If you’re looking to purchase an automotive business, or you already own one, a Small Business Administration (SBA) loan can provide financing if you’ve struggled to secure funding in the past. At Auto Center Sales, we know that purchasing and maintaining a small business is a huge endeavor and one that requires substantial funds. To help you determine if an SBA loan is right for your business, we’ve put together this brief overview of the process and what you need to qualify.
What is an SBA Loan?
A Small Business Administration loan is a type of business financing that is partially guaranteed by the government. Because the partial government guarantee helps mitigate risk for financial institutions, an SBA loan gives more opportunity to borrowers who otherwise might not qualify for business financing. When you apply for an SBA loan, you’re applying through an authorized SBA lender or financial institution, according to SBA requirements.
With an SBA loan, up to 85% of the total loan amount may be covered, which gives small businesses a better chance at securing funding. Though if you plan to apply, it’s important to keep in mind that the application process is notoriously stringent.
How Do You Qualify For an SBA Loan?
Due to their stringent application requirements, qualifying for an SBA loan is quite difficult. These loans come with minimum application requirements, so if your business meets the following conditions, you should consider applying:
● The business owner has a personal credit score of 640+
● You have at least two years of business history
● No delinquencies or defaults on government-issued loans
● Reasonable owner equity in the business
Keep in mind that the above are general qualifications. Your business may also qualify for an SBA startup loan if it does not meet traditional SBA loan income and age requirements. If you’re looking for a relatively small loan to purchase an automotive business, the SBA Express program—which provides financing of up to $350,000—may suit your needs. You may also qualify for financing of up to $50,000 under the SBA Microloan program.
Each SBA loan has varying requirements, so you’ll need to speak with your lender about your business profile and financial needs. Your local SBA District Office is another great resource for helpful information.
How Do You Apply For an SBA Loan?
While each loan has slightly different application requirements, know that you’ll be gathering a substantial amount of paperwork to begin the process. Here are the basic documents you’ll need to furnish to complete your application:
● Borrower information form
● Personal background, financial statements, and collateral
● Business financial statement and license
● Business history and loan application history
● Income tax returns and personal resumes
● Proposed purchase price, terms, and business inventory
Buying or Selling an Automotive Business? Contact Auto Center Sales
If you’re ready to move forward with your business purchase decision, or you’re looking to list your business on the market, contact Auto Center Sales today. We’ll provide you with thorough details to help you make the best purchase decision for your goals, and if you’re listing, we’ll give your shop the exposure it needs. To learn more about our services or to schedule your consultation, call our team at 800-874-5793, or feel free to send us a message on our contact page.