Auto Repair Shop Financing

by | Apr 1, 2020 | Business Financing, Insights To Business

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The automotive repair is a strong industry with $70 billion dollar in revenue.

However, there are significant cost for operating an auto repair shop such as equipment which can be costly, inventory to meet on going demand, as well as licensing and regulatory requirements.

The overhead in an auto repair shop is pretty constant. It usually only goes up during busy periods when supplies and parts are needed. But when times are slow the overhead won’t drop proportionally.

This is where auto repair shop financing can help.


When to consider a small business loan for your auto repair shop

There are many reasons why you may need a business loan such as an investment which will grow your business or extra cash to ensure you are able to meet your immediate financial obligation.

Here are some of the more common reasons auto repair shop owners seek financing:

Ensure Consistent Cash Flow
 Purchase Inventory
 Payroll, taxes, fees
 Increase workforce
 Purchase or repair equipment


Auto Repair Shop Business Loan Options

There are several different business loan or funding options available to auto repair shops.  All these may be viable options for you if you have been in business several years, have a good credit score, show consistent cash flow, and your annual revenue is strong.


Business Line of Credit

business line of credit is a flexible funding option which gives you access to funds when you need them, up to your approved amount. You only pay the premium and interest on the portion of money that you withdraw.

Requirements: 6 months in business; minimum personal FICO of 620; minimum annual gross revenue of approximately $300K.

You can be approved up to $250k.


Term Loan

A Term Loan is a viable option for an auto repair shop owner seeking a more traditional loan.  Terms range from two to five years and make it possible for you to borrow capital and repay it in a short period of time.  With a term loan you can receive funding in as little as four weeks, which is much quicker than a traditional bank.

Requirements: 2 years in business; minimum personal FICO of 640; must own a profitable business

You can be approved up to $200k.


SBA Working Capital Loan 

An SBA Working Capital Loan may be one of the best funding options for small business owners.  The reason –  It’s a government-backed loan, partially guaranteed by the Small Business Administration (SBA).    While these loans are harder for small business owners to qualify for due to more stringent requirements.

Requirements: 2 years in business; minimum personal FICO of 650; must own a profitable business

You can be approved up to $350k.


Working Capital Advance  

A Working Capital Advance typically have a higher cost and shorter term which is why this option is viable if you have poor credit score, have been in business a short period of time, or need funding quickly.  With this type of advance you can have funding within 3 days.

Requirements: 6 months in business; minimum personal FICO of 500; minimum annual gross revenue of approximately $180K.

You can be approved up to $500k.


Bank Loan

A traditional bank loan will require higher qualifications in terms of time in business, credit score, and annual revenue.  You will also need collateral to secure this loan and process to receive funding will take at least two months.  If approved a bank loan tends to have a lower interest rate and longer term options.


Auto Repair Shop Equipment Financing Option

Equipment, like a portable exhaust extraction system, in an auto repair shop takes a beating day to day. There is constant maintenance that has to be done. This takes time and money. Fast financing provides fuel to keep this machine going.

When you don’t have the cash on hand, equipment financing will allow you to finance up to 100% the cost of the equipment purchase, up to the lender’s maximum.  The purchased equipment will then be used as collateral.


Where to Get Auto Repair Shop Financing

A repair shop owner does not have the time to worry about finding money to fix equipment or to hire a new skilled mechanic.   Small Business Funding often help auto repair shop businesses that have trouble getting funding from a traditional bank.  We can provide access to fast and hassle-free financing.

Check your eligibility and see what funding options you may qualify for today.

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Grants for Auto Repair Shops

While there are not any specific grants for automotive repair shops, there government, State, or corporate grants you may qualify for which could be used for your specific business.

Unlike a business loan, grants do not need to be repaid.  However grants do come with specific guidelines which you must follow.  If you are awarded a grant and do not spend the money according to the rules, then there will be penalties and you may be required to pay back the entirety of the grant.

Here are a few non-specific use grants which you can apply for:


National Association for the Self Employed (NASE)

You must be a member of the NASE to apply for this small business grant worth up to $4,000.  The NASE award grant to small business for financing a particular small business need.  Past winners have used their grant money for purchasing equipment, hiring staff, advertising, and more.


Amber Grant

The Amber Foundation Grant is specifically for women-owned businesses.  The awarded grant is worth $4,000 and can be used for any business-related need such as equipment, marketing, or inventory.


Idea Cafe Small Business Grant

The Idea Cafe Small Business Grant is awarded to the business with the most innovated idea.  Business will receive a $1,000 grant.


Intuit Love Our Local Business

A $25,000 grant is awarded to the winner of the Intuit’s Love Our Local Business competition. The competition lets fans, including customers, vendors, employees, and the community, determine who will receive this small business grant.


A lot of research and effort goes into finding and applying for a small business grant.  And the grant process is lengthy, and you may not even be awarded the grant.  But if you qualify, this will be your best option for funding, since a grant does not need to be repaid.