Why Lenders Call Trucking High-Risk, and How to Underwrite a Carrier

By MercFinancial · Published 2026-10-21

Lenders call trucking high-risk because fuel and spot rates move weekly, trucks break down and depreciate, insurance costs jump after a claim, and many new authorities fail early. Here is the file that answers each objection.

Lenders call trucking high-risk for five reasons that have nothing to do with any particular carrier: fuel and spot rates move weekly and squeeze margins without warning, a breakdown stops revenue while the payment continues, insurance premiums jump after a claim or for a new authority, many new authorities fail in their first years, and the main asset depreciates and can be driven away. A bank's credit policy reads those five as a category and declines. A trucking lender reads them as five questions and underwrites the carrier that can answer them.

This guide takes each objection in turn, says what the underwriter is actually worried about, and sets out the document or the number in the carrier's file that answers it. It then shows how the objections combine into the tiers trucking lenders use, gives an illustrative comparison of two carriers with the same revenue and different files, and closes with how a broker places a carrier with the sources whose policy allows the industry.

Every reason a lender calls trucking high-risk is a question. The fundable carrier has already written the answer into its file.

Fuel and rate volatility: the margin question

The underwriter's worry is simple: a carrier that is profitable at this month's spot rate and diesel price may not be next month, and the truck payment does not move. What the lender wants to see is how much of the freight is contract rather than spot, whether the rate confirmations carry a fuel surcharge that passes diesel through to the shipper, and what the carrier's revenue per mile looks like against its cost per mile across a full year, not a good quarter.

The file that answers it is twelve months of settlements and a monthly profit and loss that shows the slow months with the payment still covered. A carrier that can point to a dedicated lane, two or three brokers that pay on time, and a surcharge clause has answered the margin question before it is asked. One that shows three strong months and asks the lender to extrapolate has not.

Breakdowns and depreciation: the equipment question

A tractor that is down for a week earns nothing and still owes its payment, and a major engine or transmission failure can cost more than the carrier has in the bank. The same unit is also the lender's collateral, and it is losing value every month. An underwriter is asking two things: how likely is this truck to stop, and what is it worth if the lender has to take it.

The file answers with an equipment schedule listing each unit's year, mileage, hours, current value and any lien, maintenance records or an engine control module report for the units that matter, warranty or extended coverage where it exists, and a repair reserve the lender can see in the bank statements. A carrier running late-model units with service histories and a reserve reads as a different risk from one running a high-mileage tractor with no cushion, even at the same revenue. Where the request is a truck purchase itself, the first-truck and next-truck files are set out in owner-operator truck financing.

Insurance cost shocks: the solvency question

Commercial auto and cargo insurance is one of a carrier's largest costs, it is highest for a new authority, and it can jump at renewal after a claim or be cancelled for a missed installment. The underwriter is asking whether the carrier can stay legally on the road at next year's premium, because a carrier without insurance is not a carrier.

The file answers with a current certificate at the levels brokers require, which federal rules set a floor under for for-hire property carriers and which brokers commonly push to $1,000,000 in auto liability and $100,000 in cargo, loss runs for the past several years, the safety record in FMCSA's Safety Measurement System, and the driver files behind it. Premium financing, which spreads the annual premium into installments, is a normal part of the stack and is covered in working capital for trucking companies. A clean loss history is worth more to an underwriter than almost any other single document in the file.

New-authority failure: the survivorship question

Many new authorities do not make it through their early years, and lenders price that into every young file. The causes are the ones above arriving at once: thin capital, one bad broker, a breakdown with no reserve, an insurance renewal the carrier cannot pay. An underwriter is asking whether this carrier has already passed the point where most of those failures happen.

The file answers with the authority's age, a completed new-entrant safety audit, a history of running leased-on to an established carrier before going independent, a factoring relationship or cash that covers the gap between delivery and payment, and settlements that show the truck has been loaded month after month. That is why one to two years of authority is the common threshold for term loans and lines, and why a carrier under that mark is steered to equipment financing with more cash down and to factoring. The general path for any young company is in business loans under two years in business.

