Lines of Credit for Trucking Companies: Fuel, Maintenance and Cash Flow

A line of credit is the financial shock absorber for trucking operations. When fuel prices spike, when a driver needs an advance, when three trucks need tires the same week, when a major customer pays late — a line of credit keeps you moving without scrambling for emergency financing.

For many trucking companies, a well-sized line of credit is more important than any other financing product except equipment loans.

Why Trucking Cash Flow Is Uniquely Challenging

Trucking faces cash flow pressures that most industries do not:

• Fuel costs are immediate — You pay at the pump, but invoices take 30-60 days
• Maintenance is unpredictable — A single roadside breakdown can cost $5,000-$15,000
• Tire costs are lumpy — A set of drive tires runs $2,000-$3,500; steer tires $500-$800 each
• Driver advances — Common practice, especially for owner-operators and lease operators
• Insurance premiums — Often due quarterly or annually in large amounts
• Seasonal rate fluctuations — Slow seasons mean lower revenue but similar fixed costs

How Lines of Credit Work in Trucking

A business line of credit gives you access to funds up to an approved limit. You draw what you need, pay interest only on what you use, and replenish the line as you pay it down.

Sizing Your Line of Credit

The right line size depends on your operation:

• Fuel costs — Calculate average monthly fuel expense; line should cover at least 60-90 days
• Maintenance reserve — $2,000-$5,000 per truck for unexpected repairs
• Tire float — Cost to replace tires on 25% of fleet at once
• Payment timing — How long do your customers actually take to pay?
• Seasonal cushion — Extra capacity for slow periods

Example calculation: A 10-truck fleet with $35,000 monthly fuel costs, 45-day average customer payment, and $3,000/truck maintenance reserve should target a line of at least $75,000-$100,000. This covers fuel float ($50,000+), unexpected maintenance ($30,000 reserve), plus buffer.

Line of Credit vs. Factoring

Many trucking companies use factoring for cash flow. Lines of credit offer a different value proposition:

For trucking companies with strong credit and established operations, a line of credit often costs less than ongoing factoring. Many companies use factoring when starting out, then transition to a line of credit as they build financial strength.

Real-World Scenario: Managing Fuel Price Volatility

The situation: A regional carrier with 18 trucks sees fuel costs swing from $45,000 to $65,000 monthly based on diesel prices and route mix. Customer payments average 38 days. Without financing, the owner often depleted personal savings during high-fuel-cost months.

The solution: Secured a $150,000 business line of credit at Prime + 3% (approximately 11.5% at the time).

How it works in practice: During a month with $65,000 in fuel costs, the company draws $40,000 from the line at the start of the month. As customer payments arrive around day 38-45, those funds go toward line paydown. By month end, the line is typically drawn to $15,000-$25,000.

The cost: On average, $30,000 is outstanding on the line throughout the year. At 11.5%, that is approximately $3,450 in annual interest — far less than the 3% factoring fee on $720,000 in annual invoices ($21,600).

The real benefit: The owner stopped depleting personal savings and could plan with confidence knowing cash was available when needed.

Qualifying for a Trucking Line of Credit

Lenders evaluate several factors for line of credit approval:

• Credit score — 650+ minimum for most lenders; 700+ for best rates
• Time in business — 2+ years preferred; some lenders work with 1-year companies
• Annual revenue — Typically $200,000+ minimum; line sized as percentage of revenue
• Profitability — Positive net income or strong gross margins
• Existing debt load — Current obligations affect available credit
• Bank account history — Consistent deposits, no overdrafts, adequate balances

Industry-Specific Considerations

Trucking-savvy lenders also evaluate:

• Operating authority status — Current and in good standing
• Safety record — CSA scores affect risk assessment
• Customer quality — Who pays your invoices? Creditworthy shippers reduce risk
• Equipment condition — Well-maintained fleet suggests good management
• Insurance coverage — Adequate limits and current certificates

Using Your Line Effectively

Lines of credit work best with disciplined use:

• Draw for operations, not equipment — Use equipment financing for trucks; save the line for working capital
• Pay down aggressively — Do not let balances sit; the line is for bridging, not permanent financing
• Monitor utilization — Consistently using 80%+ signals potential cash flow issues to future lenders
• Keep it available for emergencies — Do not draw the full line for normal operations
• Review annually — As your business grows, request line increases

Common Line of Credit Mistakes

Patterns that cause problems:

• Using line for equipment purchases — Creates permanent debt in a revolving facility
• Maxing out during slow season — Leaves no cushion for unexpected expenses
• Ignoring paydown — Treating the line as free money instead of temporary float
• Multiple lines — Managing several small lines is harder than one appropriately sized line
• Not having one — Scrambling for expensive emergency financing when problems hit

A business line of credit is foundational infrastructure for trucking companies. It provides flexibility to manage the inherent timing mismatch between when you spend and when you collect.

If you are ready to explore line of credit options for your trucking operation, Liminal can connect you with lenders who understand transportation businesses. The matching process is free, takes about 2 minutes, and has no impact on your credit.