Auto Repair

An Overview of Small Business Loans for Auto Repair Shops

It costs a part of cash for auto repair shops to preserve the same benefit level all year circular. Their administrations require costly gear, bounty of staff, and of course, a solid arms stockpile of auto parts. These costs gotten to be more troublesome to meet when gear breaks or long ventures emerge. An arrangement of ventures including costly or huge amounts of auto parts seem effectively compromise most operational funding. Car dealerships confront comparable problems when their resources get tied up in unused cars and trade-ins. The industry is additionally exceedingly regular, despite the got to pay dealership expenses, run promoting campaigns, and offer soak rebates all through the year.

Benifyt has get to business loans for auto repair shops brief on cash and confronting mounting costs to remain competitive.

We will address all the following queries in this tutorial, plus more:

What Are Auto Repair Shop Business Loans?

How Do Repair Shop Business Loans Operate?

What Benefits Do Business Loans Offer to Repair Shops?

What Drawbacks Do Business Loans for Repair Shops Have?

Who is Eligible for Auto Repair Shop Business Loans?

How Auto Repair Shops Can Apply for Business Loans:

What Happens If My Application for a Business Loan Is Turned Down?

1. What Are Auto Repair Shop Business Loans?

Benifyt has access to several business loans designed to help vehicle repair with their ongoing costs and cash flow cycles. These business loans can fill revenue gaps when both industries wait to be paid, in addition to supporting both short-term and long-term expenses.

2. How Do Repair Shop Business Loans Operate?

Auto repair shop business loans can be used for many purposes and therefore can have multiple repayment structures. 

 For example, let us say your auto parts supplier offers a discount on winter tires if you buy now, during the off season. Since you do not plan to sell your inventory until next season, this situation is best suited for a merchant cash advance or working capital loan. With the merchant cash advance, you can make smaller payments until the store opens and the winter tires are sold. A short-term working capital loan can also make sense, because after making the payments, you will get new income and you do not have to use your profit to pay off the loan. You may need to cover salaries and other regular expenses if you are completing large projects or waiting for reimbursement from your insurance company. In such cases, a business line of credit may be a more appropriate solution. This product is best suited for short- and medium-term expenses. It is cheapest if you can pay off your entire balance in a few months. 

3. What Benefits Do Business Loans Offer to Repair Shops?

Business loans can give auto repair shops the resources to meet demand, which can increase at any time. There are countless car dealerships to choose from in busy neighbourhoods. Therefore, if you do not have the staff or inventory to get the job done right away, customers can easily take their business elsewhere. They do not expect you to be ready. With a business loan, you can keep staff, equipment, and inventory for almost every meeting. You can also take on long and expensive projects that would otherwise prevent you from paying other bills. Some of these projects may be largely covered by insurance companies, so claims may take a long time to submit. In other words, business loans allow you to say “yes” when operating expenses and other liabilities may say “no.”

Finally, it is important to note that business loans from companies like Benifyt are much more accessible than traditional products. Minimal paperwork is required and you can receive your money in as little as 24-48 hours. You do not even need great credit, perfect cash flow or collateral. That way, when new expenses suddenly appear, you do not have to worry about big ads or wait weeks (or months) for the money to show up in your bank account.

4. What Drawbacks Do Business Loans for Repair Shops Have?

The availability of business loans can make it tempting to look for money you do not necessarily need. For example, suppose that a newly released device has the potential to increase efficiency. This may seem like a great opportunity to apply for equipment financing. But once you have bought the device, you will find that it is only relevant for about two years. In such a situation, renting would have made more financial sense than buying. High expenses also cause other costs, which makes it difficult to determine the loan amount. Perhaps you have just purchased new equipment that will enable you to offer new services. Are your employees trained to provide these services or operate the latest equipment? The training courses are paid for and the new equipment is still not generating income. 

 A similar dilemma can arise after ordering expensive parts for a large project. Do you also have enough employees to complete the project according to the agreed schedule? If so, how will you continue to pay these workers if demand decreases after the project is completed?  

 The only way to choose the right loan amount and repayment structure is to research your options beforehand. Unfortunately, many business owners do not have time to research business loans while running their business.

5. Who Is Eligible for Loans for Construction Businesses?

Annual Revenue: $180k

Credit Score: 550+

Time In Business: 6+ months

6. How Auto Repair Shops Can Apply for Business Loans:

The documentation needed for the application procedure varies based on the product you have selected. Funds can be authorized and disbursed for most products in as little as three business days. Here is how you apply to get started:

Step 1: Choose the right product

The first step is to choose the most reasonable solution to the problem. This should require proper research as each product is designed to be used for different cost and cash flow cycles. Do you want to cover short-term or long-term expenses? What is the billing schedule for the project? Considering your financial goal also helps us determine the lender and terms that best suit your needs.

Step 2: Gather Your Documents

Here are the documents and information required for all construction loan types:

Driver’s license

Voided business check

Bank statements from the past three months

Invoice for equipment (for Equipment Financing)

Credit card processing statements from the past three months (for Merchant Cash Advance)

Accounts Receivable Aging Report (for Accounts Receivable Factoring)

Accounts Receivable (for Accounts Receivable Factoring)

Debt Schedule (for Accounts Receivable Factoring)

SBA Loans require additional documents and information. To learn what is needed for the SBA Loan application, visit our SBA Loan page.

Step 3:  Fill Out Application

You will start the application handle by calling us or filling out our one-page online application. Either way, you will be inquired to enter the information from the past area alongside your wanted financing sum.

Step 4: Speak to a Representative

After submitting your application, a representative will contact you for a personal consultation to explain the available options, repayment structure, interest rates, terms, and conditions. That way, you do not have to worry about surprises or hidden costs during the repayment process.

Step 5: Receive Approval

When you are approved, the funds should appear in your bank account within 1-3 business days.  SBA loans typically take 3-5 weeks to receive funding.

7. What Happens If My Application for a Business Loan Is Turned Down?

If your application is rejected, it may be because you applied for the wrong product for your cash flow. In this case, we will likely recommend another product with a less risky repayment structure. 

 We may also decline your application if we determine that you cannot pay more debt at this time. Instead, your needs and financial situation may be better suited to another financial instrument, such as a business credit card or even a personal loan. Both options are available through offset and are usually much easier to obtain than business loans.