If You Are Looking For Auto Repair Shop
Loans For Your Business, Find The Most Competitive Loan You Can
In spite of
credit being tighter than in years gone by, many types of loans are still available to auto repair shops, auto body
shops and auto lube centers. From normal term loans, business loans, equipment loans and merchant credit card
advances, there are a wide array of options.
Car repair shops have been a staple
of the economy for years. As long as there have been cars, there have been repair shops. Because the
economy has worsened over the past few years, people are driving their cars longer than they did in years gone by
and are not purchasing new cars as often. This is a huge plug for car repair shops.
On the negative side, car repair
shops, auto body shops and auto lube centers are considered special purpose facilities. Many banks do not
like to lend to special purpose facilities. Let's imagine that you owned a business and your chief mechanic left
for personal reasons or to start their own business somewhere else. It's likely to assume that some people
would go to the new repair shop or would go elsewhere. With investment properties like apartment buildings or
office buildings, losing a tenant won't necessarily make you go out of business. Plus, a special purpose
facility can not usually be converted to some other property. Banks would rather do an auto repair
business than a gas station, restaurant or a hotel, but they still are not as desirable as doing loans for
doctors, dentists, veterinarians, apartment loans or other types of businesses.
You have to also ask yourself what type is the best type of financing. Part of it depends on how
fast you need the capital. In some cases, if you own multiple facilities, SBA and/or USDA Rural Development
financing will not be an option. If you need working capital or capital to purchase inventory, an equipment lease
or a merchant card advance might be the way to go. Truth be told, the best deal is usually with a smaller local
bank... if they will do your deal, which in many cases, they will not. They also might be limited as to options
WHY WASTE YOUR TIME WITH A LENDER
THAT WILL NOT OR HAS NOT DONE MANY AUTO REPAIR SHOP LOANS?
You see, it's an account executive's
job to generate loans. They're not there to be a pretty face, at least they shouldn't be! Some are quite
capable, some, not so much. A good rule of thumb if you're talking to one is to just start quizzing THEM on
the automotive industry and see if they know ANYTHING about it. If they don't, are you really going to
have a lot of confidence in their ability to get you financing?
review your transaction based on the following criteria.
It really is not more complicated than this.
They're not looking to lend because it's the popular thing to do.
Capacity refers to
your and the business' ability to repay the loan. Capital refers to the money you are investing or
have invested into the business. Collateral is the security you are providing to guarantee
the loan. Conditions focus on the purpose of the loan and are there certain conditions existing
that will enhance or diminish the probability of paying back the loan. Character refers to
your personal credit, background, experience, references and other intangibles.
Each type of car repair
shop financing has its distinct advantages and disadvantages. Some people ONLY make
their decision based on rate, term and/or points involved. This frequently is the WRONG decision, unless
you do not care about Return On Ivestment (ROI) or Cost Of Funds (COF). By all means, don't use that
calculator of yours because YOUR CALCULATOR NEVER LIES.
In looking for financing, first you
want to do deal with people that understand the industry more than on a cursory level. Banks and lenders don't like
to lend right now. Period. Credit is tighter than ever. To add insult to injury, the government has required
all banks to set aside more capital for potential default which in layman's term means the same banks can lend less
money for the same amount of money on deposit.
Second, wouldn't you want to go to
lenders that are actually doing and have recently done auto repair shop loans? We are in the
business of knowing which banks and lenders have done and closed car repair business loans as recently as
a month prior. It is possible that just because a lender did a loan for another business that they will not
do one for your transaction, but logically, isn't that the best place to start?
Third, half of the battle is in the
presentation. Lenders HATE getting financing packages from borrowers, mortgage
brokers, realtors and business brokers that are poorly prepared, poorly organized. Banks now will turn down
loans if they think the borrower is disorganized because of new federal guidelines that require banks to set more
money aside for default if borrowers do not provide financials and compliance documentation in future years.
They can actually have a performing loan that is not a profitable loan.
Fourth, especially when you're
purchasing a car repair business, know if you're paying too much! Because part of it is a cash business, many
sellers go off what they business actually does as opposed to what they are declaring and you will inevitably pay
too much for the business unless sellers are properly educated as to appropriate multiples for what is
||Geographic States: All States
Types: Purchase, Refinance, Cash Out, Construction, Card Advances
Type: Fixed Or Floating, Depending On Type Of Funding
||Amortization: Up To 25 Years
- Call For Quote
||Loan-To-Value Ratio (LTV): Up To 85% LTV
||Subordinated Debt: Seller Seconds Allowed
Down Payment: As Little As 10%
||Collateral: First Position Lien Only (Asset Loans) and/or UCC Lien
||Appraisal: MAI Appraisal Required (Lender ALWAYS To Order
Score: Usually Requires A 650 Minimum FICO Score
||Recourse: Full Recourse
To find out and
pre-qualify for financing and what options are available, please send the following
2014 Year End Business Financials (Corporate Returns / Profit
2015 Year-To-Date Business Financials
To learn more about us, click the About Us page or the Frequently Asked Questions (FAQ).