Regardless of whether you run a nearby dispatch or a top-of-the-line limousine service, you may discover you have to get a small business loan for your taxi business. It takes a ton of funding to stay aware of the enormous contenders, so the opportunity may arrive when you need a convergence of money to rival the various alternatives out there. Likewise, you may require money to turn toward one of the most effective plans of action: the sharing economy.
In the case of taxi licenses to access a loan, the term used is the pledge. Although the word “pledge” is not very frequent, it is one of the most used credit guarantee formulas for granting loans and personal loans. The definition of a pledge is leaving pledged one or more goods as an additional form of guarantee of payment towards the person or entity that is lending us the money. It is a prevalent practice in loans between individuals and in some banks.
Pledge is the perfect method for people who have no guarantees of any kind that guarantee that they will return the borrowed money – payroll, real estate property, etc. – and therefore have more difficulties accessing financing. One guarantee most used by many of our clients is the transfer as a guarantee of the payment of their taxi license, that is, the pledge of the taxi license to obtain a loan.
When to apply for taxi licensed loans?
New taxi drivers the most common context in which a taxi driver pledges his license is in the case of new taxi drivers who want to acquire a permit from another taxi driver- generally, he has retired or has left the sector. They do not have the amount of money needed to buy it. Depending on the city in America in question, a taxi license can cost a whopping up to $170,000, an amount of money that very few people have. You can ask for a loan with a taxi license by signing it, that is, putting it as collateral while continuing to work with it.
Taxi drivers are refinancing their licenses. On some occasions, taxi drivers pledge their license – they leave it under guarantee to pay debts, vehicle repairs, back taxes, or any reason you need to continue working, even start up another business. In these cases, the license is pledged using a loan or pledge without displacement, and they continue working with that license and returning the loan using the quotas they have chosen.
Loans for taxi drivers
During the entire duration of the loan, the taxi driver may not sell or transfer the taxi license until the loan returns. The new holder, when purchasing the permit, directly cancels the credit for taxi drivers. However, the taxi driver can work with that license since the great advantage of pledges over mortgage guarantees- leaving home as collateral. For example, in cases in which a good that generates recurring income is pledged (like a taxi license) in 99% of the cases, the client can dispose of the money generated since those revenues are not part of the payment guarantee.
What happens if the taxi license loan is not returned?
When the taxi driver has repaid the entire loan without incident, he recovers his pledged asset. That is, the license goes into his name and is 100 percent his. Again, it is essential to emphasize that while repaying the loan, all those incomes generated by the pledged good – that is, everything that the taxi driver enters working – is for him.
The pledge only includes the good itself and not the income or revenue generated by that good. However, suppose there comes a time when it is impossible to face the debt usually. In that case, the lender can execute the pledged asset, and that the license ends in an auction so that the lenders can recover the borrowed money in some way.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.