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

Educational Resources for Auto Repair Shop Owners

3 Cash Flow Challenges You Face as an Auto Repair Shop

You’re not alone if you find it to be a challenge to keep your cash flow steady as an auto repair shop – check out our tips on how to maximize your cash flow.

Learn More

Maximizing Marketing Effectiveness with a Small Team

Marketing can be a challenge for many small businesses. Nevertheless, there is one tool that will help maximize marketing effectiveness with a small team.

Learn More

Managing Your Finances as a Seasonal Business

Seasonal businesses need to be more strategic when managing their finances to balance their busy and slow seasons – check out our tips on how to plan ahead financially.

Learn More


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.


Unsecured Small Business Loans

An unsecured small business loan is simply a loan from a lender that does not require any form of collateral from a business or a business owner. This is based solely upon the creditworthiness of the applicant.

Many small business owners are interested in a loan for their business but don’t have the specific collateral a bank may require, such as specifically-identified real estate, inventory or other hard assets. Fortunately, there are lenders like OnDeck that do not require that their loans be secured by specific collateral, relying instead on a general lien on the assets of the business. These may be good options for many businesses.

Secured Small Business Loans

Banks generally prefer secured—rather than unsecured—business loans. Secured loans are loans that are backed with some sort of collateral like real estate, equipment, or other valuable business assets the bank can seize and sell if the loan is not repaid.

Banks (or other lenders that require specific collateral) commonly determine what they refer to as the loan-to-value ratio of your collateral based upon the nature of the asset. In other words, your banker may allow you to borrow against 75 percent of the value of appraised real estate or 60 percent to 80 percent of the value of what they call ready-to-go inventory. Because lenders might consider their loan-to-value ratios differently, you’ll need to ask any potential lender how they intend to set that value.

Small Business Loans for Different Industries

As a business owner, your needs may be industry-specific such as ordering kitchen supplies upfront or bridging cash flow while you wait for insurance reimbursement. At OnDeck, we understand and we offer tailored loan options (with multiple loan types, amounts, and repayment terms), so you can get a loan best suited for your industry and business. Here are some of the most common industries we work with and the small business financing options available to them.