Article summary: Auto repair shops like yours often use borrowed capital to fuel business growth or fund other growth initiatives. Auto repair shop loans can be difficult to find through traditional channels like the local bank, but that does not mean there aren’t options available for business owners with a good credit profile, a healthy business, and a predictable cash flow.

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Financing Options for Auto Repair Shops

  1. A Business Line of Credit: A business line of credit or Business LOC has been a popular way for auto repair shops to quickly access capital as needed, repay the amount borrowed, and access again. The flexibility of a line of credit, makes it possible for auto repair shops to respond quickly to opportunities.
  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.
  3. Equipment Financing: Many people, when they think of business equipment think of construction or industrial equipment, but that would be an incomplete definition. A shop lift, tire changer, or even the hand tools you use to repair automobiles could also be considered equipment. Many auto repair shops turn to equipment financing to fuel growth or otherwise fund opportunities for their businesses.
  4. 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

Is a business loan
right for your auto repair shop?

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Applying will not impact your personal credit score

Why OnDeck?

  1. Simple: Easy application & fast funding
  2. Tailored: Funds you need on your terms
  3. Human: Real, live loan advisors

A Business Line of Credit

Many repair shops choose a business line of credit (LOC) to meet their short-term capital needs. The flexibility of a LOC makes it possible to access the credit line when needed, make repayment, and access the credit line again as needed over the term of the LOC. Unlike a term loan, interest is only paid on the funds drawn against the credit line.

Although different lenders have different criteria for how they evaluate whether or not they will offer a business a line of credit, OnDeck offers a business line of credit and looks beyond a business owner’s personal credit score and whether or not the business has specific assets that could be used as collateral when evaluating creditworthiness. Of course, personal credit score, business credit profile, and other data are part of the equation, but metrics that demonstrate the overall health of the business are also considered when evaluating a business’ creditworthiness. The minimum qualifications for an OnDeck business line of credit include:

  • A Personal Credit Score of 600+
  • One Year in Business
  • Annual Revenues of $100,000+

A business line of credit with OnDeck requires a personal guarantee to secure the credit line.

Terms for a Business Line of Credit

Depending upon the lender you choose, the terms may vary, but OnDeck offers the following terms:

  • A line of credit up to $100,000
  • Weekly periodic payments
  • A $20 monthly maintenance fee (waived for six months if you draw $5,000 or more in the first five days after opening your account)
  • Funding in as fast as 1-3 days upon approval
  • Rates as low as 13.99%1 APR2 for highly qualified borrowers

Apply Now for an OnDeck Business Line of Credit

Equipment Loans for Auto Repair Shops

When people think of business equipment, they often think of heavy construction equipment or industrial machinery. A shop lift, tire changer, or even the hand tools you use to repair automobiles could also be considered equipment. An auto repair shop equipment loan could be a good fit if this describes the reason your shop is looking to borrow.

Equipment financing could be a good solution to fund the purchase of expensive equipment with a long usable life. Because the equipment being purchased acts as the collateral for the loan, and typical repayment terms can be up to six years.

To qualify for an equipment loan, the typical minimum qualifications are:

  • A Personal Credit Score of 600+
  • A Down Payment of 10%
  • A Strong Business Credit Profile

An equipment loan with OnDeck will require the equipment being purchased to act as collateral as well as a personal guarantee.

Equipment Loan Terms

Depending upon the lender you choose, the terms may vary, but OnDeck offers the following terms:

Short-Term Business Loans and Terms

A short-term business loan could be a good fit for repair shops that need to purchase supplies or meet other short-term business needs. Lenders, like OnDeck, offer loan amounts up to $500,000, can often give you an answer on your loan application within 24 hours, and fund your loan within another day or two after that. Making it possible to quickly take advantage of opportunities to increase profits or otherwise fuel growth opportunities.

Short-term business lenders (like OnDeck), also look beyond a business owner’s personal credit score and whether or not the business has specific assets that could be used as collateral, when evaluating a potential loan for an auto repair shop. Of course, personal credit score, business credit profile, and other data are part of the equation, but metrics that demonstrate the overall health of the business are also considered when evaluating a business’ creditworthiness. The minimum qualifications for an OnDeck loan include:

  • A Personal Credit Score of 600+
  • One Year in Business
  • Annual Revenues of $100,000+

A short-term loan with OnDeck does not require specific assets be identified as collateral, but a general lien on business assets and a personal guarantee will be required to secure the loan. This makes it possible for a healthy business without any specific asset to use as collateral, to qualify for a loan.

Loan Terms

Depending upon the lender you choose, the terms for an auto repair shop loan offered may vary, but OnDeck offers the following loan terms:

  • Loan Amounts from $5,000 to $500,000
  • Repayment terms from 3 months to 3 years (depending upon the loan)
  • Daily or Weekly periodic payments
  • Funding in as fast as 1-3 days upon approval
  • APRs as low as 9.991% AIR2 for highly qualified borrowers

Apply Now for an OnDeck Business Loan

SBA Guaranteed Loans and Terms

The SBA offers a number of loan guarantee programs that could be a potential fit for an auto repair shop. The 7(a) loan program is a good place to start. You can read more about SBA loans HERE.

1 Eligibility for the lowest rates is very limited, available only to businesses with the strongest creditworthiness and cash flows, and typically businesses that have shown an excellent payment history on prior loan products with OnDeck. The weighted average rate for lines of credit is 32.6% APR. Weighted averages are based on loans originated in quarter ending June 30, 2018.

2 Rates Definitions:

Annual Interest Rate: The interest rate in annualized terms, excluding fees
Annual Percentage Rate: The interest in annualized terms, including fees

4

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What type of loan makes sense for your business?

Financing options to help you grow your business

If you’ve ever heard the adage, “It takes money to make money,” you must be a small business owner. Fortunately, there are more small business loan options available today than ever before—you just need to know where to look and what to look for. You don’t need to be a financing expert to build a successful business, but you do need to consider all the business loan options available to determine which one is best to meet your business need.

 

Small Business Loans and Lines of Credit

With online lenders and lines of credit, there are more options available today than a traditional term loan from the bank when you need extra capital to fuel growth or fund other business initiatives.

Loans with a Purpose

Depending upon why you’re borrowing (your loan purpose), there could be an option custom fit to meet your business need. Here are some of the financing options available with specific use cases in mind.

Non-Traditional Financing Options

Sometimes it takes a different approach to meet a business’ financing needs. There are a number of options from micro-loans to funding sources that won’t even be described as a small business loan.

Industry Loans

Each industry has specific loan types that may be better suited for your business. Here are some of the most common industries we work with and the financing options available to them.