Many small fleet operators work very hard to grow their trucking operations by actively securing jobs on load boards, seeking long-term client contracts, and earning a solid reputation. But growth for smaller trucking operations often means finding ways to cover fuel-related expenses. A similar problem can exist for newer businesses or owner-operator set-ups.

Fuel advances are becoming an increasingly popular solution for smaller companies. Because of the potential drawbacks associated with fuel advances, however, it’s important to know how to use them wisely. Here’s what you need to know.

What is a Fuel Advance? 

A fuel advance is an additional service offered by some freight factoring companies. It’s a fairly simple premise. The company advances funds to an owner-operator or small fleet owner after their load has been picked up. The advance is meant to cover the costs of fuel and any other expenses related to delivering the load from Point A to Point B.

Can You Benefit from an Advance? 

There’s no question that a fuel advance can provide welcome relief for smaller operations short on funds or newer companies still building up their profit margin. And if you strategically use fuel advances, they can be a much-appreciated asset for your business. In general, fuel advances may benefit your smaller operation under the following circumstances:

  • You don’t have another financing option available you can qualify for
  • You participate in factoring programs but you still need some help covering fuel expenses
  • You have a profit margin that’s high enough to cover any fees related to the advance plus the advance itself
  • You have a rapidly growing business and you need some extra help managing fuel costs as you expand

What Should You Know First? 

Fuel advances are usually limited to about 40-50 percent of a traditional factoring advance. Also, a fuel advance will be part of any regular advance you may have received. This means you’ll need to pay factoring fees that may be related to it. Fees associated with advances can also be somewhat significant since they need to be quickly processed.

Plus, advances are given before the load is delivered, so there is an understandable risk for the factoring company. Also, there is paperwork that needs to be completed before an advance is given, and the load has to be verified.

Need some help paying for fuel? Pay4Freight is the freight factoring company you can turn to for a competitive fuel advance plan likely to fit into your budget. Pay4freight Fuel Advance program advances 50% of the load’s value up to $3,500.  Fuel Advances are available on multiple truck fleets as well. We’re also your go-to source for advice on using load boards effectively and other reliable trucking industry insights.