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Auto Repair Shop Loans: Best Options to Consider in 2023
If you’re ready to launch or grow your auto repair shop, there’s a good chance you have many expenses on your plate. That’s where auto repair shop loans come in. These products can give you the capital you need to meet your business goals.
Written by:Anna Baluch
Auto repair shops, just like most automotive businesses, come with hefty upfront costs. In addition, they are known for slow and busy periods as well as fluctuating cash flow, which can make it difficult to budget for and cover your expenses.
With the right small business loan, you can resolve these unique financial challenges with ease. Whether you’re a startup or have been a key player in the auto repair industry for years, auto repair shop loans, which we’ll discuss further below can set you up for success.
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Top Picks for Best Auto Repair Shop Loans
- National Funding: Best For Fast Funding Loans
- Backd: Best for Cheapest Interest Rates
- Biz2Credit: Best For Working Capital Loans
- GoKapital: Best for Multiple Loan Offers
- Bluevine: Best for Lines of Credit
- Torro: Best for Startup Costs for Auto Repair Shops
- SmartBiz: Best For SBA Loans
As long as you consider your unique situation and weight the pros and cons of each, you’ll be able to find the right solutions. In this review, our experts highlight the rates, fees and terms of each auto repair shop loan and explain what it a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.
Best Auto Repair Shop Loans for 2023 - Full Overview
Best Overall
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National Funding - Best For Fast Funding Loans
Min. Annual Revenue
$250,000
Min. Time in Business
6 months
Min. Credit Score
600
Key Features
- Borrow up to $500,000
- Fast funding
- Early payment discounts
- Loan Repayment 2-5 years
- Factor rate From 1.10
Pros & Cons
- Fast funding: Depending on when you apply, you may be able to receive your money via direct deposit within 24 hours.
- Early repayment discount: With a working capital loan, you’ll earn a 7% discount on your remaining balance if you repay it in full within the first 100 days.
- Excellent support: If you have questions about your loan, you can contact National Funding via phone or email and speak to a dedicated loan officer once you’re approved.
- Daily or weekly repayments: National Funding requires daily or weekly repayments on their working capital loans, which can take a toll on your cash flow.
- Origination fee: You’ll be on the hook for an origination fee of 1% to 2%, which can increase your overall cost of borrowing.
- No special interest loans: While National Funding states it offers business loans to minorities, it doesn’t offer any special loan products for them.
Overview
National Funding offers both short term working capital loans, which might be useful for your auto repair shop. You can get approved quickly and receive your cash within 24 hours. The funds can help you pay for everyday expenses like payroll, utilities, and taxes.
Main Features
National Funding’s short-term working capital loans range from $5,000 to $500,000 with repayment terms between four months and two years. The pay rate starts at 1.10. For a chance at approval, you’ll need a credit score of at least 600, a business track record of six months or more, and at least $250,000 in annual revenue.
If your auto repair shop could use some money to pay for the day-to-day expenses that allow it to run smoothly, a working capital loan from National Funding is worth exploring. As long as you have sufficient revenue and can commit to daily or weekly repayments, you can receive up to $500,000 in funding.
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Backd - Best for Cheapest Interest Rates
Min. Annual Revenue
$100,000
Min. Time in Business
One year
Min. Credit Score
Not disclosed
Key Features
- Borrow up to $2 million
- Industry best factor rate for MCA - as low as 1.10
- APR for the Line of credit product starts at 35%
- Flexible repayment terms up to 16 months
- Get funding in as little as 24 hours
- Check your rate with a soft credit pull
Pros & Cons
- Large loan amounts: Up to $2 million for a working capital loan.
- Flexible payment options: Pay daily, weekly, or semi-monthly.
- Fast funding times: Receive funds 24-48 hours from loan approval.
- No collateral required: Backd does not require collateral for any of their loans.
- Not available to startups: Must be in business at least one year.
- Not available to all industries: Certain industries will not qualify.
- Rates and fees not disclosed: Must apply in order to see rates.
Overview
Backd was founded in 2018 to provide funding options to small businesses who may not qualify for traditional forms of financing. They tailor their loans specifically to your small business. Backd knows no two businesses are alike, and therefore no two loans should be alike, either.
Main Features
Backd offers working capital loans and business lines of credit to auto repair shops. If you’re funding a large, one-time project, a working capital loan could be your best bet. They range from $10,000 to $2 million and must be repaid within 16 months. Payments can be made daily, weekly, or semi-monthly. If you’d prefer to have access to funds over the course of many years, a business line of credit could be for you. You draw on the line, pay it back, and draw on it again. Business lines of credit range from $10,000 to $750,000 and come with unlimited terms. To qualify for either option, you need to be in business for at least one year and have $100,000 or more in annual revenues.
