Automotive Business Loan

Automotive Business Loans Can Help Your Business

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How an Automotive Loan Can Help Your Business

Business owners in the automotive industry often find themselves in an awkward situation: a majority of operational funding relies on customer payments, but most customers only pay the full amount when the job is done. So how do automotive businesses cover payroll and other business expenses, while working on jobs, waiting for payment?

Sometimes, business opportunities come up – maybe multiple, or lengthy projects – that could require new and expensive car parts. Would you be willing to give up those opportunities just because you don’t have working capital available and your competition does?

Auto shops often have to invest a substantial amount of cash to provide high-quality service – even without seeing an immediate increase in revenue. Because auto shops are usually covered by insurance companies, they often have to continue serving their customers as they wait for reimbursements.

Car dealerships, another sector of the automotive industry, experience similar cash flow problems. Since 75% of their assets are invested in new cars and trade-ins, profits are only realized when a car is sold.

Additionally, the car dealership business can be highly seasonal. Despite an off-season, the dealership still needs to pay dealership fees and offer competitive rates and discounts, while maintaining marketing campaigns throughout the year.

Automotive businesses could often use the help of an automotive business loan. SMB Compass has funded different types of automotive companies in the United States, such as:

  • Towing
  • Car Dealership
  • Auto Repair
  • Tire and Auto Parts
  • Car Wash and Detailing

We understand the challenges of running an automotive business. That is why we’re committed to working with you through the good times and the bad to help find a financing product that fits your needs.

Best Ways to Use an Automotive Business Loan

Running a business can be hard, but if you have a reputable funding partner that believes in your business’ potential, you can have a shot at success.

Here are some of the ways you can use the funds from an automotive business loan:

  • Store improvements
  • Open new locations
  • Purchase parts, equipment, and inventory
  • Payroll and taxes
  • Advertising and marketing
  • Hire new employees
  • Education and training for employees
  • Operating expenses
  • Refinance existing debt
  • Pay for unexpected business expenses

How Long Does Automotive Business Financing Take?

SMB Compass offers quick approval for your automotive loan. Our company has provided more than $160,000,000 to small businesses all over the country. All of our clients are presented with the best loan programs, tailored to their needs.

We offer fast and flexible funding. In four easy steps, your business will receive the funding you need:

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Apply for an automotive business loan online

Our simple online application lets you fill out and submit your request for funding. The process is pretty simple, but if you need help along the way, you can contact us via phone, chat, or email.

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A friendly 5 to 10-minute introduction

The next step is an introductory conversation with one of our account executives. We will go over your needs and begin to discuss the different options available.

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Documentation and underwriting

Once you make a decision and reach an agreement, we’ll provide closing documents to review the terms. We’ll also answer any final questions you might have.

Approval and funding in less than 24 hours

When your loan has been approved, we immediately send the funds to your business bank account within 24 hours.

Best Types of Loan Programs for Auto Business Loans

SMB Compass offers different types of financing options for your automotive business needs. To ensure that your business gets nothing but the best, our trusted financial advisors will help you find the right loan, based on your business’ specific needs and goals.

Here are the most common types of financing options for automotive businesses:

SBA 7(a) Loans

The Small Business Administration (SBA) gives incentive for lenders to offer loans to small businesses by guaranteeing a percentage of the funds immediately. This makes SBA loans ideal for small businesses.

The SBA 7(a) loan is also ideal for hotel financing because it has low-interest rates, long repayment terms (10 to 25 years), and you can borrow up to $5,000,000. The SBA 7(a) loan is flexible, and you can use it to fund any hotel financing need, such as purchasing commercial real estate, construction, renovations, equipment purchasing, additional working capital, and more.

Invoice Factoring

Invoice factoring refers to selling your open invoices or accounts receivable to lenders or factoring companies at a discounted price. When your customers pay their dues, it goes directly to the lender. If you have open invoices and you need additional working capital, you can use invoice factoring to gain access to quick cash when you need it.

Business Line of Credit

Just like a credit card, a business line of credit lets you withdraw funds against a predetermined amount set by the lender. Businesses pay the amount they withdraw, and then can use the line again for other purchases.

The terms of a line of credit are based on three factors: personal credit, business credit, and cash flow. Since this type of loan is not secured by collateral, potential lenders want to see strong cash flow and good operating history. If you can show an excellent credit profile and strong cash flow, there’s a great chance that the terms and rates for your loan will be attractive.

Equipment Financing

Small business owners in the automotive industry often have two options when it comes to buying equipment:

  • Taking on a sizable equipment loan to buy new equipment; or
  • Pool resources to buy used tools.

You don’t have to sacrifice your financial cushion just to buy new equipment. Equipment financing enables you to purchase brand new equipment without having to disrupt cash flow, drain your savings, or use up working capital. There are typically two options for equipment financing: equipment loans and equipment leasing.

Best Types of Loan Programs for Hotel Business Loans

SMB Compass offers different types of financing options for your hotel business needs. We have financial experts on hand, ready to help answer any question to make sure you find a loan product that fits your needs.

Here are the most common types of financing products for hotels:

SBA 7(a) Loans

The Small Business Administration (SBA) gives incentive for lenders to offer loans to small businesses by guaranteeing a percentage of the funds immediately. This makes SBA loans ideal for small businesses.

The SBA 7(a) loan is also ideal for hotel financing because it has low-interest rates, long repayment terms (10 to 25 years), and you can borrow up to $5,000,000. The SBA 7(a) loan is flexible, and you can use it to fund any hotel financing need, such as purchasing commercial real estate, construction, renovations, equipment purchasing, additional working capital, and more.

Asset-Based Loans

If your business doesn’t have enough revenue or cash flow to qualify for other forms of business financing, you might want to look into asset-based loans. Asset-based loans are ideal for businesses with a high value in assets or on their balance sheets.

Businesses can use their assets as collateral to secure financing. Most lenders consider the following as collateral for an asset-based loan:

  • Accounts Receivable
  • Inventory
  • Equipment
  • Intellectual Property
  • Real Estate
  • Marketable Securities

Merchant Cash Advance

A merchant cash advance is a good option if your hotel business needs working capital ASAP, or if you don’t have good credit. Technically, a merchant cash advance is not a loan; as the name suggests, it’s more of a cash advance.

With a merchant cash advance, lenders provide you with the funds you need in exchange for a percentage of your daily credit/debit card transactions. While a merchant cash advance isn’t a loan, it still offers similar benefits. It also has a higher approval rate than other traditional loan programs.

Equipment Financing

Buying new equipment for your hotel is expensive. Equipment financing provides you with the money you need to purchase new beds, washers and dryers, vehicles, or any other equipment your hotel needs. Typically there are two equipment financing options: equipment leasing and equipment loans.