Car Wash Financing | Top Lenders for Car Wash SBA Loans

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Last annual update: May 27, 2023

Navigating the world of car wash financing can be challenging. With numerous options and strategies available, it’s essential to find the right bank to finance your car wash.

Typical car wash financing terms

Loan term: 25 years

Interest rate: 9 – 11% (in 2023)

Minimum equity: 10% – 20% down from buyer

Minimum annual cash flow: 13% of loan amount

Loan size: $2.75M – $4.25M car wash loans are common

In 2021, the US car wash service market size was valued at over $14 billion and analysts expect it to grow at a compound annual growth rate of 4.8% through 2028. Research has also shown that consumers increasingly prefer washing their cars by themselves. That explains the uptick in car wash financing requests for self-service car washes.

It’s estimated that there are more than 100,000 car wash facilities in the United States with new locations rapidly opening up across the country, both in-bay automatic and self-service. If you’re looking to enter this business, definitely take advantage of SBA car wash loans to get your business up and running with minimum collateral. 

How to get money to buy a car wash

Conventional loans are difficult to get if you’re looking for car wash financing. That’s because banks have strict approval requirements and if customers can’t meet them, they can’t get a loan. Car washes are viewed as single-purpose properties as they can’t easily be converted to another use.

That’s one of the main reasons why banks consider these businesses as high risk and tend to be hesitant in lending to them. Even if they do decide to provide car wash loans, the terms will likely require significant down payment, higher interest rates and possibly even a balloon payment requirement. Conventional loans typically offer lower interest rates than SBA loans, but rates do not matter if the bank

SBA loans for buying a car wash

The various loan programs of the Small Business Administration are perfect if you’re looking for money to buy a car wash. The SBA is a government agency but it’s not directly lending to business owners. It guarantees a significant chunk of the loan and the SBA’s partners lend the money. Their risk is reduced as even in the case of a default, a big portion of the loan is guaranteed by the government. Borrowers are also required to put less cash or equity down to qualify.

You can obtain an SBA loan from banks, credit unions and other conventional lending institutions. The SBA 7(a) and SBA 504 loans are the most common car wash loans that business owners opt for. Both have distinct purposes but will cover nearly all of the car wash’s needs – from buying land and equipment to construction and working capital.


SBA 7(a) loan for buying a car wash

First-time lenders generally opt for the SBA 7(a) loan to buy a car wash. The funds can be used for buying land and constructing a new car wash from the ground up or purchasing and renovating an existing business.

Any of the costs related to the construction can be covered by the loan, including but not limited to water pumps and hydraulics, conveyors, dryers, and other equipment. Funds from the SBA 7(a) loan can also be used to refinance an existing loan.

A maximum of $5 million can be borrowed through an SBA 7(a) loan for a car wash. The repayment period is typically 25 years. Current SBA loan interest rates 

Loan AmountFixed+PrimeSBA Max Interest
$50,000 - $5,000,0003.0%8.25%11.25%
$25,000 - $50,0004.0%8.25%12.25%

SBA 504 loan for buying a car wash

The SBA 504 loan is also an effective solution for a car wash loan. It’s meant to provide financing for specific fixed assets that may include land, property renovations, and machinery. The SBA 504 loans can’t be utilized for working capital, operational expenses, refinancing debt, advertising or marketing.

The 504 loan provides long-term, fixed-rate financing for up to $5 million. Your business needs to have a tangible net worth of less than $15 million and an average net income of less than $5 million after federal income taxes to be eligible for a 504 loan.

The SBA 504 loan interest rates are lower compared to SBA 7(a) loans with both 10 and 20-year repayment terms offered.


SBA 504 Green Loan Program

If you qualify for an SBA 504 loan, you may also be eligible for multiple SBA 2nd mortgages through the Green Loan program provided that your business meets a few conditions. Car washes are inherently environmentally friendly as washing a car in your driveway consumes up to 140 gallons of water while a car wash only uses up to 40 gallons of water.

Through this program, you can get a second mortgage of up to $5.5 million at below-market, fixed-interest rates on a per-project basis, but only if you buy or construct a building that uses 10% less energy than what you’re currently using.

