How Auto Repair Shops Stay Afloat with Small Business Loans

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There are numerous reasons your auto repair shop could be in need of a small business loan. Like with any business, auto repair shops fluctuate in traffic and sales. They have their seasons, which means so will your revenue and cash flow. Forbes discussed how business declines for auto repair shops when new car sales are on the rise. That’s something auto shops should expect during tax time.

Your slow flow doesn’t mean you can stop stocking the shelves with parts and supplies. You also need equipment to be prepared for the customers you do have. During these times, extra capital will keep the business functioning. The most logical way to get funding is through small business loans for auto repair shop.Business Financing Hub - Small Business Loans for Auto Repair Shop

When Auto Repair Shops Can’t Rely on Banks

Not many banks are just eager to hand money to auto repair shops. Small businesses in general have a hard time getting commercial loans. Most often, banks want to see high credit scores, long business history, and consistent revenue. Even when the banks leave you hanging, you do have a few other options. Before you sign on the dotted line, know what each loan offers.

Think about your unique business needs. Then compare the benefits and drawbacks of each small business loans for auto repair shop.

Unsecured Credit

Another requirement banks often have is securing your loan with collateral. When you’re building your business, you don’t have assets or can’t afford to risk them. Unsecured credit is an alternative that doesn’t require collateral. You also don’t need business credit history or a business score to qualify. Lenders review your personal credit history to see if you’re a good fit for unsecured credit.


  • Revolving account allows you to use and reuse the funds as you repay
  • No collateral requirement means no need put your assets at risk
  • Can use personal score to qualify
  • Helps build business credit
  • Easy application and short approval process
  • Can use loan proceeds for anything business related


  • Interest and fees could be higher than that of traditional lenders
  • Not for large transactions. Best for temporary cash flow or working capital needs.

ACH Business Loans

Lenders offering these loans give small businesses funds based on the revenue they bring in. It’s like a cash advance for a business. Lenders secure their repayment of the ACH  loan by withdrawing a certain amount from your checking account. Payment agreements can be daily, weekly, or monthly. It’s a short-term solution to satisfy for cash flow or working capital needs.


  • Can use accounts receivable as collateral
  • No rigid credit requirements
  • Approval based on business activity
  • Quick turnaround to receive cash
  • Flexible repayment options


  • Not an ideal long-term financing solution
  • Short terms and high payments
  • Not revolving. Loan closes at the end of the term.

Equipment Financing

Good small business loans for auto repair shop are ones that are specific to their needs. This industry depends on equipment to repair their customer’s vehicles. If your cash flow is low, you won’t have the money to buy equipment outright. That’s where equipment financing comes in.

Your auto repair shop can purchase through a loan based on your revenue or by using the equipment as collateral.


  • Easy to qualify
  • Doesn’t require lengthy credit history
  • Actual equipment is collateral
  • Financing tax deductible up to $50,000
  • Allows businesses to maintain cash flow


SBA Small Business Loans for Auto Repair Shop

Financing with the help of the small business administration is the closest you’ll get to a bank commercial loan. That’s because technically it is one. Government backing from the SBA helps small businesses get financing they normally wouldn’t from a bank. If the borrower can’t make the payments, the SBA guarantees to repay up to 75%.

With some loans, they even pitch in a portion of the money along with the bank and the applicant. Lending programs through the SBA include:

  • 7(a) Small Business Loans- general small business loan to fund a variety of projects or business needs.
  • CDC/504 Loan- Loan to fund real estate or equipment. Borrowers must contribute 10% of the overall amount  of the project.
  • Microloan Programs- small loans from startups, growing small businesses, and some child care centers.
  • Disaster Loans- businesses seeking funds to repair or replace assets damaged or destroyed by natural disasters.


  • Flexible loan amounts based on business needs
  • Variety of loans to meet different business
  • Lender Match helps businesses find SBA approved lenders
  • Lower interest rates based on credit
  • Easier way to get a bank loan
  • Higher loan amounts available
  • Longer loan terms


  • Longer application process than alternative funding
  • Stricter requirements to qualify
  • Stipulations on how you can use funds for each loan
  • Longer wait time to receive money
  • Cannot qualify for funding from any other lender

Of all these options, the most difficult to qualify for is an SBA loan. Since they partner with banks and guarantee repayment, they screen applicants. They want to maintain a good relationship with the banks and keep their funding. Alternative funding may be best to start and prove yourself. Even when using your personal credit, lenders still report business activity.

If you’re working to build business or even personal credit, you still have options. It depends on why you need the loan and how you can pay it back. Alternative small business loans for auto repair shop may have higher fees and interest, but not all have to. Do your research and shop around before committing to financing. Start by knowing what you need the loan for, then evaluating your options.

Apply for a Loan at Business Financing Hub

When you’ve found a financing solution you can live with, you don’t have to go through the process alone. Business Financing Hub is here to help. We’ve helped small businesses funds years, and we can get small business loans for auto repair shop. Entrepreneurs and business owners can apply for unsecured credit and other funding types at Business Financing Hub.