The 5 best business auto loans to get your company on the road
Published 5:17 AM EDT, Fri April 5, 2024
If your business relies on vehicles to run smoothly, business auto loans are worth exploring. This form of financing combines the best qualities of business loans with traditional auto loans — it serves the needs of your company and can build your business credit scores, but offers the fast, flexible funding of a consumer car loan.
But there’s more than one way to finance a company vehicle. While a business auto loan offers the fastest approval turnaround, an equipment loan or a term loan could also be used to pay for a car.
Since there are countless options on the market, we’ve done the heavy lifting for you and compiled this list of the five best business auto loans.
Methodology
To determine the best lenders for business auto loans, our editors considered the features that business owners and entrepreneurs care about most, from rates and fees to eligibility requirements. Our research analysts collected information on 18 popular lenders that offer funding to purchase company vehicles, and then weighed the data across four categories: loan cost, loan details, accessibility and repayment experience.
Read our complete methodology to learn more about how we chose the best lenders for business car loans.
- Number of companies reviewed: 18
- Number of data points analyzed: 486
- Number of features we considered: 27
- Number of primary data sources used: 20
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SBG Funding
: Best business auto loan
-
Clarify Capital
: Best for receiving multiple loan offers
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Fora Financial
: Best for building a fleet of vehicles
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Funding Circle
: Best for building business credit
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Bank of America
: Best traditional bank option
SBG Funding
Best business auto loan
SBG Funding offers business equipment loans (which you could use to purchase vehicles for your enterprise) with competitive rates, flexible repayment terms and amounts up to 100% of the equipment’s value. Although it can take up to 48 hours to receive a loan decision, this lender can deposit loan funds the same day as approval.
SGB Funding’s eligibility requirements are accessible — you’ll need personal credit scores of 600 or higher and only need to have been in business for six months. However, it also requires at least $250,000 in annual revenue, which is a high bar to clear for many small business owners.
This lender doesn’t require a hard credit pull at any stage of the loan process. Instead, it will determine your eligibility with a soft credit check (which won’t impact your scores) and by examining your four most recent bank statements.
Some SBG Funding loans come with a prepayment discount, but whether this perk applies to equipment loans is unclear. This lender also isn’t transparent about its fees or whether it reports your on-time payments to the credit bureaus.
- Low credit score requirement (at least 600)
- Only requires six months in business
- Same-day approval and funding possible
- Finances 100% of equipment value
- No hard credit pulls
- High annual revenue requirement ($250,000)
- No fee information on the website
- Might not report to some credit bureaus
Business owners who meet the revenue requirement and want flexible repayment options
* Rates as of April 5, 2024
Clarify Capital
Best for receiving multiple loan offers
Rather than lending money directly, Clarify Capital is a broker — it has a network of 75 partner lenders, so you may receive more than one loan offer. It promises “instant” approval decisions (but doesn’t specify exactly how quick the process is), and may deposit funds into your account the same business day.
Like SBG Funding, Clarify Capital will finance up to 100% of the car’s value. It requires credit scores of 550 or higher and at least six months in business. However, you’ll need to demonstrate at least $120,000 in annual revenue. Plus you may have to offer a personal guarantee, which is a legal promise that you’ll repay the debt if your business can’t.
- Quick approvals and same-day funding possible
- Low credit score requirement (at least 550)
- Only six months in business required
- Finances 100% of equipment value
- Offers pre-qualification
- Receive multiple loan offers
- Personal guarantee may be required
- $10,000 monthly revenue requirement
- Not a direct lender
Business owners who need fast access to funding and are willing to offer a personal guarantee
* Rates as of April 5, 2024
Fora Financial
Best for building a fleet of vehicles
Fora Financial, which also ranked highly in our best small business loans research, offers equipment loans as large as $1.5 million. This lender could be a good option if you’re building a fleet of company cars, but there’s a catch — you’ll only have 15 months to pay off the loan. You must have at least $180,000 in annual revenue to qualify, so this lender may not be a good fit for smaller businesses.
Although Fora Financial has the highest revenue requirement on our list, it also works with bad-credit business owners. You may be approved with credit scores as low as 500. (If you’re a small business owner with lower revenue figures and are not trying to build a big company fleet, you might also consider our list of the best bad credit car loans.)
After you apply, Fora Financial will make a lending decision within 24 hours and distribute the funds in a few business days. You might also land a discount for paying off your loan early.
Unfortunately, Fora Financial doesn’t report your on-time payments to business credit bureaus like Dun & Bradstreet, so you won’t build your business credit with this lender.
