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Financing and insurance for US Postal Service contractors

Contract mail routes, a single large customer, and trucks or vans that run on a fixed schedule.

Short answer

Three things usually come first for a Postal Service mail contractor. One is paying for the trucks or vans a contract calls for, often before the first trip. Another is cash to carry payroll and fuel on a payment schedule set by the contract. The third is meeting the insurance requirements written into the contract. Highway contract route suppliers carry mail between set points on schedules the contract defines, so the contract is where most answers start. BreadRoute is not affiliated with the US Postal Service. Providers and insurers decide what they offer, not us.

Which financing products do mail contractors usually look at?

A mail contract can mean steady, scheduled work, but it also concentrates your revenue in one customer and fixes your equipment and schedule. Providers look at the contract's term and payment schedule as well as the trucks.

  • Equipment financing

    Tractors, straight trucks, or vans to the contract's specs. Match the term to the contract's length where you can.

  • Line of credit

    Payroll and fuel against a fixed payment schedule. Reusable as you pay it down.

  • Working capital

    Startup costs for a new route before payments begin. Add up the total you would repay before you sign.

  • SBA loans

    7(a) loans for trucks and working capital, and 504 loans for a yard.

  • Fuel cards

    Controls and records across scheduled routes. We do not currently route fuel card requests.

Factoring and accounts receivable financing depend on how your contract pays and whether it allows assigning payments, so read it and ask before you assume either fits. Asset-based lending tends to suit larger contractors with several routes and equipment to borrow against.

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Which insurance lines do mail contractors usually ask about?

Postal Service contracts set their own insurance requirements, and the Postal Service's inspector general has reviewed whether contractors meet them. Read your contract's insurance clauses and give them to your agent. Policies vary, so read the declarations, definitions, and exclusions.

  • Primary auto liability

    Contracts set liability insurance requirements. Match your limits and keep certificates current.

  • Physical damage

    Trucks and vans that must be available on schedule. Check valuation, deductibles, and how fast a claim gets a unit back on the road.

  • Workers' compensation

    Employee drivers on scheduled routes. Requirements depend on your state.

  • General liability

    Contracts may ask for it alongside auto liability. Read yours.

  • Commercial umbrella

    If your contract or your own risk calls for total limits above your primary policies.

Also worth a look: occupational accident for contract drivers who work without an employer's coverage, management liability once you have many employees, and commercial property if you own a yard or shop.

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What makes mail contracting different?

The contract runs the business. Highway contract route suppliers carry mail over highways between designated points, on schedules set in the contract's terms. The contract decides your trips, your equipment, your payments, and your insurance, so read it closely before you buy trucks or hire drivers.

One customer is a concentration risk. Steady scheduled work is valuable, but if most of your revenue comes from one contract, a lost renewal or a change in the route hits hard. Providers notice that too, and may look at the contract's term and renewal history.

Insurance requirements are written in. Contracts set liability insurance requirements, and the Postal Service's inspector general has found cases where documentation that contractors met them was missing. Keep current certificates on file and match your limits to the contract.

Vehicle weight shapes the federal rules. Vehicles rated 10,001 pounds or more in interstate commerce are commercial motor vehicles under federal rules, and federal financial responsibility rules don't apply to vehicles rated under 10,001 pounds, except for certain dangerous materials. See couriers and small fleets for more.

Frequently asked questions

Is BreadRoute connected to the Postal Service?

No. BreadRoute is not affiliated with the US Postal Service. This page explains general financing and insurance questions for mail contractors. Your contract governs what the Postal Service requires.

What is a highway contract route?

A route on which a supplier carries mail over highways between designated points, on schedules set in the contract's terms and conditions.

What insurance does a mail contract require?

The contract sets it, so read the insurance clauses in yours. Contracts set liability insurance requirements, and the Postal Service's inspector general has reviewed whether contractors documented that they met them. Keep certificates current and ask your agent to compare your policy to the contract.

Can I finance trucks for a new route?

Through equipment financing. Providers weigh the trucks, your time in business, credit, and down payment, and may look at the contract's term and payment schedule. Whether to work with you is their decision.

Can I factor my mail contract payments?

It depends on the contract. Some government contracts limit assigning payments, so read yours and ask the provider before you assume factoring or receivables financing fits.

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