Backd wants to help your auto repair shop access the funding it needs. Applying takes just a few minutes and you’ll receive a lending decision instantly. If you need a large loan with flexible terms and payment options, Backd may be the lender for you.
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Biz2Credit - Best For Working Capital Loans
Min. Annual Revenue
$250,000
Min. Time in Business
18 months
Min. Credit Score
575
Key Features
- Borrow up to $2 million
- Loan Repayment 12-36 months terms
- Variable APR depending on the applicant
- Multiple loan types available
- Funding in 72 hours
- Soft credit pull
Pros & Cons
- Fast funding
- High borrowing limits
- Quick application
- Strict eligibility criteria
- Origination fees between 1% and 6%.
Overview
Biz2Credit working capital loans can help you cover everyday expenses for your auto repair shop, such as utilities and payroll. Borrowing amounts go up to $2 million and you can pay back what you borrow daily, weekly, or bi-weekly.
Main Features
Biz2Credit’s working capital loans range from $25,000 to $2 million with varying repayment terms. For a chance at approval, you need a minimum credit score of 575, at least $250,000 in annual revenue, and an 18-month business track record.
If you have a strong credit history and need cash to pay for the everyday costs of running your auto repair shop, Biz2Credit’s working capital loans might make sense.
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GoKapital - Best for Multiple Loan Offers
Min. Annual Revenue
$240,000
Min. Time in Business
2 years
Min. Credit Score
500
Key Features
- Borrow up to $5 million
- Loan Terms 2 to 10 years
- Interest rates start at 25%
- Wide range of loan offers
- Simple application process
- Instant pre-approval
Pros & Cons
- Easy online application
- Fast decision and lending times
- Available in all 50 states
- Poor credit is accepted
- Multiple loan types to choose from
- Early payment discounts
- High annual revenue requirements
- Rates might be high
Overview
GoKapital is our number one pick for multiple loan offers. If your auto repair shop is in need of funding, GoKapital offers everything from a $5,000 line of credit to $5 million equipment financing loans. And best of all, they are not industry or state-specific, meaning as long as you meet the requirements, you should have no trouble getting approved for a loan.
Main Features
GoKapital loans range from $5,000 to $5 million with terms from two to 25 years, depending on your loan type. Loans with the highest borrowing amounts include merchant cash advances, equipment financing, and SBA loans. Equipment financing and SBA loans also come with some of the lowest interest rates, assuming your credit is strong. To qualify for a loan from GoKapital, it’s best to have a minimum credit score of 500 (the higher, the better), two years of business history, and $240,000 in annual revenues. If your revenue is lower, GoKapital offers personal and startup loans with a $50,000 minimum annual revenue requirement.
If you need funds to update your current auto shop, purchase new machinery, and simply have extra funds on hand to cover operating expenses, GoKapital can help. With their many loan types, easy online application, and excellent customer service, GoKapital wants to see you succeed.
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Bluevine - Best for Lines of Credit
Min. Monthly Revenue
$10,000
Min. Time in Business
6 months
Min. Credit Score
600
Key Features
- Funding up to $250,000
- Interest rates as low as 4.8%
- Loan Repayment 6-12 months terms
- Quick and simple application
Pros & Cons
- Simple Application: You can apply for a line of credit online, within minutes.
- Quick Funding: Depending on when you get approved, you may withdraw funds fairly quickly.
- Quick Funding: Depending on when you get approved, you may withdraw funds fairly quickly.
- Limited Availability: BlueVine is only available in select states.
- High Repayments: Since loan terms are fairly short (6 to 12 months), you may face costly repayments.
Overview
Bluevine is an online lender that offers business lines of credit of up to $250,000. With a line of credit, you can withdraw funds at any time, up to a set credit limit. You’ll only pay interest on the amount you borrow.
Main Features
Bluevine’s unsecured lines of credit range from $5,000 to $250,000. You can choose terms of 6 or 12 months and land an APR as low as 4.8%. You’ll repay what you borrow plus interest on a weekly or monthly basis. Bluevine’s eligibility criteria includes a credit score of at least 600, six months or more in business, and at least $10,000 a month in revenue.
If you’re unsure of exactly how much capital and are seeking a flexible form of financing for your auto repair shop, a Bluevine business line of credit should be on your radar.
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Torro - Best for Startup Costs for Auto Repair Shops
Min. Monthly Revenue
$5,000
Min. Time in Business
Not specified
Min. Credit Score
700
Key Features
- Borrow up to $575,000
- Loan Repayment 12 - 48 months terms
- Hundreds of financing options
- Use the loan for any purpose
- Fast process
Pros & Cons
- Many Options: Torro can connect you to hundreds of financing options so you can find the ideal one for your specific budget and needs.
- Flexible: You may use a Torro startup loan to pay for startup expenses for your auto repair shop.