- Low credit score requirement (at least 500)
- Only six months in business required
- Discount for early repayment
- No hard credit pulls
- Fast approval and funding
- High maximum loan amount
- High annual revenue requirement ($180,000)
- Short repayment terms
- Doesn’t build business credit
- Charges a 2.5% processing fee
Bad-credit business owners with strong revenue streams who can afford large monthly payments
* Rates as of April 5, 2024
Funding Circle
Best for building business credit
Funding Circle offers term loans between $25,000 and $500,000 that can be used to buy company vehicles. Since this lender reports your on-time payments to Experian and Dun & Bradstreet, a Funding Circle loan can help you improve your business credit scores.
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This lender may make a loan decision in as little as 24 hours, and you could receive loan funds in as few as two business days. This is partly why Funding Circle also ranked first on our list of best fast business loans.
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However, you must be in business for at least two years and have strong personal credit (scores of 660 or higher) to qualify. All Funding Circle loans require collateral and a personal guarantee, and you can expect to pay an origination fee between 4.49% and 10.49% of your loan amount.
- Builds business credit
- Flexible repayment terms
- No hard credit pulls
- Fast approval and funding
- Must be in business for at least two years
- Good personal credit required (at least 660)
- Personal guarantee and collateral required
- Charges origination fees up to 10.49%
Established businesses that want to build business credit
* Rates as of April 5, 2024
Bank of America
Best traditional bank option
Bank of America offers business auto loans that start at $10,000. Its interest rates are competitive, and if you’re enrolled in the “Preferred Rewards for Business” program, you can receive a rate discount worth 0.25 to 0.50 percentage points. (To qualify, you’ll need to maintain a minimum balance of $20,000 in a Bank of America business checking account.)
Bank of America, which also offers some of the best auto loan rates for consumers, will lock in your interest rate for 30 days so you have time to find the vehicles you need. Plus, it will connect you with its network of authorized dealers in case you haven’t already found your preferred cars.
Since Bank of America’s business auto loans are secured loans, your vehicle must meet certain requirements:
- Minimum value of $10,000
- 5 years old or newer
- Fewer than 75,000 miles
Since the cars serve as collateral for the loans, that also means they’re vulnerable to seizure if you don’t follow through with repayment.
You’ll have to meet personal eligibility requirements, too. Bank of America doesn’t specify the criteria needed to qualify for its business auto loan, but most forms of business financing with this lender require at least two years in operation and $100,000 in annual revenue. Approval decisions are typically made within 24 hours, and funds will be sent directly to the dealership at purchase.
- 30-day rate lock
- Loyalty rate discount available
- Free access to business credit scores
- Network of auto dealers
- Builds business credit
- Vehicle restrictions
- Limited repayment term options
- Lack of transparency on eligibility requirements
- Requires a hard credit pull
Business owners who are still shopping for vehicles and want to lock in their rate
* Rates as of April 5, 2024
Our picks at a glance
| Rating | Starting APRs* | Repayment terms | Minimum credit score | |
|---|---|---|---|---|
SBG Funding
| 5 | 3.75%
| 1 to 7 years
| 600 |
Clarify Capital
| 4.8 | 6.00%
| 2 to 6 years
| 550 |
Fora Financial
| 4.5 | Factor rate of 1.10 to 1.40
| 4 to 15 months
| 500 |
Funding Circle
| 4.2 | 7.49%
| 6 months to 7 years
| 660 |
Bank of America
| 4.2 | 6.99%
| 4 to 6 years
| Undisclosed
|
Why should you get a business auto loan?
- Get a company vehicle quickly. Rather than saving to pay cash, a business auto loan can get your company in the driver’s seat quickly. Many lenders offer same-day approvals, and most can disburse loan funds in one or two business days.
- Grow your business. A business auto loan may open the doors to new customers and opportunities that will allow you to scale your venture. And lenders’ eligibility requirements, such as annual revenue minimums, can ensure you don’t try to grow too fast.
- Build business credit. Some lenders report your on-time payments to one or more of the business credit bureaus, including Dun & Bradstreet, Equifax and Experian. Strong business credit can help you qualify for future loans.
- Preserve liquidity. Since you’ll spread out the cost of purchasing company vehicles over time, a business auto loan allows you to protect your cash reserves and liquidity. Just beware of business auto loan lenders with short repayment terms.
- Take advantage of tax benefits. Depending on how you use the vehicle, you may be able to deduct loan interest and the entire cost of ownership and operation from your taxes.
What is a business auto loan and how does it work?
Whether you run a garden center and need a way to haul supplies, or your bakery wants to begin delivering its treats, a business auto loan can help you purchase vehicles for business use. This form of financing is typically available through banks, credit unions or online lenders and can typically be used to buy cars, vans and light-duty trucks, among other equipment.
Just like a consumer auto loan, you’ll receive the funds to purchase a vehicle upfront and pay it back with interest over a set term. The primary difference is that the vehicle must be used for business purposes, and your eligibility depends on the details of your enterprise (such as your time in business and revenue). Some lenders allow you to finance the car in your company’s name, which can protect your personal credit and assets in the event your business defaults on the loan.
