It costs a lot of money for auto repair shops to maintain the same service level all year round. Their services require expensive equipment, plenty of staff, and a healthy arsenal of auto parts. These expenses become more difficult to meet when equipment breaks or lengthy projects arise. A series of projects involving expensive or large quantities of auto parts could easily compromise most operational funding.
Car dealerships face similar dilemmas when their assets become tied up in new cars and trade-ins. The industry is also highly seasonal, despite the need to pay dealership fees, run marketing campaigns, and offer steep discounts throughout the year.
United Capital Source has access to business loans for auto repair shops and car dealerships short on cash and facing mounting expenses to stay competitive.
United Capital Source has access to several business loans geared towards the cash flow cycles and recurring expenses of auto repair shops and car dealerships. In addition to covering temporary and large-scale costs, these business loans can bridge gaps in revenue when both industries wait to receive compensation.
Business loans for auto repair shops and car dealerships can come in the form of:
Business loans for auto repair shops and car dealerships can be used for many purposes and, therefore, feature several repayment structures. Small business loans can cover daily expenses for auto repair shops, such as hiring staff and launching marketing campaigns. These loans can also help refinance business debt.
For example, let’s say your auto parts supplier offers a discount on snow tires if you buy now, during the slow season. Since you’re not selling the inventory until next season, this situation is best suited for a Merchant Cash Advance or Working Capital Loan. With a merchant cash advance, you could make smaller payments until business picks up and you sell the snow tires. A short-term Working Capital Loan might also make sense because, by the time you finish making payments, you’d be reimbursed with the new revenue and wouldn’t have to spend your profits on loan payments.
Maybe you need to cover payroll and other regular expenses while completing large projects or awaiting compensation from an insurance provider. A business line of credit might be a more fitting solution. A business line of credit allows auto repair shops to use only the funds needed and pays fees on the used funds. This product is best suited for short-term, medium-sized expenses. It’s cheapest when you can pay off your full balance in just a few months.
Auto repair shops might also need to invest in new technology or heavy equipment. Equipment financing is a fantastic option in these cases, as the equipment you’re financing serves as collateral for the loan.
As for car dealerships, one of their most significant expenses is inventory, especially if they sell used cars. A Working Capital Loan would allow you to cover operational costs while purchasing large quantities of vehicles. We can also supply the funds required to market your new inventory aggressively. This way, you can sell the used vehicles quickly and maximize profitability.
Both types of businesses may need to acquire commercial real estate for their respective operations or to expand locations. Business term loans or SBA loans are generally the best loan programs for financing commercial real estate acquisition.
| LOAN TYPES | MAX AMOUNTS | RATES | SPEED |
|---|---|---|---|
| Merchant Cash Advances | $7.5k – $1m | Starting at 1-6% p/mo | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at Prime + 2.75% | 8-12 weeks |
| Business Term Loan | $10k to $5m | Starting at 1-4% p/mo | 1-3 business days |
| Business Line of Credit | $1k to $250k | Starting at 1% p/mo | 1-3 business days |
| Receivables/Invoice Financing | $10k-$10m | Starting at 1% p/mo | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 3.5% (SBA) | 3-10+ business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 1-6% p/mo | 1-2 business days |
Auto repair business loans provide the means to meet demand, which can skyrocket anytime. Busy neighborhoods have a myriad of auto shops to choose from. Thus, customers can easily take their business elsewhere if you don’t have the staff or inventory to get jobs done the moment they are requested. They won’t wait for you to be ready. Auto repair shop loans allow you to maintain the staff, equipment, and inventory to take virtually every appointment that comes your way.
You can also accept lengthy and expensive projects that otherwise prevent you from paying other bills. Some of these projects might be mostly covered by insurance providers, which can take a long time to send reimbursements. In other words, business loans allow you to say “yes” when your operational expenses and other obligations might say “no.”
Likewise, car dealerships can use business loans to cater to the preferences of their target buyers. This could mean purchasing large quantities of certain vehicles, renovating their waiting area, or ramping up their digital marketing efforts. Research has found that millennials visit at least 18 websites for recommendations or price comparisons before going to a dealership. Hence, dealerships must advertise themselves strongly enough to attract attention and stand out from the competition.
Financing can help auto repair shops purchase essential tools and equipment and hire additional staff as needed.
Lastly, it’s important to note that business loans from companies like UCS are much more accessible than traditional products. Minimal paperwork is required, and you can get funded within 24-48 hours. You don’t need excellent credit, perfect cash flow, or collateral. Hence, if new expenses arise unexpectedly, you won’t have to worry about meeting steep requirements or waiting several weeks (or months) for funds to appear in your bank account.
The accessibility of business loans can make it tempting to seek funds you don’t necessarily need. For example, a newly-released piece of equipment can potentially increase efficiency. This might seem like an excellent opportunity to pursue equipment financing. However, after you purchase the equipment, you realize it will only be relevant for about two years. In this situation, leasing would have made more financial sense than buying.
