If you have struggled to get financing in the past when you want to buy an auto shop or are thinking of venturing into small business loan territory for the first time, you may be wondering what SBA’s loan programs are all about.
What is an SBA loan?
The Small Business Administration provides a government-backed guarantee to banks and lenders for the money they lend to qualified candidates. This guarantee protects the lender's interests by promising to pay a portion of the loan back if the business owner defaults on the loan. So when a business applies for an SBA loan, it is actually applying for a loan through a bank or authorized SBA lender, structured according to SBA requirements with an SBA guarantee.
SBA loans alleviate some of the risk associated with lending money to business owners and entrepreneurs who may not qualify for traditional loans – thus opening up lending opportunities to thousands of entrepreneurs, start-ups, growing businesses, minorities, and veterans.
What Type of SBA Loans Can You Qualify For?
There are several types of loans that you can take advantage of, each developed to suit the needs of your business:
● Business acquisitions
● Working capital
● Equipment purchases
● Refinancing existing debt
● Seasonal working capital
● Major fixed assets
In addition, SBA can help business owners in need of financing to help with disaster recovery. Disaster loans – available to homeowners, renters, businesses of all sizes and private, nonprofit organizations – can be used to repair or replace items that have been damaged or destroyed in a declared disaster including, real estate, personal property, machinery and equipment, and inventory and business assets.
If you are looking for smaller loan amounts under $50,000 to start an auto shop, consider the Microloan program or the SBA Express program. A subset of the 7(a) loan program, SBA Express is designed for businesses with financing needs up to $350,000. The proceeds can be used to finance a variety of business activities, and no collateral is required for loans up to $25,000.
Is Your Business Eligible for a Loan?
While each loan has its own specific qualification criteria, talk to your bank or lender about your needs and business profile. Another resource is your local SBA District Office. In addition to meeting SBA requirements, lenders will also take into consideration credit factors such as your business cash flow, equity investment, collateral, etc.
How do You Apply for a Small Business Loan?
While each SBA loan program has its own eligibility criteria and application process, there is some advance preparation that you’ll need to undertake. From personal and business financial statements to old tax returns, a loan application checklist details what you’ll need to prepare in advance of your loan application.
A checklist may include the following:
● Loan application form
● Resume
● Business plan
● Business credit report
● Income tax returns
● Financial statements
● Accounts receivable/payable
● Collateral
● Legal documents
Buying or Selling an Automotive Business? We Can Help
If you’re ready to take the next step in your life by buying or selling an automotive repair business, contact AutoCenter Sales today. We can help you list your property or find an auto shop that you would like to invest in. Our brokers have the experience and knowledge necessary to assist in any real estate transaction.
To find out more about our services and products or to schedule a consultation, call us at 1-800-874-5793. You can also send a message at info@autocenter-sales.com.