This may not seem like a big deal on paper, but in the real world, it is positively massive. And I know this firsthand.

Before we launched this program, I called around to see if anyone would do this. I called financing companies, banks, you name it… and I was very specific: I wanted to finance a business-use SUV in my company name. 

I did not want a personal loan. I did not want a business blanket lien. I wanted to finance an SUV, except on the loan paper I wanted my company name first instead of mine. 

The answer I got was the same everywhere: NO.

I was offered plenty of personal loans. I was offered a large business line of credit by a few big banks, or financing for an entire fleet. But nobody would do what I was asking for – a single SUV financed in my company name.

So to us, it seemed like a niche that needed filling. Because we’re asked about this repeatedly. We got to work.

Right away, we found out why nobody offers this: it’s a nightmare. I don’t want to bore you with the details (because they are boring), but all lenders have bosses, and those bosses are not comfortable with small businesses being the lead borrower on paper for an SUV or two.

To overcome these issues, we had to significantly raise the credit requirements for this program. That proved satisfactory, and the program was launched.

This means if you meet the elevated credit requirements, you can finance a business-use SUV in your company name. Sweet, right? 

We worked hard to offer this program, and we hope it helps some companies. Click the above link to see the details.  

Most of the questions are tax-related, and we can’t give official tax advice. But there are tax deductions for partial business-use vehicles, and most of them follow the same rules, which I’ll outline here.

The big rule is how much “business use” the vehicle will be subject to. And the threshold for most instances is a minimum of 50%.

This means the vehicle must be used for business at least half the time for it to be considered a partial business-use vehicle in most cases.  

So what is business use exactly? It’s when the vehicle is used for business purposes. In cases of pickup trucks and SUV’s, it’s pretty clear – jobsite use, hauling materials, going to and from jobs to quote, check on the crew’s progress, etc. However, it is NOT bringing your kids to Little League, even if your company did sponsor an outfield wall sign (and good for you in doing that!)  

It gets a little murkier when it comes to larger SUV’s and even passenger vehicles. The same 50% rule applies, but in many cases, business use is a little ambiguous. Is picking up business supplies as well as household groceries business use? That’s for the IRS to answer, not me. But I will say that’s probably not a fun conversation at the audit.

One thing that’s very clear though: a typical commute is NOT business use. Even if you own a company, the time commuting from your home to the physical office is not business use. 

Lastly, size does matter. Nearly all 50% partial business-use vehicles are eligible for some type of deduction, but the larger ones get the bigger deductions. 

Ok, that’s about it on the rules for partial business-use vehicles. I hope it helps, and that the biggest takeaway  is “ask your tax professional”. 

On the surface, it seems a little odd, right? Because there are many, many companies who use passenger cars. In fact, one of the perks for many executives is a “company car”, and many a small to medium business owner has their everyday vehicle as a company car as well.

And that’s pretty much the reason why commercial lenders (like equipment financing companies, and even the commercial arm of the bank) shy away from “personal” style / passenger vehicles (note: Even pickup trucks and normal sized vans are on the “we don’t finance that” list for some commercial lenders.)

See, these vehicles, even if designated for work under the company name, are almost always also for personal use. Even contractors who have a work truck likely run personal errands and bring their kids to the ballgame in that truck. So even if the business buys the truck, it still could technically be classified as “consumer debt”.

This is important, because when financial lending institutions (like banks and equipment financing companies) list their assets and liabilities and overall financial picture, consumer debt carries a different weight and overall risk than commercial debt (note – Section 179, which I talk about often, also treats these vehicles differently. You can’t “write off” your Buick under Section 179.) As commercial lenders, we want no consumer debt.

Thus, for an equipment financing company to finance or lease a vehicle, we want to be reasonably sure that it’s going to be used 100% for business, which means more or less “equipment” type vehicles which really aren’t practical for personal use. For example, you aren’t taking your wife out to dinner in a bucket truck, right? Or bringing the paving truck through the drive-thru?

Although those would be pretty funny – I wonder if Mrs. Fletch would have married me if I showed up to our first date in a dump truck…