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Challenges and opportunities of trailer financing for small businesses in Canada

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For small businesses in Canada, having the right equipment is an asset for their development. 

Used in sectors such as construction, transport and agriculture, trailers facilitate the transport of goods and equipment. 

Nevertheless, financing such resources can be a challenge.

What is trailer financing?

Trailer financing is a method that enables companies to acquire trailers without immediately paying the full amount. 

This approach helps to balance their budget by spreading the cost of investment over an extended period. 

The process usually involves either taking out a lease or obtaining a loan tailored to the organization's specific needs and financial situation.

With a traditional loan, the company borrows a certain sum from a financial institution to purchase the trailer and repay the loan, with interest, according to an agreed schedule. The advantage of this option is that you become the owner of the trailer at the end of the repayment period.

Leasing, on the other hand, is a practical alternative. With this option, the company pays for the use of the trailer over a specified period. When the contract expires, it can either buy the trailer, extend the agreement or return the trailer. With Fincap leasing, on the other hand, you cannot return the trailer.

This formula is particularly well suited to organizations wishing to maintain a modern fleet, or those preferring regular monthly payments for better financial management.

The usefulness of trailers for small businesses

Trailers make it easy to transport goods, equipment and various resources, making them a practical tool for small businesses. 

Their ability to adapt to different types of load makes them useful for a wide range of activities, including construction, agriculture and trade.

In addition to their versatility, trailers optimize logistics operations. 

Indeed, by owning their trailers, companies can manage their deliveries and supplies more directly, without having to rely on external transport companies. 

This autonomy leads directly to savings and strengthens control over their operations.

In short, trailers are an asset for small businesses looking to strengthen their logistics and increase their transport capacity without compromising their budget.

Challenges of trailer financing

Difficulties accessing credit

Accessing credit to finance trailers is an ordeal for many small companies. 

And with good reason: banks and other financial institutions rigorously assess risk before granting loans. 

For companies without an established credit history or sufficient collateral, this assessment often results in rejection. However, lenders are cautious because they need to minimize the risk of default. 

Indeed, when a new institution is relatively new or has not yet demonstrated a consistent ability to generate income, it is often perceived as a risky investment.

This creates a vicious circle: without a credit history, it's hard to get financing, and without financing, it's just as hard to build the track record needed for development.

Impact of fluctuation on financing

Economic fluctuations are also changing trailer financing conditions. 

In times of economic uncertainty, such as recessions or financial crises, lending institutions tighten their criteria, making access to financing more complicated for small businesses. In addition, changes in interest rates also have a direct impact on financing costs.

Under these conditions, companies often see their revenues fluctuate, which complicates the management of loan repayments. 

This situation sometimes calls for restructuring existing debts or finding more flexible financing to prevent financial difficulties. 

Alternative trailer financing solutions

Faced with these challenges, there are other trailer financing solutions; here are just a few:

Leasing: As mentioned above, leasing enables companies to use equipment such as trailers without buying them outright. 

At the end of the leasing contract, the company can choose to purchase the equipment at a residual price, renew the lease, or return the equipment. This option, which is more accessible than traditional loans, often presents less risk for lessors.

Crowdfunding: This method involves collecting small amounts of money from a large number of contributors, usually via an online platform. For a small business, this can be a way of engaging its community and raising funds for a major purchase like a trailer without going through traditional banking channels.

Peer-to-peer lending: Peer-to-peer lending enables businesses to borrow directly from individual investors without going through a traditional financial institution. These loans can provide more flexible terms tailored to the specific needs of small businesses.

Industry-specific financing programs: Certain industries may have access to specialized financing programs that recognize the unique needs of these sectors. 

In the transport sector, for example, there are funds specially designed to help companies acquire trailers.

Government subsidies and assistance: In Canada, numerous government programs are specifically designed to help small businesses acquire trailers. 

These programs provide advantageous financing terms and often include loan guarantees that reduce the risks assumed by lenders.

Lease finance your trailer with Fincap

We offer you the best financing and leasing options for your trailer financing. 

Thanks to our extensive experience, we have developed specific expertise in all types of equipment leasing. 

This enables us to better understand our customers' needs, identify the best leasing opportunities and help them achieve their goals.

Get the best equipment financing conditions for your business needs

Explore our fast, easy and straightforward options to help your business grow.