Top Banks for SBA Auto Body Shop Loans

  find me an Auto Body Shop lender

Last annual update: Aug 28, 2022

Business is booming for auto body shops. Since the pandemic began, more people than ever are choosing to have body work done on their vehicles rather than purchase new ones. Many shops are reporting they have work backed up for several months because of supply chain issues affecting the availability of parts.

The cost of replacing a vehicle is also driving many people to keep the car they already have. According to the U.S. Bureau of Labor Statistics, new and used car prices are up over 40% since January 2021, and they continue to increase. Personal finance experts agree that in most cases, it’s a more intelligent move financially to fix a vehicle’s body rather than replace it.

An SBA 7(a) loan for an auto body shop can be used for buying parts, purchasing equipment, refinancing debt, expanding, or even buying a new auto body shop. And you can have as long as ten years to repay an SBA loan.

 

Benefits of owning an auto body shop

The biggest benefits of owning an auto body shop are owning your own business and being your own boss. Many successful body shop owners started their careers working for dealerships or someone else’s shop, saw how profitable body work could be, and decided to open their own body shop.

When they open their own shop, they’re not only skilled at performing body work, but they also have been part of the auto body industry and understand critical components of the business, like inventory control, pricing, staffing, etc.

 

How to obtain financing to buy an auto body shop business

If you’re looking for auto body shop financing, consider applying for an SBA loan. The various loan programs offered by the Small Business Administration can help provide the financing you need to set up your shop.

The SBA is a government agency that doesn’t lend you the money directly. Instead, it guarantees a significant portion of your loan. That lowers the risk profile for SBA’s lending partners, which include conventional banks and financial institutions, so they’re more willing to approve loan requests.

You can also put significantly less cash or equity down to qualify with an SBA loan. And, with an SBA loan, no covenants or collateral is required. The most common SBA auto body shop loans include the SBA 7(a) and Express loans.

 

SBA 7(a) loan for buying an auto body shop

The 7(a) is the preferred SBA loan for auto body shops. You can use the funds made available through this program to purchase parts and equipment, refinance debt, expand your existing shop, or even purchase a new auto body shop.

If you own an existing auto body shop and want to buy out a partner, you can utilize the funds from an SBA 7(a) loan.

The maximum SBA loan for an auto body shop is $5 million. These term loans are generally repaid with monthly payments that include interest. The payment stays the same for fixed-rate loans since the interest rate is locked in. However, for variable rate loans, it’s up to the lender to request a different payment amount if the interest rate changes.

 

 SBA Express Loans for auto body shops

SBA Express Loans are a part of the agency’s 7(a) loan program. Up to $500,000 can be borrowed under an Express loan. The approval times are typically much faster for these loans.

The lenders ultimately make all eligibility and credit decisions. The market prime rate plus 4.5-6% interest is applied with repayment terms of up to 10 years.

 

How to apply for an SBA auto body shop loan

Access our network of SBA lenders that includes leading nationwide banks, credit unions, and other financial institutions. Our lending partners are experienced handling applications for auto body shop financing, so they will diligently pursue your opportunity.

There are countless SBA approved lenders that are ready to offer you an auto body shop SBA loan. These are just some of the top lenders:

RankBankCityState# of LoansAvg Loan $Avg Interest
1U.S. BankCincinnatiOH36$234,7065.6%
2The Huntington National BankColumbusOH32$186,0065.7%
3Harvest Small Business FinanceLaguna HillsCA16$1,064,0255.4%
4Enterprise Bank & TrustClaytonMO15$879,4135.6%
5Wells FargoSioux FallsSD15$241,3877.9%
6United Midwest Savings BankDe GraffOH14$348,5716.3%
7M&TBuffaloNY13$398,8466.3%
8Live OakWilmingtonNC9$1,027,9445.4%
9Newtek Small Business FinanceLake SuccessNY9$648,4336.0%
10KeyBankClevelandOH7$572,7145.3%

  find me an auto Body Shop Lender