8 common business auto loan requirements to know
Eligibility criteria varies widely between lenders, but generally, they will consider factors like:
- Your personal credit scores: You’ll need good credit to qualify for most business auto loans (scores of 670 or above). Some lenders may accept personal credit scores as low as 500, but you can expect to pay higher interest rates.
- Your business credit scores: Not all lenders require business credit, but again, the higher your scores, the better.
- Time in business: Most lenders require your business to be operational for anywhere from six months to two years before you qualify for financing. If your business is just getting off the ground, consider our picks for the best startup business loans.
- Business revenue: You’ll need to prove a certain level of monthly or annual revenue — many lenders want to see at least $100,000 a year, but some may accept annual revenue as low as $50,000. (It may be possible to get a business loan with no money, but expect to pay high interest rates and make a personal guarantee.)
- Business industry: Some lenders only extend financing to businesses operating in certain industries. Ineligible industries commonly include gambling, real estate investing, adult entertainment and cannabis dispensaries.
- Vehicle restrictions: If you apply for a secured business auto loan, the lender may restrict the car’s age and mileage — for example, you may not be able to finance a vehicle older than five years. Also, you’ll have to certify that you intend to use the vehicle for business purposes.
- Vehicle type: Heavy-duty trucks and specialty commercial vehicles typically require an equipment loan rather than a business auto loan — but as you can see from our list above, many lenders offer this kind of financing option.
- Personal guarantee: Depending on the lender and your company’s financial profile, you may have to back your loan with a personal guarantee. This is a legal promise that you’ll repay the debt with your own funds if the business defaults on the loan. If you can’t make the payments, your personal credit and assets can be at risk.
Good to know: Keep in mind that the example requirements above may not apply to every lender. Check with your lender to determine its specific business loan requirements.
Pros and cons of business auto loans
| Pros | Cons |
|---|---|
|
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Business auto loans can make it more affordable to purchase several vehicles for your enterprise. Repaying this loan has myriad benefits: You’ll increase your business equity, you may build your business credit through repayment and you may be able to deduct the interest from your taxes. Plus, having company vehicles can help your business expand into new markets or better serve your customers.
However, you’ll typically need good personal credit scores to qualify. Your lender may also restrict the type, age and mileage of vehicles you can finance (particularly for secured loans), and you may have to offer a personal guarantee to repay the loan in case your business defaults.
Business auto loans vs. leasing: Which is right for you?
In addition to financing auto loans for businesses, some lenders also originate business auto leases. The decision between buying and leasing is similar to the one you’d make when choosing your next personal vehicle. Ask yourself the following questions:
- How long does your business plan to use the vehicle?
- Do you intend to customize the vehicle?
- Which is more important: a low monthly payment or lower overall costs?
If your business will use the vehicle for many years and rack up a lot of miles, buying may be the smarter choice. However, leasing may make sense if you’d like the flexibility to upgrade or exchange the vehicles as needed.
| Buying | Leasing |
|---|---|
|
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How to get a business auto loan
This process is very similar to applying for a small business loan — you’ll find a lender, meet eligibility requirements and provide verification documents. One major difference is that you’ll also need to find a vehicle that meets your needs and qualifies for financing. Here’s what you need to know:
- Determine your budget. First, estimate how much you can afford to spend on a vehicle. This figure will likely be lower for startups than established businesses. Don’t stretch your budget too far — if your business can’t repay the loan as agreed, you’ll struggle to qualify for future financing opportunities.
- Assess your eligibility. Check your personal credit scores to determine which lenders may be the right fit. (Your credit card issuer or bank may offer free access to your scores.) If you have established business credit, check your scores with the reporting bureaus by visiting their websites. Also, calculate your annual revenue and time in business, as lenders will consider this information when evaluating your application. Some lenders may also ask you for a copy of your business plan.
- Find the right vehicle. The vehicle you choose should meet your business needs and lender requirements. If it’s too old or has too many miles, lenders may not approve your loan.
- Compare lenders. If you have an existing business account with a bank or credit union, determine whether that lender also offers business auto loans. You may receive a relationship rate discount or a faster approval process. But don’t stop there — comparing interest rates, terms and fees from multiple lenders can help you zero in on the best option.
- Gather documentation. Collect various business financial documents, like financial statements, tax returns and bank statements. You should also have your business license or articles of incorporation on hand, as well as your employer identification number and Social Security number.
- Submit an application. Complete the application on the lender’s website or in person at a local branch, if applicable. You may need to work with a loan account manager to clarify the details of your business and discuss funding options. Some lenders can review and approve your application the same business day, while others may take a week or longer.
4 alternatives to business auto loans
If a business auto loan won’t meet your needs or help your business accomplish its goals, consider one of the following alternatives:
1. Small business loan
Best for: No vehicle restrictions and broad loan use
A small business loan comes with low interest rates and lengthy terms. You can use it for commercial vehicles, equipment, inventory and other business-related expenses. However, you’ll need good credit and extensive documentation to get approved.