- Speedy Process:There is no paperwork or business appraisals so you may get your funds the same day you apply.
- Potentially Higher Fees: Since start-up capital loans come with a greater risk, you may have to pay a higher than average interest rate.
- Limited Chat Support: If you tend to use chat for support, it may not always work on the Torro website.
- Good Credit: In most cases, you’ll need stellar credit for a Torro startup loan.
Overview
Torro is a lender that supports small businesses and entrepreneurs. If you’re ready to get your auto repair shop up and running, its start-up capital loan may be a smart option. You can use it to cover a number of startup expenses like equipment, inventory, payroll, marketing, and insurance.
Main Features
Torro’s start-up capital loans work like business lines of credit, which allow you to pull funds any time, up to a set credit limit. These loans go up to $100,000 and come with terms between 12 and 48 months as well as maximum APRs of 36%. Repayment terms vary. To be considered for a start-up capital loan, you’ll need a minimum credit score of 700 and a maximum revenue of $5,000 per month.
If you’re new to the auto repair industry and would like to launch an auto repair shop from scratch, a Torro start-up capital loan might be the ultimate financial resource.
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SmartBiz - Best For SBA Loans
Min. Annual Revenue
Not specified
Min. Time in Business
2 years
Min. Credit Score
640
Key Features
- SBA 7(a) loans up to $350,000
- SBA commercial real estate loans up to $5 million.
- Loan Repayment 10 - 25 years
- SBA 7(a) loan rates: 10.75%-11.75%
- SBA Commercial real estate loan rates: 5.50-6.75%
- Receive multiple loan offers
Pros & Cons
- Low rates: If you have good credit, you can lock in a low interest rate with a SmartBiz SBA loan.
- Long repayment terms: You’ll be able to spread your loan out over multiple years and take your time repaying it.
- High borrowing limits: Depending on your finances and the SBA loan you choose, you can land up to $5 million in funding.
- Extensive application: It will take some time to complete the rigorous application process, which requires a lot of information and documentation.
- Fees: You might be on the hook for fees, like origination fees and maintenance fees in addition to interest.
- Difficult to qualify for: You’ll need strong credit to take out an SBA loan.
Overview
SmartBiz strives to offer affordable lending to small businesses in an effort to support local economies. It’s an SBA-approved lender, meaning it offers SBA loans that are partially guaranteed by the U.S. Small Business Administration. There are a variety of SBA loans, which offer competitive interest rates and lengthy repayment terms of up to 25 years
Main Features
SmartBiz SBA loans range from $30,000 to $5 million with repayment terms between 10 and 25 years. Interest rates cap out at 7%. For a chance at approval, you’ll need a credit score of at least 640 and a business history of two years or more.
As long as you have good credit and have had an auto repair shop for at least two years, SBA loans from SmartBiz can be an affordable option.
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How to Choose the Best Auto Repair Shop Loan
- Loan Features: Loan features account for loan terms, loan amounts, and repayment schedules. Some lenders offer long terms, large amounts, and flexible repayment schedules, which are preferred for auto repair shops while others have shorter terms, smaller amounts, and less repayment flexibility.
- Application process: The application process may be straightforward and online with fast approval and funding. Or it may take some time and require extensive documentation. In addition, it might include a prequalification feature where you can check your loan offers without any impact to your credit. An easy application with prequalification is ideal for auto repair shop loans.
- Interest rates and fees: Minimum and maximum interest rates and fees vary greatly from lender to lender. As an auto repair shop owner, low rates and minimal to no fees are your best bet.
- Qualification process: While some lenders require stellar credit, substantial annual revenue, and at least a few years in business, others are more flexible and open to lending to auto repair shop startups and newer businesses.
- Customer support: Customer support refers to how easy it is to contact lenders any time you have questions or concerns about your auto repair shop loan. Support is usually offered via phone, email, and live chat.
- Online user reviews: Third-party reviews on sites like TrustPilot and Better Business Bureau (BBB) can explain a lender’s reputation and customer service ratings.
- Perks and Bonuses: Some lenders go the extra mile and ofer perks like hardship assistance, mobile apps, and free credit score monitoring. These extras can make certain auto repair shop loans more attractive.
Main Features of the Best Auto Repair Shop Loans
| Company | Min. Credit Score | Min. Time in Business | Min. Annual Revenue | Loan Amount | Interest Rate |
| Biz2Credit | 575 | 18 months | $250,000 | $25,000 to $2 million | Not disclosed |
| GoKapital | 500 | 2 years | $240,000 | $5,000 to $5 million | 4% and up |
| Bluevine | 600 | 6 months | $10,000 per month | $5,000 to $250,000 | Starts at 4.8% |
| Torro | 700 | Not disclosed | $5,000 per month | Up to $100,000 | Maximum of 36% |
| SmartBiz | 640 | 2 years | Not disclosed | Depends on the SBA loan type | Not disclosed |
What Are The Costs of Running an Auto Repair Shop?