You can take several steps to make these improvements such as recycling water, using solar power for energy and heating water as well as upgrading to more energy-efficient lighting.

“Pre-qualifying” for car wash financing

Often, entrepreneurs contact wishing to be pre-qualified for an SBA loan. This is done because a seller and/or his business broker wants to know that a potential buyer has the financial wherewithal to close on a transaction before the seller spends significant time processing buyers’ and bankers’ due diligence and document requests. Pre-qualifying for a business loan involves an initial assessment by a lender to determine whether a borrower meets the basic criteria to potentially qualify for a loan. Pre-qualifying is a preliminary step to facilitate discussions. Pre-qualifying is non-binding on the bank and the borrower and does not guarantee that a bank will close on a loan. However, pre-qualifying does provide comfort to buyer, seller, and banker that a potential transaction is viable.


How to apply for an SBA car wash loan

We help connect you to the best car wash lenders in the industry. Here are just a few of the top banks, credit unions and other financial institutions that are actively approving SBA loans for car washes. We also help connect you to SBA Preferred Lenders that are committed to quickly approving SBA loans for small businesses.

For example, for a SBA car wash loan of $1,000,000, the car wash will need to generate at least $110,000 in annual profits (revenues – expenses) to cover the loan payments.

To help you further search for car wash lenders, here’s the complete list of top lenders actively doing SBA loans for car washes:

Top car wash loan lenders

There are only a dozen or so banks in America that are the leaders in car wash financing. These lenders really understand the intricacies of SBA car wash loans and we recommend you contact them first to get a clean, quick deal!

RankBankCityState# of LoansAvg Loan $Avg Interest
1Celtic BankSalt Lake CityUT19$2,653,0326.3%
2Metro City BankDoravilleGA8$4,266,2504.9%
3The Huntington National BankColumbusOH8$215,0006.6%
4U.S. BankCincinnatiOH8$22,2505.9%
5Stearns BankSaint CloudMN7$2,020,3866.9%
6Patriot BankStamfordCT5$3,646,6006.9%
7TD BankWilmingtonDE5$52,4009.4%

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Benefits of owning a car wash business

Steady and Recurring Revenue: Car washes often generate consistent revenue streams as people need to wash their vehicles regularly. Whether it’s through one-time customers or recurring memberships, car washes can provide a steady flow of income. One very hot trend we are seeing is buyers converting per visit business models to monthly recurring subscriptions, which can be incredibly lucrative for buyers who acquire car washes in the right markets.

Profit Margins: Car wash businesses can have relatively high profit margins given very low labor costs. Once the initial investment is recovered, the ongoing expenses, such as water, cleaning supplies, and maintenance, are generally manageable compared to other businesses.

Scalability and Expansion Opportunities: Car wash businesses can be scalable, allowing for potential growth and expansion. Owners can consider adding more bays, services, or locations to increase their customer base and revenue. Additionally, diversifying services like offering detailing, waxing, or additional vehicle maintenance options can attract a broader range of customers.

Low Labor Intensity: Depending on the type of car wash, the level of labor required can be relatively low. Automated or self-service car washes may require minimal staffing, reducing labor costs and potential management challenges.

Repeat Business and Customer Loyalty: If customers have a positive experience with a car wash, they are likely to return and become repeat customers. Building a loyal customer base can lead to increased revenue through word-of-mouth referrals and recurring business.

Resilience to Economic Cycles: Car washes are considered non-discretionary services, meaning that vehicle owners will still require car washes regardless of economic conditions. This can provide some level of stability and resilience during economic downturns.

Environmentally Conscious Operations: Many car wash businesses strive to incorporate eco-friendly practices, such as water recycling, energy-efficient equipment, and environmentally safe cleaning products. Operating an environmentally conscious car wash can attract customers who value sustainability and support businesses that prioritize green initiatives.

Potential for Passive Income: Depending on the business model, car washes can offer opportunities for passive income. For instance, self-service car washes or automatic car washes with minimal staffing requirements can generate revenue even when the owner is not present.

Fragmented Industry: Large, national car wash businesses only comprise a small percentage of the overall market, providing small mom-and-pop operators an excellent opportunity to compete effectively in their local market.