Illustrative example: two carriers, same revenue, different files

Illustrative example: two hypothetical three-truck carriers each gross about $600,000 a year and each ask for a fourth truck and some working capital. Carrier A has four years of authority, two shippers on contract plus spot freight, service logs on every unit, clean loss runs, a factoring relationship, and $25,000 in reserve. Carrier B has fourteen months of authority, all spot freight, one policy cancelled for non-payment and rewritten, a tractor with very high mileage and no records, no reserve, and two revenue-based advances being repaid from settlements.

The first is offered an equipment loan on the fourth truck with a modest down payment and is told an asset-based line is realistic next year. The second is offered the truck only with a large down payment and a short term, is told the advances must be cleared or consolidated before any lender adds a payment, and is steered to factoring to replace them. Same revenue, different files, different answers. The numbers are round and hypothetical. The pattern is what underwriters see every week.

How to build the file that answers each objection

Where MercFinancial fits

MercFinancial is a commercial funding brokerage in Houston, not a lender, and it does not have a trucking program or a promise of approval. It reads the carrier's file the way an underwriter does, objection by objection, and says what is missing before anything is submitted. It then identifies which of its more than 160 funding sources have a credit policy that allows motor carriers at this stage and the structure needed, places one file with those sources, and compares the offers. Whether a product is available depends on the funding source. When the honest answer is that the file needs another six months of settlements or a cleared advance, you hear that and what to do in the meantime. Stephanie pre-qualifies a request in a few minutes with a soft credit pull, and the specialist call is free. The wider picture is on the trucking business funding hub.

Frequently Asked Questions

Why is trucking considered a high-risk industry by lenders?

Because five things move against a carrier at once: fuel and spot rates change weekly, a breakdown stops revenue while the payment continues, insurance premiums jump after a claim or for a new authority, many new authorities fail early, and the truck that secures the loan depreciates and can be driven away. Banks treat those as a category. Trucking lenders treat them as questions a carrier's file can answer.

Are trucking companies eligible for SBA loans?

Yes. Trucking companies are not among the ineligible businesses in 13 CFR 120.110, so a 7(a) loan is available through SBA lenders whose own credit policy accepts motor carriers. Those lenders typically want a few years of authority, clean safety and insurance records, tax returns and personal guaranties, and the loan fits a fleet purchase, a carrier acquisition or long-term working capital rather than one urgent truck.

How long does a trucking company need to be in business to get a loan?

It depends on the product. Equipment lenders fund a truck for a new authority through first-time buyer and new-authority programs with more cash down, and factors take a new carrier from its first load. Term loans, lines of credit and SBA loans generally wait for one to two years of authority and settlements, which is roughly when most early failures have already happened.

Does a bad CSA score affect trucking financing?

Yes, indirectly and directly. A poor record in FMCSA's Safety Measurement System raises insurance premiums and can cost broker relationships, both of which show up in the numbers a lender reads. Some lenders also review the record itself before financing equipment or extending a line. Clean inspections and a passed new-entrant audit are part of the file, not a formality.

Can a trucking company with a recent claim or repossession get financing?

A claim, yes, once insurance is back in force at the required levels and the loss runs show it was isolated: expect higher premiums and closer underwriting for a while. A truck repossession is harder, because it is exactly the loss an equipment lender prices for, and most will wait years and want a large down payment. Factoring remains open in both cases, since it rests on the broker's credit.

MercFinancial is a commercial funding brokerage in Houston, Texas. MercFinancial is a broker, not a lender: every loan is made by a third-party funding source, every request is subject to that source's underwriting and credit approval, and loan amounts, advance rates, interest rates, terms, fees, collateral and guaranty requirements vary by funding source and borrower and are not guaranteed. Nothing here is a commitment to lend or an offer of credit, and financing is for business purposes only. Any example in this guide is hypothetical and illustrative; actual terms and outcomes vary. Motor carriers are regulated by the FMCSA and must hold operating authority and insurance; financing availability depends on the funding source's policies. This guide is educational only and is not legal, tax, accounting or investment advice.