Auto Repair Business Loans

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Best Business Loans for Auto Repair Shops

Small business owners in the auto repair industry face a highly competitive and challenging environment. The demands of running a successful auto repair business for a small business owner can be complex and is more than just repairing cars.

A lot needs to be addressed in an auto repair shop’s operation, including facility and location maintenance, equipment to meet the needs of repairs, proper advertising for customer acquisition and retention, and a skilled labor force with continued education and training. Auto repair shop loans are necessary to tackle all of these needs, gain an edge above the competition, and reach your business’s full potential.

Auto repair shop owners will face challenges when dealing with traditional outlets for a bank loan. AdvancePoint Capital has the experience and history of acquiring small business loans for auto repair shops across the United States. We can provide the small business loans that auto repair shop owners require to meet their needs. Try out our loan services today!

The 8 Best Small Business Loans for Auto Repair Shops:
What are my Small Business Loan Options?

Long Term Auto Repair Shop Loans

Long term business loans are an option with a fixed approval amount paid back within a term of 3 to 10 years with monthly payments and principal and interest rates. Auto repair shop loans are popular as lenders offer incredibly low rates. Still, it’s challenging to secure financing from conventional routes with their high credit standards, significant paperwork, profit requirements, and minimum gross revenue that most small businesses do not have. The typical repayment period is 3 to 5 years but can be longer if necessary.

 

Highlights of Term Business Loans:

  • Lender rates starting at 7%
  • Terms from 3 to 10 years in duration
  • Monthly affordable payments
  • Credit scores from good to excellent

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Long Term Auto Repair Shop Loans

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Short Term Business Loans for Auto Repair Shops

Short term business loans are very accessible to many small businesses, including auto repair shops. They have lower annual revenue requirements, typically do not provide business funding based on profit & loss like a conventional bank loan, and lenders will rely more on credit and cash flow health in business bank statements.

Short term business loans feature a fixed amount funded with a fixed amount that you’re responsible for paying back over a fixed term of time. Lenders typically offer a fixed monthly, weekly, or daily payment via ACH for this loan product.

 

Highlights of Short Term Business Loans:

  • Business funding in as little as one day
  • Lenders accept excellent to poor credit scores.
  • Only an application and three months bank statements required for approval
  • Easier approval qualifications than most other business loan products

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Short Term Business Loans for Auto Repair Shops

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Business Line of Credit for Auto Repair Shops

Business credit line options offer the most flexibility as they operate similarly to a credit card, enabling you to access money at any time as long as you have not reached your credit limit. This product is not a loan but a revolving line of credit.

Business owners also have the ability to apply for an increase with additional information provided and approved. You receive a credit limit once approved and can draw as little as you want, as often as you want, as long as you don’t exceed your limit.

A line of credit typically is six months to a year in duration but can be revolving and have principal and interest rates that can be quite attractive. Lenders offer this type of financing to be extended through a process called renewal.

 

Highlights of Business Line of Credit:

  • Lender rates starting at 7%
  • Revolving credit
  • Affordable monthly payments
  • Ability to take as little as you want and draw on it as often as you like
  • Only responsible for the interest on the current balance

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Business Line of Credit for Auto Repair Shops

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Small Business Administration (SBA) Loans for Auto Repair Shops

If you demand the best business loan product at a great price and excellent terms and you have time and a knack for paperwork, then an SBA loan may be exactly what your auto repair business needs. SBA loans are loans that the United State’s Small Business Administration guarantees.

The rates and terms of this product are more attractive than any other type of business financing, but the catch about SBA loans is that they are challenging to get approved for with such stringent qualifications. Real estate market value may be required as collateral for some SBA products.

 

Highlights of SBA Loans:

  • Repayment schedule from 1 to 25 years
  • Lender interest rates as low as 5%
  • Monthly payments and affordable repayment terms
  • Programs like the 7(a) and SBA 504 C

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Small Business Administration (SBA) Loans

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Business Cash Advance

Business cash advances (BCAs) are a type of purchase of future sales agreement that advances future sales at a discount to the business. The business is responsible for paying back a fixed lump sum (also known as a specified amount). The difference between the advance amount and the specified amount is called the “factor rate or cost.”

A fixed percentage of future overall sale deposits is the method used for repayment or a portion of future credit card sales. The payments are collected by an ACH fixed daily or weekly from the business bank account or percentage of credit card batch, based on the specified percentage of future sales.

Reconciliation can occur at the end of every month. If the fixed payments taken are more than the set percentage of sales in the agreement, a business owner can request a refund for overpayment so that the set specified percentage of sales matches the sales volumes. A business cash advance is not a loan but an advance of future sales to the shop’s revenue.

