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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.

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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

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:

Auto Business Loans

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.

Automotive Business Loans
Loan for Automotive Business

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.

Equipment Financing Loan

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:

Auto Business Loans

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.

Automotive Business Loans

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.

Loan for Automotive Business

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 Loan

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.