HELOC for Owner-Operator Truckers

Why a trucker's tax return understates the business

Three things flatten an owner-operator's Schedule C at once. Section 179 or bonus depreciation on a tractor or trailer can wipe out most of a year's net on paper. Per diem deducts a fixed daily amount for every day on the road. And fuel, insurance, tolls, maintenance, tires and plates are large, real expenses. The result is a return that a bank reads as a marginal business, in a year the operating account received six figures in settlements.

A deposit-based file reads the operating account. The truck's depreciation schedule is not part of it, and per diem — which was never a cash expense — does not reduce anything.

How settlement and factoring income is read

• Leased-on operators. Weekly or bi-weekly settlement deposits from the carrier, net of the carrier's deductions, are the income. Twelve months of them are read as they landed.
• Own authority with a factor. Factoring advances and rebates land as deposits; they are read like any other deposit. If you run some loads unfactored, those broker payments count too.
• Fuel-card advances. Advances that were netted out of a settlement before it was paid are already reflected in the smaller deposit, so there is nothing to explain.
• Lease-purchase drivers. If your settlement is net of a truck payment to the carrier, the deposit already reflects it; say so at the start so the file is structured correctly.
• Deposits are not credited dollar-for-dollar. An expense factor is applied to arrive at qualifying income, and it depends on the file — a soft-pull conversation gets you the real number.

Small fleets

An owner with two or three trucks and drivers on 1099s has the same problem at a larger scale: strong deposits, heavy depreciation, and a return that shows a fraction of the cash. The file is the same — 12 months of deposits into the company's operating account — and the LLC or S-corp structure does not change it. The LLC and S-corp page covers the entity side.

Freight cycles and slow quarters

Rates move, and a soft freight market shows up in the settlements. Twelve consecutive months capture the current run rate — including a slow quarter — rather than averaging it against a prior year's return. If the most recent months are the strongest, they count in full, because the history runs up to the week you apply.

Common questions