No matter if you’re starting your own automotive business or purchasing an existing auto repair shop, having solid financial resources is crucial in getting your business off the ground. A concrete financing plan is just as important as hard work and planning when it comes to purchasing a business. Before you begin contacting lenders, consider these practices to secure financing.
1. Determining the Necessities
Obtaining a new business does not come cheap. It’s important to understand just how much capital is necessary to purchase your business.
● Acquisition financing: This is the type of financing you can use to purchase an existing business.
● Real estate financing: While owning the property instead of leasing can be enticing, it often takes a large, upfront investment.
● Operations financing: With this type of financing, flexibility is given to your new business with a day-to-day open line of credit.
2. Research Your Options
The best part of trying to secure financing for your automotive business is that there are plenty of options to explore:
● SBA programs: The SBA offers a variety of different programs you may be eligible for.
● Traditional commercial loans: When looking to buy an auto shop, these mortgages have strict qualifications, but they have the lowest interest rates.
● Commercial bridge loans: These loans are short-term deals that allow the buyer to close quickly on owner-occupied commercial properties. They allow buyers to secure financing and put their plans into work before they can obtain long-term support. These loans are typically refinanced at the end of the bridge loan.
● Commercial hard money loans: When purchasing an automotive business, these loans allow financers to look at the value of the property instead of the value of the potential buyer. With this approach, loans can be approved faster than traditional loans, which allows your plans to move quickly.
3. Consider Collateral
Though not all loans require collateral, those that don’t often have higher interest rates to offset the risks of investing for the lender. Most loans from banks require collateral assets to reduce their risk. Types of collateral typically include your home and any other large assets you may have.
Contact AutoCenter Sales Today
If you need help financing your automotive business, put your trust in the brokerage team at AutoCenter Sales. We will guide you through the process step-by-step. Contact our team today for a no-obligation consultation.