Best Auto Repair Business Loans Explained
Let’s now take a deeper look at the top auto repair business loans listed in the table above. We will also provide you with insight into our recommended lenders.
Small Business Administration (SBA) loans have government support, guaranteeing 85% of the funds. SBA loans help small businesses operating in specific industries where there’s a high demand for services. However, there are only a few lenders who are approved to distribute government grants.
SBA loans are ideal for the initial capital outlay needed to open your auto repair business. An SBA loan will help you cover most of your expenses for the first year and obtain the workspace and workforce that you'll need. You’ll be approved for this financing solution if you can show how much profit you will make from your auto repair business services.
StreetShares is an approved SBA lender that covers industries including the auto repair sector. StreetShares even accepts businesses that don’t anticipate a high return on investment for the first year. The lender also rewards clients for loyal repayments.
Short to medium-term loans are a good option if you don’t qualify for an SBA loan. Short-term loans have a repayment period of up to 18 months, while medium-term loans have a repayment period as long as five years. The term loan you select will vary according to the objectives of your business plan, and how quickly you expect your business to make a profit.
A term loan can also help you expand your business. You may, for example, wish to open another site or purchase more equipment. You may also want to increase your workforce for faster repair turnaround times. Term loans are ideal for businesses who wish to expand further because once you are an established business you can use your track record to secure this type of loan.
OnDeck offers several financing solutions, but they are exceptional when it comes to short-term loans. OnDeck is forgiving if you have a bad credit score and they also have more lenient approval requirements, in comparison to their competitors. They also boast a helpful customer service resource.
Equipment financing is essential for any auto repair business. This loan type will help you obtain the vehicles, machines, and tools you need to perform the services your customers expect. If you’re lucky, you’ll find a lender that’s willing to pay for the entire value of the equipment you need. However, you can expect high interest rates if you don’t have much experience in your sector.
Equipment loans are the backbone of the auto repair business. If you only need funds to purchase assets and tools, there’s no need to look at other loan options. Equipment financing is also an ideal choice if you want to save your capital and operating budgets for the year ahead.
National Funding provides equipment financing for small businesses in the auto repair business, which may include obtaining inventory items and adding marketing campaigns. National Funding is happy for you to use the funds to buy new equipment, however, you will need to show how your auto repair business will be successful.
When you need revolving funds to cover your daily operations, a business line of credit is an excellent solution. You have the option of drawing on as much money as you need, and you will only need to pay for what you owe on a monthly basis - over the repayment period. In short, a business line of credit will give you fast access to funds.
Auto repair businesses spend money on inventory items daily. Whether you suddenly need to buy new brake pads for a Toyota Supra, replace a flywheel, or your wheel alignment machine fails, a business line of credit may be your best option. If you can’t wait for loan approval or you have used up your last operating funds, a business line of credit is ideal. As the money from this loan will tie you over until you receive the income you need to repay the loan.
Out of all the lenders available for this loan type, we recommend BlueVine. BlueVine has an online portal that lets you view what you owe and manage your payments. It also grants you quick access to funds as and when you need them.
Invoice factoring works well when you have numerous clients that owe you money. With invoice factoring, the lender buys your invoices from you. However, you may need to prove that your clients are reliable and have a history of paying your invoices. It also helps if you have contracts in place that stipulate 30- to 45-day payment terms.
When their vehicles suddenly break down, some clients don’t have the cash on hand to pay you immediately. You can set up an agreement for them to pay at the end of the month. You can then rely on the lender to cover the costs for you in the interim period. In this way, you will always have funds available for inventory purchases.
Fundera has several loan solutions available for auto shop owners, with invoice factoring being at the top of the list. Even if you’re a startup company or have a bad track record, Fundera will help you get back on track in relation to your financial health.
If you need finances fast to upgrade equipment or add new equipment to meet demands Fora Financial is highly recommended for your auto repair business. This is also a great way to keep the cash flow of your business healthy and stay on top of expenses.
A merchant cash advance can help if you need to hire more skilled workers to expand your current service base to a demanding market. This is an ideal type of loan to use for the payroll or invest in marketing strategies.
You can get approved for this type of loan in only 24 hours and you need no collateral to get approved and have the money available quickly. There are no set terms for paying back the loan but there are some benefits for early-down payment of the loan.