After the economic crisis of 2008/09, banks have further tightened their already stringent qualification rules for financing. It can be tough for companies in the trucking and transportation industry to find financing to help them through times of cash flow lows. Reputable accounts receivable factoring companies that specialize in the transportation industry, provide invoice factoring to trucking businesses provided they are doing business with creditworthy customers.That's especially helpful for startup trucking businesses or transportation companies going through a transitional stage that do not have strong credit history. Why does the bank say "no"? How a traditional lender decides if you qualify for financing Listed below are three of the main criteria that a tradition lender, like a bank, will consider before approving a loan or business line of credit for your trucking business. Do you have the ability to pay? It's called a "cash coverage ratio". Basically, they'll look at your trucking business's net income before depreciation to come up with a rough estimate of cash flow. A banker will want to see that you've got at least 1.5 times your annual new loan payments in cash flow. They may also want a good look at your personal sources of income that aren't already tied up paying for personal expenses. Do you have a history of paying? This is where your business and personal credit history and credit score come into play. If you have a history of paying on time, it lessens the risk for the bank. What's the fall-back plan if you can't pay? This is why you'll often be asked to put up business or personal assets as collateral; that is, something that can be easily liquidated to pay off the debt should your trucking business falter. Two tips to improve your chances of obtaining financing Look for financing when you don't need it. It's a paradox that the best time to get financing approved is when business is great and you don't need it. That's the time to apply for a business line of credit that can be drawn upon when your trucking business hits a cash flow wall. Actively work on improving your credit score. Request an updated credit score report (personal and business) every year. If it isn't in the "good" to "excellent" range, put together a plan to improve it. A good accountant or financial adviser can give you tips on some simple things you can do to set you on the right road. And remember, a good credit score will do more for you than help you qualify for financing. Your credit score will also determine the rate of interest you'll pay on that financing. You still need cash flow, and the bank is still saying "no". Where do you go now? Invoice Factoring your trucking accounts receivable invoices and freight bills is an excellent solution for providing cash flow, even when the bank has refused financing for your trucking company. Why would a factoring company say "yes" when a bank said "no"? Because invoice factoring involves selling your freight invoices to a factoring company at a discount in exchange for immediate cash, a factoring company is more interested in your customers' creditworthiness. Unlike banks who are more concerned with your business's financial history, a factoring company focuses on the business you're bringing in today. If you're doing business with creditworthy customers, you qualify for factoring. For more information about factoring to create cash flow for your trucking business, visit www.accutraccapital.com.