Related >> LLC loans: How to get funding for your business
2. Business line of credit
Best for: Flexible purchasing power
Like a business credit card, a business line of credit is a form of revolving debt that lets you borrow as much or as little as you’d like, up to a set credit limit. Eligibility requirements tend to be more lenient, but rates and fees can be high and repayment periods may be short.
3. Consumer auto loan
Best for: Mixed-use vehicles
If you can’t qualify for a business auto loan or plan to drive your vehicle for personal needs as well, you could use a consumer auto loan to buy a company vehicle. However, this route won’t build business credit and you may not see as many tax benefits.
4. Personal loan
Best for: Brand-new businesses
Depending on the lender, you may be able to borrow a personal loan and use it for business purposes. However, many lenders don’t allow personal loan funds to be used this way, and personal loan rates are often higher than any business loan option. You’ll be personally liable for loan repayment, and this option won’t build your business credit.
But if you’re just starting out and can’t meet a business lender’s requirements (like time in business or annual revenue), a personal loan can be easier to qualify for. You’ll typically need good personal credit and low levels of debt. Many personal loan lenders can approve and fund your loan in a few business days, while business loans may take weeks or even months.
Methodology
Company vehicles can unlock access to new markets or provide incentives to employees — but you don’t want them to cost an arm and a leg. With that in mind, our editors heavily weighted cost factors to determine the best lenders for business auto loans. Here are the four categories we considered before narrowing our list to the top five lenders.
Loan cost (30%)
It’s especially challenging to compare the cost of business loans because some lenders advertise APRs, some use factor rates and others don’t disclose terms at all. We rewarded lenders that offer low and transparent rates, charge few fees and provide rate discount opportunities.
Loan details (25%)
Here, we reviewed the meat and potatoes of each loan option, considering factors like:
- Available loan amounts
- Repayment term options
- Rate lock period
Accessibility (30%)
We rewarded lenders with accessible underwriting criteria, including relatively low requirements for personal credit scores, annual revenue and years in business. We also considered whether each lender restricts the vehicles it will finance, awarding points to those with flexible or few limitations.
Repayment experience (15%)
When you borrow a business auto loan, you’ll want to work with a lender that provides great customer service, from application until repayment is complete. In this category, we considered how long it takes each lender to approve and fund its loans, whether it helps you build business credit and its rating with the Better Business Bureau.
What didn’t make the cut
More than a dozen of the lenders we assessed didn’t make our list of the best business auto loans. In many cases, lenders scored poorly because they lacked transparency, failing to disclose key loan information like rates, amounts, repayment terms and eligibility requirements. Here are some popular lenders that fell short:
- PNC Bank, Truist Bank and Wells Fargo don’t disclose rates or eligibility requirements.
- Crest Capital requires personal credit scores above 700 and at least five years in business.
- Navy Federal Credit Union (NFCU) only lends to military service members (including veterans and retirees) and requires you to be an NFCU member for at least one year before applying.
Frequently asked questions (FAQs)
Business auto loan rates tend to be a little higher than consumer auto loan rates — expect APRs to start around 6% or 7% for eligible businesses. Rates on equipment financing may be slightly lower (possibly under 4%), and most equipment lenders also allow you to use funds to purchase business vehicles.
Lenders that offer traditional business auto loans typically limit purchases to consumer passenger vehicles, like cars, vans or light-duty trucks. If your business needs heavy-duty trucks or commercial vehicles, you must borrow an equipment loan instead.
Most lenders won’t allow you to use a business auto loan to finance equipment or specialized vehicles, like heavy-duty trucks, construction equipment or tow trucks. Instead, consider a related loan product: equipment financing. (You can use an equipment loan for a business vehicle.)
If you default on a secured business auto loan, the lender may seize the vehicle to recoup its losses. Your business credit scores may also be impacted, if applicable. The lender could sue you or seize other business assets if your collateral isn’t worth enough to cover your debt.
If you’ve signed a personal guarantee, you’ll assume personal responsibility for the loan and can lose personal assets. Also, your credit history would be negatively impacted.
You may be able to deduct the interest on your business auto loan from your taxes if the vehicle is used exclusively for business purposes. General auto expenses, like gas and maintenance, may also be deductible. Before purchasing a vehicle, speak with your tax advisor to understand the tax implications.
Editorial Disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airlines, hotel chain, or other commercial entity and have not been reviewed, approved or otherwise endorsed by any of such entities.
This content is for educational purposes only and is not intended and should not be understood to constitute financial, investment, insurance or legal advice. All individuals are encouraged to seek advice from a qualified financial professional before making any financial, insurance or investment decisions.
Note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed or may no longer be available.
