Car Wash Financing: Best Business Loans and Lines of Credit 2023

The car wash industry accounts for about $5.8 billion dollars each year, with more than 8 million vehicles using a car wash each day. Despite these figures, it can be a challenge to obtain the capital you need to operate a car wash.

To start and operate a car wash, you’ll need to pay for inventory and equipment, permits and licenses, advertising fees, payroll for employees, utility bills, and more. There are a variety of car wash business financing solutions to help you meet your goals. Below, we’re sharing the best small business loans for car wash from top lenders.

Before making a commitment, it’s best to compare car wash loans to find the one that’s best for your individual car wash business. 

In this review, we highlight the terms, rates and fees of each lender, and explain what makes each them a good choice. We also share potential downsides of each company, and provide a rating methodology you can use to select the best car wash financing option for your needs.

Best Car Wash Financing Options - Full Overview

How to Choose the Best Car Wash Financing Option

• Loan Features: As a car wash owner, large loan amounts, lengthy terms, and flexible repayment terms are ideal. In some cases, however, smaller, short-term loans might come in handy.
• Application process: When it comes to applying for a car wash loan, chances are you’d like to do so online, from the comfort of your own home or office with minimal documentation. We looked for straightforward applications with quick decision and funding times.
• Interest rates and fees: The lower the interest rate and less fees you have to pay, the more you’ll save on financing your car wash. A competitive rate can result in hundreds or even thousands of dollars in savings. 
• Qualification process: If you’re a startup car wash, you’ll want a loan with lenient minimum credit score, annual revenue, and business history requirements.
• Customer support: Depending on the lender, you can receive answers to your questions and assistance with your application via phone, email, online chat, or website features like loan calculators and FAQ pages.  
• Online user reviews: Ratings and reviews from independent, third-party sites like Trustpilot and Better Business Bureau (BBB) can help you choose reputable lenders for your car wash loans.
• Perks and Bonuses: Extras like hardship assistance and free credit score monitoring can make any car wash loan more appealing.

What Are the Costs of Running a Car Wash Business?

If you have plans to start a car wash business from scratch, you’ll need to acquire about 7,000 square feet of land, which may range from $100,000 to $200,000 or even more, depending on the location.

Once you have the land, you’ll need to invest in construction and landscaping, which could cost up to $800,000. This figure will go up even higher if you have to tear down any structures that already exist.

Other expenses you’ll have include equipment, a waste management system, licenses and permits, marketing, and insurance. When you add everything up, you’ll find that a car wash business will cost you around a million dollars. In addition, you’ll have ongoing expenses like water, electricity supplies, maintenance, and payroll which can vary greatly.

While the costs can be expensive, the average car wash business makes $100,000 per year for self-service car washes and up to $900,000 per year for a full-service business.

How Can You Use a Car Wash Business Loan

A car wash loan is versatile, meaning you can use it to cover just about any business-related expense, including:

• Property: With a car wash loan, you may receive the significant capital you need to acquire land and transform it into a car wash that will attract potential customers in the local area.
• Equipment: The type of car wash you decide to open will determine what equipment you might finance. At a minimum, however, you should expect to purchase washing systems, chemicals, dryers, blowers, brushes, towels, a water system, and a payment processing system.
• Marketing: To succeed in the car wash industry, you’ll need to promote your offerings. You can use a car wash loan to pay for a website, signage, social media ads, and other tools that will support your overall marketing strategy.
• Payroll: If you have a manual car wash, you’ll need employees to wash vehicles. Even if you go the full-service route, employees will be required to maintain equipment and address customer service issues. A car wash loan can help you cover the costs of payroll.