The costs of operating an auto repair shop vary greatly and depend on a number of factors like your size, location, the type of equipment you choose, how you staff your shop, and more. On average, however, you can expect to spend somewhere in the $37,500 range. This figure includes expenses, such as:
- Garage space: Your location will determine the cost of your commercial garage. In general, however, you can expect to pay $0.50 per square foot per month if you live in a rural area or small town and $5.00 per square per month if you’re in a large city.
- Small repair tools: These may be screwdrivers, hammers, bolt extractors, pry bars, fuses, pliers, torque wrenches, cordless drills, and anything else your mechanics need to perform their jobs. You may spend anywhere from $1,000 to $2,000 or more.
- Large repair tools: Large repair tools refer to diagnostics and OBD machines, engine cranes, and hydraulic lifts, which tend to be very expensive. You may spend $8,000 to $10,000 on them.
- Administrative expenses: You’ll need to invest in licenses, certifications, and permits for your auto repair shop as well as insurance. These admin fees may run you between $5,000 to $6,000 per year.
Types of Loans Available for Auto Repair Shops
The most common types of auto repair shop loans, include:
- Short-term business loans: Short-term business loans usually come with terms that range from a few months to a few years. These products, which are easier to get than long-term loans, can help you borrow capital quickly and cover short-term expenses with ease.
- Business lines of credit: Business lines of credit are a lot like credit cards with larger loan amounts. Since you can borrow as much or as little as you need, up to a set credit limit, this is a flexible financing option.
- Equipment financing: Equipment financing is just what it sounds like: financing for any equipment you need to run your auto repair shop. It’s secured to your equipment so if you default, the lender will have the right to seize it.
- SBA loans: Offered by individual lenders, SBA loans are guaranteed by the U.S. Small Business Administration. While SBA loans can be difficult to get, you can land large loan amounts and flexible repayment terms you might not be able to find elsewhere.
- Merchant cash advances: Merchant cash advances give you upfront payment in exchange for a portion of your future debit and credit card sales. You’ll repay your advance via a percentage of your daily sales or fixed withdrawals from your bank account.
How Can You Use Auto Repair Shop Loans?
Since auto repair shop loans are flexible, you can use them to cover a variety of expenses, such as:
- Garage space: You’ll need a garage so that your mechanics have a place to perform their repairs. With an auto repair shop loan, you can obtain the funds you need to pay for one.
- Equipment: Auto repair shops use no shortage of equipment. You may use equipment financing to buy or lease new or used equipment.
- Marketing: To get your name out there and retain loyal customers, you’ll want to invest in marketing. Auto repair shop loans may help you pay for social media, Google ads, print materials, and other marketing initiatives.
- Payroll: Auto repair financing might come in handy if you’re seeking funds to pay your mechanic and support staff. This is particularly true if you tend to face cash flow shortages during your slow season.
- Expansion: There may come a time where you want to open new locations. Financing can help you take your auto repair shop venture to the next level.
- Employee education: Your mechanics are your most important assets.That’s why you might want to invest in their education by financing the costs of classes and workshops that improve and advance their skills.
How to Get an Auto Repair Shop Loan?
To improve your odds of qualifying for auto repair shop financing, keep these tips in mind.
- Consider collateral: Since collateral reduces lender risk, it’s easier to get approved for a secured loan that involves collateral or a valuable asset you own, like your commercial vehicle or property. If you’re a startup or newer repair shop, you may want to secure your loan with collateral.
- Build your business credit: Most lenders will consider your business credit history as it shows how likely you are to repay your loan. If you don’t have one, get a D-U-N-S number from Dun & Bradstreet and start working with vendors who will report your payment history to the bureaus. Note that this process will take time.
- Do your research: Not all auto repair shop loans are created equal. It’s your job to shop around, explore your options, and apply to the financing solutions with criteria that you meet.
- Solidify your business plan: Your business plan will explain your goals with your auto repair shop and what you intend to do with the loan proceeds. Make sure it’s professional and thorough before you send it to any lender.
Succeed With Auto Repair Shop Loans
Whether your mission is to buy an auto repair shop franchise, start one from scratch, or grow your existing venture, auto repair shop loans have you covered. These financing solutions can ensure you have enough capital to cover your expenses and enjoy a thriving, fulfilling business today, tomorrow, and years down the road.
About the Author
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Anna Baluch
Freelance copywriter who enjoys writing for large publications as well as startups, small to medium sized businesses. Anna Baluch is a personal finance writer with over 7 years of experience covering topics related to mortgages, debt management, student loans, personal loans, and more.
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