Top Banks for SBA Auto Repair Loans

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Last annual update: Aug 28, 2022

Business is booming for auto repair shops. Since the pandemic began in 2020, more people than ever are choosing to repair their vehicles rather than purchase new ones.

Many employees are now working from home either full-time or sharing time between working at home and the office. Since they’re driving fewer miles than they once did, they’re choosing to repair their existing vehicle instead of trading up or selling what they have to buy a new one.

Auto repair shops are also busy because of the lack of new cars available due to supply chain issues and chip shortages. Many shops are reporting they have work scheduled out as far as six months because of these issues.

The cost to replace a vehicle is also driving many people to keep and repair what 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 smarter move financially to repair a vehicle rather than replace it.

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

 

Benefits of owning an auto repair shop

The biggest benefits of owning an auto repair shop are owning your own business and being your own boss. Many successful repair shop owners started their careers working for dealerships or someone else’s shop.

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

 

How to obtain financing to buy an auto repair shop business

If you’re looking for auto repair 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 also have to 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 repair shop loans include the SBA 7(a) and Express loans.

 

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

The 7(a) is the preferred SBA loan for auto repair shop businesses. 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 repair shop.

If you own an existing auto repair 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 repair 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 repair 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 repair shop loan

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

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

RankBankCityState# of LoansAvg Loan $Avg Interest
1The Huntington National BankColumbusOH132$190,4925.7%
2U.S. BankCincinnatiOH116$453,2815.5%
3Live OakWilmingtonNC62$1,107,3445.6%
4Wells FargoSioux FallsSD47$457,3556.0%
5United Midwest Savings BankDe GraffOH40$150,0006.2%
6M&TBuffaloNY38$120,2087.1%
7TD BankWilmingtonDE38$91,2898.0%
8Harvest Small Business FinanceLaguna HillsCA31$878,4585.7%
9PNC BankWilmingtonDE29$418,8626.9%
10Columbia State BankTacomaWA26$110,0655.9%

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