What You Need to Know


Automotive businesses – like auto repair shops – can come with steep upfront costs. To keep business humming along, you need to buy expensive equipment like shop lifts and air compressors, inventory and meet ongoing licensing and regulatory requirements.

At the same time, your cash flow can be uneven – maybe you’re in your slow season, or maybe you’re waiting to get an invoice paid by a customer or insurance agency.

Financing for your automotive or mechanic shop can help. A line of credit or short-term loan can help you manage your cash flow or invest in new equipment. Learn more about how to use small business loans for your auto repair shop.


Types of loans available for your auto repair shop

1. A Business Line of Credit:  A business line of credit gives you access to flexible, revolving funds when you need them for your shop. With a line of credit, you borrow what you need, pay down the balance, and the funds are replenished so you can use the line again. Most auto repair shop owners will use a line of credit to cover upfront inventory costs or bridge cash flow in between invoices. Learn more about OnDeck's Business Line of Credit. 

2. A Short-Term Business Loan: Many online lenders offer short-term business loans for small businesses like auto repair shops. With terms that range from three months to three years, this type of financing makes it possible for a repair shop to borrow capital and repay it quickly—often making the total dollar cost lower than a longer-term loan. Getting a short-term business loan from an online lender can be much quicker than getting a traditional loan from a bank – typically, the borrower can apply in minutes and get their funds within days. Many auto repair shops will use a short-term business loan to pay for improvements to their shop, purchase inventory, or run marketing or advertising campaigns. Learn more about OnDeck's Short Term Business Loan.

3. Equipment Financing: Equipment financing is another way to finance the purchase of business equipment (besides just using a loan or line of credit). Any tangible asset used in business operations can be considered business equipment. For auto repair shop owners, this can include a shop lift, tire changer, or alignment machines. Many auto repair shops use equipment financing to purchase new equipment for their shop without tying up their existing capital.

4.  A Bank Loan: As a business owner, the financing option you’re likely most familiar with is a traditional bank loan. A bank loan typically requires collateral to secure the loan, and the application process tends to take several weeks. The length of the loan can be anywhere from 2-20 years. While the interest rates on a bank loan can be attractive, many auto repair shop owners may find it hard to qualify for a bank loan and find the application process too slow for their cash flow needs.

5. The SBA (Small Business Administration) Loan Guarantee Program: Although the SBA is not a lender and provides financing through participating banks and credit unions (among others), the SBA Loan Guarantee Program will sometimes qualify a borrower who might not otherwise meet the more rigid criteria required by the bank. If your auto repair shop is an established business, with a few years under its belt, and your personal credit score is above 680, this could be an option for your business.

“OnDeck was able to provide us with the money we needed to make our expansion a smooth transition. We were able to purchase new equipment that helped to speed up operation and increase our profit by 20% in that department.”

Douglas and Meghan Garrity
Performance Detailing
Orland Park, IL

Read their full story

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