Editor's choice: OnDeck business lines of credit
- Business or practice ownership not required
- No hard annual revenue or time-in-business criteria
- Multiple loans OK
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Specialized equipment, location, payroll and general inventory can be expensive to keep up, especially when you’re just starting out. Renovations can make finances for your shop tight as well.
When you’re in need of extra working capital, a business loan could help ease cash flow and help your auto repair shop grow. We take you through your options, how to compare them and what you need to apply.
The type of financing you choose depends on how your company generates revenue and what you’ll use the loan funds for. Since auto repair shops bring in revenue from lots of customers and you may need a loan to maintain or upgrade your repair tools, financing that’s flexible or specialized for equipment could be ideal.
Even within the auto repair industry, your needs will vary greatly from a competing shop’s across town. Here are ways to see if an offer is right for you:
How much do I want to borrow?
Not all options will allow a minimum or maximum amount that meets your needs. Borrowing more than you need can lead to paying unnecessary interest, so it’s important to get close to the amount you need only.
When would I like to repay the loan?
Shorter terms sometimes come with the benefit of a lower overall cost of your loan, but it might not be feasible for shops with a lower cash flow. Take into account how much you’re able to pay back, and plan for any emergencies that may pop up.
How much am I willing to spend in costs?
By getting a lower interest rate, you’ll likely have a lower cost overall. Be sure to look for the APR when available, which includes extra costs in the rate. Consider underwriting, document preparation, application, late and prepayment fees when looking into financing plans. Prepayment fees can be especially tricky if you want to cut down on the cost of the loan by paying it off early.
Am I eligible?
Before you apply, make sure you meet a lender’s minimum qualifications. Some applications require a hard pull on your credit, which can affect your credit score — unnecessary if you aren’t eligible in the first place.
Different lenders require different criteria based on the types of financing they offer. Here are a few basic documents to ready regardless of where you end up applying.
We gathered tips from automative industry websites and entrepreneur blogs. Here are seven to help you run a successful auto repair shop:
Keep your garage on track to success by pinning down the financing option that’s best for your situation. There’s a lot to explore, but you can potentially narrow down your options quickly by knowing what it is you want and why.
Compare your options, find the best fit and get ready to make your business even better than your competitors.
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