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Cost Effective Towing Business Startup's with Tow Truck Financing

Posted On: February 7, 2023 author Paul Kendall

Having problems with financing your tow trucks or towing vehicles?

It is a known fact that new business owners have a harder time securing financing, than those who have been around for a while. As the first year of any business is always the riskiest, startups can expect to experience several rejections before being approved. As a start up, you have to make sure you are prepared to stay alive with money saved up or customers lined up for projected revenues. Otherwise what do you got? 

This is even more difficult for those who are looking to start their own towing business.

Purchasing new tow trucks is an extremely costly endeavor, with maintenance costs mounting higher each year. Lots of wear on tear on these trucks with salt and miles. 

This leads to the question: Can your working capital still support your starting a tow truck business with these expenses? You've got to support yourself, possibly family, employees, rent

If you’re having financial problems in your startup towing business, then you’re in the right place. In this article, we will talk about starting a towing business with the help of tow truck financing.

Using Tow Truck Financing to Support Business Operations


As much as possible, preservation of capital is needed for startups along with the application for tow truck loan.

That’s why many start up tow truck businesses are looking for external monies.

External monies, such as tow truck financing, can provide the financial relief to tow truck operators. But before we discuss about it, take a look at the things that you should do to properly start your towing business through the department of transportation. 

How to start a tow truck business


A towing business can be profitable and is a good idea!

But starting one without a concrete business plan can result in a financial disaster. Achieving success is always harder if there’s no plan to serve as a guide.

While creating your business plan, remember that this will serve as the outline for the essential aspects of your business.

The plan should include the following:

  • Business description,
  • Types of towing services you will offer, and
  • List startup cost, equipment cost, labor cost, and liability insurance cost.
  • Fore cast revenues. 


Having a business plan ready prevents unnecessary decisions that can cause problems in the long-run. One example of that is spending too much of your working capital on something that your business won’t benefit from.

To avoid unnecessary expenses, you should know the appropriate amount you should be spending to start and operate the towing business. 




The Cost of a Towing Business


In any business, it’s important to have more money coming in than going out. To do this, you can either lessen your expenses or plan your budget and finance your tow truck through a financing company. 

To help determine whether you are spending appropriately for your business, we’ll give you the costs expected from running a towing business. Keep in mind that these may vary and are affected by the services you offer.

How to start a tow truck business

Let’s assume that you’re operating with only one tow truck. These are the estimated amount of expenses that you may incur:

  • Fuel $1,282 (220 calls @ 20 miles each & 13mpg with $3.79 gal/ diesel)
  • Insurance $300 (high deductible)
  • Repair Bills $500 - Variable depending upon many factors (age of truck/ upkeep).
  • Advertising $500 - Variable but expect to spend at least this amount.
  • Phone $100
  • Damages $300
  • Uniform $75
  • Miscellaneous $50 - Ticket book and office supplies.


You also need to purchase supplies and equipment for your operations through the financing options  such as:

  • Fully equipped tow with accessories
  • Flatbed
  • Amber strobe lights
  • Floodlights
  • Flares
  • Traffic cones
  • Jacks
  • Battery booster
  • GPS
  • Booster cables
  • Lockout kit
  • Portable air compressor or air tank
  • 5 Gallon Fuel Tanks
  • Tire service tools
  • Overalls
  • Snowsuit for winter
  • Essential office Equipment


Keep in mind that any expenses you’ll pay annually such as licenses and permits, taxes, subscriptions, and dues have not been factored in yet.

However, the startup towing business can cost anywhere from $150,000 to $2,000,000.

Although we have provided an estimation, the true cost remains uncertain. There are different factors that can affect this such as the location of the business, the state fees, and the most important asset of the business - the tow truck.



Do You Need to Purchase or Lease a Tow Truck?


Buying a tow truck requires a lot of money for a tow truck driver.

If your business can afford it, then the decision is up to you. However, if your business has limited capital, then purchasing a brand-new truck can prove to be a risky decision.

Choosing to acquire a tow truck through leasing is a popular option for most type of towing businesses. Doing this not only lowers your overall monthly expenses, but also results in higher profits.

You Need Funds


Whether you choose to lease or buy a tow truck from the truck company,  external monies is still needed. Doing this allows you to allocate your working capital accordingly to finance other aspects of your business such as payroll, rent and repairs. 

This is also done in order to preserve available cash flow for the future operations and/or emergencies in the business.

When starting a tow truck company Use Tow Truck Financing 

If you’ve decided that you need an external funding to acquire tow trucks, opt for tow truck financing. This type of financing will save your company from experiencing insufficient funds.

Unlike local bank loans, tow truck financing from private tow truck lenders has lower requirements and qualifications to meet the specifications for roadside assistance. Also, its application process and approval only take a couple of days.

As a result, funds to pay for your tow truck can be acquired almost immediately after approval. Pay your private party or dealer quickly so you can get to work and increase revenues. 

Final Thoughts on Starting A Towing Business with Tow Truck Financing


Starting a towing business requires time and effort. It’s also an extremely risky business.

Before you start your towing business, have a concrete business plan in place. This will prevent you from doing unnecessary decisions such as spending on things you don’t need. This is even more important when you're a start up tow truck operation and have only a minimal amount of capital to work with.

The startup towing business can cost anywhere from $150,000 to $2,000,000. Your monthly expenses will also be higher if you choose to purchase a new truck through the advertisements made through social media.

With that said, many towing businesses choose to finance their tow trucks through tow truck financing. This type of business financing has a simplified application process that will help you get the financing that you need faster when you start a towing business.

If you want more details about tow truck financing, you can call Trust Capital at (866) 458-4777. Trust Capital has helped many start up towing businesses finance their first, second and third tow truck. 

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