Automotive Business Loan

Get access to revolving funds when you need it most

Serine Alejandro

December 28, 2020

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Automotive Business Loan

Take Your Business to the Next Level with an Automotive Business Loan

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 throughout the United States, such as:


Car Dealership

Auto Repair

Tire and Auto Parts

Car Wash and Detailing

SMB Compass understands that auto businesses need working capital to strive in a competitive market. This is why we specialize in providing personalized automotive business loans for auto businesses in the US. We will work with you to find a financing product that fits your needs and goals.

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Use an Automotive Business Loan

Best Ways to Use an Automotive Business Loan

Automotive businesses are capital intensive, but with an experienced funding partner, your business will continue to thrive. Here are different ways you can use an automotive business loan:

Store improvements

Open new locations

Purchase parts, equipment, and inventory

Advertising and marketing

Hire new employees

Education and training for employees

Operating expenses

Refinance existing debt

Pay for unexpected business expenses

Different Loan Options for Auto Business Loans

Automotive businesses need funds to pay for operating expenses, open new locations, purchase equipment, etc. SMB Compass believes that your business deserves the best, so we will help you find the perfect financing solution for your business. Listed below are the most common automotive business loans:
Best Types of Loan Programs

SBA 7(a) Loans

It’s a known fact that small business owners have a hard time qualifying for business loans. The Small Business administration created SBA loans to help small businesses secure additional working capital by guaranteeing 85% of the loan.

The SBA 7(a) loan is perfect for automotive businesses because of its competitive interest rates and 10 to 25-year repayment terms. A 7(a) loan is a general purpose loan, which means you can use it for just about anything – as long as it’s for the benefit of your automotive business.

Invoice Factoring

Invoice factoring is the 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.

Personal credit, cash flow, and business credit are the basis for the terms of your line credit. Since collateral is not required, lenders look for candidates with solid cash flow and operating history. If you have an excellent credit history, as well as cash flow, the terms of your loan will most likely 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.

Learn About Your Financing Options

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