the banks.”
— Eduardo Cruz, president, Commercial Equipment Financing
Cruz emphasized that being proactive involves conducting comprehensive audits of businesses, soliciting references, and maintaining open lines of communication with stakeholders.
Maintaining Credit Standards
Bob Rinaldi, president of Rinaldi Advisory Services, also highlighted the importance of sticking to credit parameters during downturns. He noted that staying consistent in the market will eventually lead to recovery.
“Either you’re in the business or you’re not in the business. As long as you stay in that market, you know it’s going to heal itself at some point.”
— Bob Rinaldi, president, Rinaldi Advisory Services
Importance of Clean Financial Records
Many transportation companies are finding it harder to secure financing due to stricter credit standards. Cruz advised that carriers can enhance their chances of obtaining truck loans by keeping their financial records in order. Lenders are increasingly requesting bank statements, especially in the transportation sector.
“And it doesn’t matter if it’s small or big. The blemish is a blemish.”
— Eduardo Cruz, president, Commercial Equipment Financing
For small fleet operators, having alternative capital sources such as 401(k) savings or Individual Retirement Accounts is crucial. Cruz mentioned that these resources could provide a safety net in case of financial challenges.
