Taxi services

Taxi Business: All You Need to Know About Loans and Financing Ipass

Taxis and yellow cabs don’t just run on gas. They’ll need money to keep going. 

Whether you need to add another taxi to your fleet or have cash on hand in case of an emergency, taxi financing may be able to help guarantee.

How Can Financing Help Your Taxi Company?

Taxis are available in every city in the country, from New York City to Miami. And each of those taxis is part of a taxi company with its own set of expenses.

If your company operates in a metropolis like New York City, you may be required to get a taxi medallion, which can cost tens of thousands, if not hundreds of thousands of dollars. However, becoming a medallion owner-driver may be worthwhile in terms of obtaining support from local medallion associations. 

A taxi medallion loan can be just what you need to get started and stay in the game. Small business loans for taxi companies can also help fund day-to-day expenses when business is slow. You must always be able to pay your employees and cover overhead costs, and a loan can help you bridge the gap until better times arrive.

The coronavirus pandemic has affected millions of businesses, including taxis. While we all get back on our feet, you may still have bills to cover to return to your former glory days, and business financing might help.

The Finest Loans for Taxi Ventures

Your taxi company can use a variety of financial services and lending options. Some require greater credit scores and requirements than others, so shop around to discover the best deal for your scenario.

Loans for Working Capital

If you have strong credit, you may be able to get long-term financing at a reasonable rate from a bank or credit union. Shop around: the bank with whom you’ve done business for years may not be able to provide you the lowest deal, and online lenders are now competing for low rates.

Loans from the Small Business Administration

Small business entrepreneurs can apply for low-interest loans with extensive repayment periods from the Small Business Administration. SBA loans can be used to finance the purchase of real estate and equipment (such as taxis) and operating capital.

A credit line

You don’t always need a large chunk of money all at once, and you’d rather have capital available when you need it. Consider a business line of credit in that situation. You’ll be approved for a specific amount, and you’ll be able to borrow that amount at any moment.

You can borrow it and repay it as many times as you like.

Finance for equipment

Some loans necessitate collateral, which you may lack. The vehicles act as collateral for equipment loans, which are ideal if you’re looking to expand your taxi fleet. 

The interest rates on these are usually modest.

Using a Credit Card

Having company credit cards on hand could be beneficial. 

They can be used by authorized staff to purchase gas or office supplies, and if you have a rewards card, you might quickly earn back more than you pay in interest if you pay off your amount in full.

Short-term Limited Time

But what about taxi companies that don’t fit into one of the above categories? Don’t be concerned. You will not be left in the cold. Some short-term lenders will qualify you for funding based on variables other than your business and personal credit scores. Remember that these loans have hefty interest rates, so you’ll want to pay them off as soon as possible.

Cash Advance from a Merchant

A merchant cash advance is another alternative if your credit isn’t great. It’s not a loan; rather, it’s a deposit against future credit card sales. Repayments are automatically withdrawn from your transactions each day or week, plus a charge.

How to Pick the Best Taxi Loan for Your Company

If they have any, cab drivers owe it to themselves and their employees to maintain a regular cash flow and keep their fleet in excellent shape. Knowing which loan to choose can be difficult with so many possibilities.

Begin by determining what you want to achieve. What is the reason for your financial need? 

Is it better to acquire one or several cabs or just have a backup plan in case you run out of cash?

After that, have a peek at your credit report. 

If you don’t have a FICO score of 640 or more, you may need to look into other possibilities. 

Learn how to create business credit if your company hasn’t yet done so. This will help you qualify for better deals.

Finally, make a payback strategy. How will you make that payment each month when you have other bills to pay? The most common blunder made by business owners is taking out a larger loan than they can afford to repay.

How to Obtain a Taxi Loan

The loan applications for taxi businesses may differ slightly. Some, such as those offered by the Small Business Administration (SBA) or banks, may demand financial papers such as tax returns or profit and loss statements, whereas online lenders may only require a few facts from borrowers.

Expect to be questioned about both your company and yourself. Lenders will want to know how long your taxi company has been in operation and your Social Security number because you will be responsible for repaying the loan if the company fails. If your application is approved, you will be provided loan terms, including interest and monthly payments. If the terms are acceptable to you, sign the loan documents and wait for the funds to arrive in your account.