 

Highlights of Business Cash Advance:

  • Low business revenue requirements
  • Factor rates from 1.09% up to 1.45%
  • Payoff dependent on future sales
  • Origination costs/fees that range 0% to 5%
  • Flexible repayment schedule
  • All credit types considered

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Business Cash Advance

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Business Credit Cards

Business credit cards are credit cards with business guarantees and revolving credit lines that business owners can use for any purchase with a card or account number. The business owner pays accrued interest on the balance with low minimum monthly payments and no set term for repayment when used. Banks are the lenders for this product.

A plastic card is issued for purchases and payments. Auto repair shops use this product in conjunction with other loans since this is not a loan but a line of credit.

 

Highlights of Credit Cards:

  • Revolving credit with principal and interest charged.
  • Rates and costs vary depending on the lender
  • Origination fees vary from 0 to $500 per year
  • Ease of use requiring little to no contact with a creditor and online access to all account needs.
  • Low business revenue requirements
  • Flexible monthly payments and repayment terms

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Invoice Factoring

Invoice factoring provides small businesses the opportunity to get an advance on their invoices quicker than waiting to be paid by their clients. Invoice financing companies advance the invoice’s outstanding balance once submitted to them in exchange for a nominal fee.

This process accelerates the payment of invoices to small business owners to improve cash flow. The invoice finance company is then responsible for collections of all invoices that are advanced. Invoice financing (factoring) is not a loan but an advance off specific invoices.

 

Highlights of Invoice Financing:

  • No rates
  • Repayment term depending on the invoice due date
  • Fees ranging from 1% to 2.5% fee based on the invoice
  • The credit of the clients need to be favorable, NOT the small business owner advancing off invoices

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Invoice Factoring

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Equipment Financing

Equipment financing is used for the purchase of equipment, securing the equipment as collateral. This type of funding comes in the form of a loan or a lease and is a standard funding option for auto repair shop owners and their businesses. This product can come in the form of a lease or a loan, depending on the lender.

Product Overview

  • Lenders factor rates 1.09% up to 1.45% or interest rates 4.5%-28%
  • Repayment terms from 2 to 10 years
  • Origination fees range from 0% to 3%
  • Monthly fixed payments
  • Good to excellent credit required

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Equipment Financing

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Small Business Owner Benefits of Auto Repair Shop Loans

Running an Auto Repair shop can have a unique set of cash flow issues. Payroll, advertising, equipment maintenance, and purchases — as well as property maintenance and improvements, can really cut into cash flows. This makes it essential to have financing to balance your revenue and have the proper reserves to handle anything that may come up, such as capital expenses.

Auto Repair Shop Equipment

Equipment financing for auto repair shops may be necessary because machinery for auto repair shops can get pricey, often into the tens of thousands of dollars. Equipment such as lifts, air compressors, computer auto evaluation tools, tow trucks, and a variety of specialty equipment tools most of the time will require loans to purchase. Equipment loans will keep your cash in your bank account instead of draining your working capital cash flow.

Employment

We think it can be easily said that the mechanics working on automobiles are the lifeblood of a repair shop. Hiring the right people and maintaining continuing education is a must and can be costly, especially if you’re trying to maintain high qualification and certification standards. Sometimes signing bonuses are needed to acquire the talent and maintain a high standard of knowledge and education. Financing may be necessary to fill the gaps and keep cash flows strong.

Supplies

You may be the type of Auto Repair Shop that needs to maintain a certain amount of supplies/parts on hand to improve the speed and efficiency of your auto repair shop. Acquiring items in bulk may require a loan to get special deals or save on money.

Renovations/Capital Improvements

The real estate the auto repair shop is located on will need to be maintained. Expansion of customers may translate into facility enhancements and require business funding to finance additional work bays, customer service desks, and seating areas for people waiting for their car to be repaired or other structural needs.

Advertising

Advertising, now more than ever, is a part of being a successful Auto Repair Shop. The success and growth of an auto repair shop require attention to the internet. You’re not in business unless you’re showing up on the first page of a Google search; it’s the Yellow pages of the 21st Century.

There are many options out there for a customer to repair their cars, and more customers use internet search engines to find a solution. The cost to build a website and the search engine optimization needed month over month will cost thousands of dollars but will be well worth it.

A loan may be required because the money needed for these services adds up fast. The cost and fees to have a proper website built and optimized for search engine optimization can reach above $10,000, let alone the monthly data optimization work, which takes time, effort, and money paid to web developers who specialize in search engine optimization.

Types of Auto Repair Shop Small Business We Serve:

  • Auto Repair Shops
  • Tire Stores
  • Transmission Repair Shops
  • Car Detailing and Car Wash
  • Auto Parts Stores
  • Towing Services
  • Truck Repair Shops
  • Auto Body Shops

The fast, convenient, and straightforward way to get the money you need for your small business – now!

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