Major expenses also tend to create other costs, making it challenging to figure out how much money to borrow. Maybe you’ve just bought new equipment that allows you to offer new services. Do your employees have the training to perform these services or handle the latest equipment? Training courses come with a cost, and your new equipment is yet to bring in revenue.
A similar dilemma could arise after ordering expensive parts for a large project. Do you also have enough employees on staff to complete the project by the scheduled time frame? If so, how will you continue to pay these employees if demand drops once the project is completed?
Researching your options beforehand is the only way to choose the correct borrowing amount and repayment structure. Unfortunately, many business owners don’t have the time to study business loans while running their businesses.
The amount of paperwork required depends on the product you choose. Funds can be approved and distributed for most products within 1-3 business days. Here’s how to apply:
The first step is choosing the most sensible solution to the problem at hand. This should require some research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term expense? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Here are the documents and information required for Auto Repair Shop & Car Dealership Loans:
SBA loans require additional documents and information, such as financial statements. To learn what’s needed for the SBA-backed loans, visit our SBA loan page.
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
If you’re approved, we’ll contact you within 24 hours. After closing, funds for most business financing products should appear in your bank account within 24 hours to one week.
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
If your application is declined, it’s possible that you applied for the wrong product to meet your cash flow needs. In this case, we would likely recommend a different product with a less hazardous repayment structure.
Your application might also be declined if it is determined that you cannot afford to take on more debt at this time.
If your credit score is holding you back from accessing financing, consider working with a reputable credit repair service to raise your scores.
The stability of the automotive industry is directly linked to the general economy. When the economy takes a turn for the worse, virtually all dealerships feel the impact to some degree. Business loans can help dealerships meet their current obligations and maintain relevance during rough patches.
Also, car dealerships don’t make any money from trade-ins until they sell the vehicle. But does that mean they shouldn’t stock up on trade-ins now that used cars are so popular? Business loans can come in handy when dealerships acquire trade-ins in the months leading up to a busy period.
Another reasonable use of business loans for car dealerships is marketing. Ever wonder why used car dealerships tend to slash prices so aggressively? It’s because they haven’t sold their cars as quickly as intended. The dealership is merely trying to minimize the loss. Why didn’t the vehicle sell at its original price? Odds are, it’s because the dealership failed to market the vehicle correctly. With the right marketing strategy, dealerships don’t have to slash prices and lose out on profits.
Purchasing inventory is another crucial need that car dealership loans can help provide. Several loan programs can provide floor plan financing to ensure your lot is always stocked with in-demand vehicles.
No, business loans for either industry do not require collateral. However, if you can provide collateral, you may be able to offset issues with credit history or cash flow that would have otherwise resulted in higher rates or lower borrowing amounts.
Before assuming you can provide collateral, contact the business loan provider to make sure they accept your desired type of collateral. And the value of collateral might not directly reflect your permitted borrowing limit. For example, $10,000 worth of collateral might be able to get you a $6,000 loan with a competitive interest rate.
This depends on where you apply and the product you have in mind. If you’re looking for a bank loan, you’ll need excellent credit, perfect cash flow, collateral, plenty of money in the bank, high annual revenue, and at least two years in business. Conventional lenders often view the auto industry as high-risk. Many lenders look for a strong credit score to qualify for business loans.
Traditional lenders have lengthy application and funding times. The loan application process can typically take between 30 and 90 days, depending on the complexity of the loan. Fortunately, alternative lenders provide much faster funding than conventional lending institutions, often able to close and fund loans within a few days.
Alternative lending options are easier to acquire than traditional bank loans for auto repair shops. Products from companies like United Capital Source are much more accessible. Your ability to meet the requirements mentioned above will determine your borrowing amount, rates, and terms. But falling short in any (or more than one) of these areas won’t stop you from qualifying for multiple products. With some products, your credit score is practically irrelevant. For example, eligibility for a Merchant Cash Advance is based on the size and volume of your debit and credit card sales.
Compare lenders for eligibility criteria, loan amounts, repayment terms, and other considerations.
Yes, five out of the seven aforementioned products are accessible for borrowers with bad credit. Because bad credit makes you more likely to default, your rates may be higher, and your terms may be shorter. However, if you have strong cash flow or can provide collateral, your bad credit may have less impact on your rates and terms.
The only two products not accessible with bad credit are business term loans and SBA loans. These products carry high borrowing limits, low rates, and long terms. The other five products usually carry shorter terms and are much easier to repay. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
UCS will never communicate with a prospective client on Facebook, Facebook Messenger, or any other type of social media. Further, any email communications will always come from an official UCS email address and not a Gmail, Yahoo, or other email domain. If you believe you have been contacted by someone posing as an employee of UCS, please email [email protected].
