Financing a refrigerated carrier acquisition

A refrigerated carrier raises its own points to ask a lender about: reefer trailers carry refrigeration units whose age and service history need checking unit by unit, and revenue may depend on a few food accounts that audit carriers. BDC says a financing structure may combine your own investment, a business loan and seller financing, and that you and the seller must agree on a purchase price before applying. This guide covers what a lender can take as security, what a lender may ask about, and what to ask. For the broader picture, see financing a trucking acquisition.

What can stand as security

Ask the lender whether it would take equipment, such as tractors, reefer trailers and the refrigeration units mounted on them, as security. Ask how it values used units, whether it wants the units appraised, and whether it will lend against a trailer whose refrigeration unit is near the end of its life. The answer shapes how much of the price the equipment can carry. Ask too whether the lender registers its security against each trailer separately or against the fleet as a whole, and how that would affect selling or replacing a unit later. Ask what, if anything, the lender would accept as security beyond the physical fleet. Ask also whether it requires personal guarantees.

What a lender may ask about

Raise these features of the business with the lender yourself. If compressors are due for overhaul at once, that is near-term capital spending the buyer must also fund. If revenue rests on one grocery or distribution account, ask how the lender weighs that. Ask whether an unresolved claim, or a shipper audit not yet remedied, would affect an approval. Ask the lender early which of these it treats as conditions, and bring the diligence findings to the conversation rather than waiting for the lender to uncover them.

Questions for the lender

Ask which documents it will want for a carrier: regulator records, claims files, shipper audit results and the equipment list with service history. Ask whether the loan can include working capital for fuel and driver payroll in the first months, or whether that must come from the buyer. Ask how it treats a share purchase compared with an asset purchase (and ask the regulator whether certificates and any food licence are handled differently under each), and ask what happens to the loan if a key shipper leaves in the first year. Get the answers in writing before you waive conditions. Also ask how long approval takes and what the lender needs to see after diligence, so closing dates are set from real timelines. If a vendor note is part of the plan, ask whether the lender needs to review its terms before the seller’s version is final.

Vendor take-back questions

Seller financing, also called a vendor take-back, is one of the pieces BDC says a structure may include, and BDC lists refinancing seller financing among the uses of its purchase loan. Ask the seller how long the note runs, what it is secured by, and whether it ranks behind the lender. Ask what happens if a claim surfaces after closing: can the buyer set it off against the note? Ask whether the note’s terms can be tied to a key shipper’s retention, and get any such term in writing.

Before you commit

BDC says you and the seller must agree on a purchase price before applying; ask the lender what it needs after that. BDC also asks applicants to be prepared to provide the agreed purchase price and how it was determined, and the transaction structure, such as an asset or share purchase, and says it will assess the complete financing structure. If diligence finds a fleet overhaul bill or a failed audit, the funding plan has to be revisited before closing, not after. Confirm with the regulator that certificates will be in place for the new owner on the day of closing. A funding plan that assumes a food licence or certificate carries over is a risk until the regulator confirms it. Keep a written record of each confirmation so the lender’s lawyer and your own can see the same facts.

• How the lender values used reefer units and whether it will finance a unit near the end of its life.
• Whether working capital for fuel and payroll is included or must be funded separately.
• Which diligence findings the lender treats as conditions of approval.
• Vendor note term, security, ranking behind the lender and any set-off for claims after closing.
• Regulator confirmation that certificates and any food licence will be in place at closing.