Types of Loans Available for Car Wash Businesses

There are a variety of car wash loans available, including:

• SBA Loans: SBA loans are partially guaranteed by the Small Business Administration. While they’re difficult to qualify for, they offer large amounts and lengthy repayment terms of up to 25 years. Several popular SBA loans include the Standard 7(a) Loan, 7(a) Small Loan, Export Loan, SBA Express Loan, Veterans Advantage Loan, and CAPLine Loan.
• Microloans:For a smaller loan of up to $50,000, a microloan is worth exploring. Microloans are usually offered by mission-based nonprofits and government organizations such as the USDA and SBA.
• Commercial Real Estate Loans: If you need to buy land or property to run your car wash, a commercial real estate loan is useful. You can also use a commercial mortgage to renovate an existing car wash.
• Equipment Financing: Equipment financing is specifically intended to pay for new or used equipment. The equipment itself will serve as collateral for your loan, so you’ll likely get approved, even with bad credit.
• Invoice Factoring: Invoice factoring is when you sell your invoices for immediate cash. Usually, a factoring company will invoice you 85% to 90% of your unpaid invoices. Once they collect payment from your customers, you’ll receive the remaining balance minus the factoring fee.
• Merchant Cash Advances (MCAs): merchant cash advance (MCA) might be a good option if your customers pay you through debit and credit cards. You’ll receive the cash upfront and pay it back with a percentage of your sales plus any fees.
• Business Credit Cards: Business credit cards can help you cover daily expenses. Most of them come with rewards like cash back, airline points, gift cards, and merchandise. If you pay them in full every month, credit cards may be very beneficial to your car wash business.

Other Types of Car Wash Financing

In addition to small business loans, you may want to consider these car wash financing options:

• Crowdfunding: You can use crowdfunding to connect to potential investors who believe in your car wash venture and are willing to lend you money. Under the debt crowdfunding model, investors act as individual lenders and will require you to repay them via monthly installments. Equity crowdfunding gives investors shares of your company in exchange for their investments.
• Friends and family: If you have friends and family that would like to help you fund your car wash venture, treat their contribution like a traditional loan. Provide them with detailed information on what you’ll do with their funds and how you intended to pay them back. Make sure everything is in writing so that everyone is on the same page and there is no confusion.
• Grants: Small business grants are ideal because you don’t have to pay them back. However, applying for them is usually a long, time-consuming process. The U.S. Small Business Administration (SBA) is one federal organization that offers grants to small businesses run by women, veterans, and minorities. You may also want to check with the Chamber of Commerce and explore grant options in your local area.
• Equipment Leasing: Equipment leasing is when you rent equipment for a specific period of time. Once your leasing contract comes to an end, you can return the equipment, renew the lease, or purchase it.

Car Wash Equipment Leasing Options

Leasing car wash equipment might make sense if you’re short on cash as most lessors don’t require a large down payment. It can also make it easier for you to update your equipment so that you’re always using the latest and greatest washing systems, dryers, and blowers. Also, depending on the lease, you may be able to deduct your payments as a business expense and save on taxes.

Crestmont Capital is one company that offers leasing for car washes. There are no upfront costs and the company offers flexible term lengths and repayment options. You can apply for a lease for free without any impact to your credit. Deferred payment plans are also available.

Mid Continent Capital, Inc. is another option for equipment leasing. Its lease terms range from 12 to 60 months and can give you affordable access to top-notch car wash equipment, including conveyors, vacuums, operating software, and more.

How to Qualify for Car Wash Financing

Tips that can increase your chances of securing car wash loans include:

• Build Credit: Your credit score shows lenders whether you’re responsible with money and able to pay your bills on time. If you’re a car wash startup, do your best to build credit. To do so, you may want to open a business credit card and repay your balance in full every time.
• Consider Secured Car Wash Loans: Secured loans that involve collateral or something valuable you own are less risky and therefore easier to qualify for. You may want to look for secured options if you’re having trouble getting approved for unsecured loans. Just keep in mind that if you default on a secured loan, the lender may seize your asset.
• Write a Compelling Business Plan: Your business plan will inform lenders about your car wash and what you plan to do with the loan proceeds. Before you submit your plan with your application, make sure it’s well-written and professional.
• Choose the Right Lender: Car wash loans are not created equal. That’s why it’s in your best interest to shop around and choose a car wash lender with criteria that you meet. Our list of the best car wash loans above is a great starting point.

Conclusion

Car wash loans and lines of credit can provide your car wash business with the funds it needs to purchase equipment, pay employee salaries, and expand your business. As long as you’re willing to put in the work, a car wash business can be a profitable business that you can hold on to long-term. Make sure to do your research and choose the right car wash loan product to meet your business financing needs.

*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.