Getting a successful business off the ground takes more than just hard work. Whether you’re starting a new dealership or buying an auto repair shop, having a sound financial footing is crucial to acquiring a new or existing business. Many businesses get their start with the help of various financing options. But before you get in touch with the nearest lender, consider the following best practices for securing financing for your new business.


Understand Your Needs

Acquiring a new business can take significant amounts of capital, so it’s important to know exactly what’s needed to sustain your business:


  • Real estate financing - Owning your own commercial property can be more lucrative than leasing, but purchasing property often requires a sizable upfront investment.
  • Floorplan financing - For automotive dealerships, floorplan financing offers an expedient way to generate good inventory without a significant upfront investment.
  • Operations financing - Having an open line of credit for day-to-day operations provides financial flexibility for new businesses.


Explore Your Options

When it comes to financing your new automotive business, there are plenty of financing options to choose from:


  • Traditional commercial mortgage - Standard commercial mortgages offer the lowest interest rates, but with stringent qualifications for borrowers.
  • Commercial bridge loans - This form of short-term financing helps borrowers compete with cash buyers and close quickly on owner-occupied commercial properties. Borrowers typically refinance with a long-term loan towards the end of the bridge loan.
  • Commercial hard money loans - These loans are similar to commercial bridge loans, but with lower qualification requirements offset by higher interest rates.
  • SBA programs - In recent years, the U.S. Small Business Association (SBA) offered financing pilot programs targeted specifically at automotive businesses. While these programs aren’t currently available, you may be eligible for other programs offered by the SBA, including SBA 7(a) loans and CDC / SBA 504 loans.


Consider Your Collateral

The vast majority of banks require collateral assets as a way to offset the risks of financing. These assets may include your home and any other personal assets you may own. In many cases, the value of your personal assets can influence the size of your commercial loan. Keep in mind there are loans available that don’t require existing collateral. However, these loans often feature higher interest rates.


If you need help with financing your automotive business, you can count on the brokerage team at AutoCenter Sales to guide you through the process. Contact us today for a no-obligation consultation and fill out our Priority Buyer form for the latest updates on newly available automotive businesses for sale.