How Auto Repair Shops Can Secure Funding

Learning how to secure funding for auto repair shops without making a dent in their bank accounts can be lifesaving for many shop owners. Opening an auto repair shop is a big financial commitment. They have to shell out a lot of cash for diagnostic equipment, lifts, special tools, and enough spare parts to handle the common repairs that walk through the door. Most shop owners expect that.

What they do not expect, however, is how much funding they’ll need after they’ve opened for business. Equipment breaks down. Customers build up faster than anticipated sometimes.

Fortunately, there are ways to secure funding that won’t break the bank or require shop owners to go to their credit card well repeatedly. Options have become available recently that make it easier than ever for shop owners to discern between funding sources that offer decent returns compared to those that fall short of meeting their unique needs.

Why Banks Aren’t the Solution to Funding Needs

Banks are usually the first funding option business owners think of. It sometimes works, but many banks have become sticklers about who they will lend money to. They also want to see two or three years of financials and they also require good personal credit. Most shop owners simply do not have the personal credit the bank will require.

It also takes ages. Most shop owners do not have months to wait while the bank processes their application. If the equipment the shop owner needs to pay for is not broken, the shop owner risks falling behind their competition regarding capability.

Many banks require minimum yearly earnings that many small yet successful auto repair shops may not have earned just yet. This is tough in an industry where consistency and effort creates income over time.

What Are the Real Solutions Available Today?

The good news is funding doesn’t have to come from banks, nor do shop owners have to put themselves in a tight spot regarding debt by using credit cards or even payday loans. The lending landscape has changed drastically in the past decade.

Funding options are readily available through lenders who understand how often auto repair shops need to secure funding. These lenders look at different factors to decide whether to grant a loan or another form of funding rather than simply adhering to perfect credit score guarantees.

They consider daily or weekly revenue rather than requiring all parties to display perfect credit scores. They understand that this is a seasonal type of industry.

In some instances, a client may need funding urgently. Other times, a shop owner may experience steady revenue for months before it tapers off again. Their understanding makes it easier for shop owners to acquire funding as a simple process.

Equipment financing for auto shops also became much easier to secure. Shop owners no longer have to get general loans that they might spend on everything except what they need.

Learning About Cash Flow-Based Lending

Many lenders consider cash flow more than any other factor these days, making shop owners in this industry one of their favorite clients. Cash flow-based lending sounds complicated, but it isn’t. Lenders calculate the cash flow that comes in and goes out of other companies over time.

This means assessing whether the client is a good candidate for lending. The approval process is also quicker than acquiring funds through a traditional bank because there is less paperwork involved. This means that shop owners can get what they need quickly and much faster than many other forms of lending.

The trade-off is that these funds usually come with interest rates higher than the average bank loan. However, just like choosing which type of funding may work in a shop owner’s favor, citizens will know to choose wisely by thinking about how the expense will compare to what it may save them.

Shop owners can always secure equipment funding before they actually need it. With a sound plan, shop owners can stay ahead of their competition without bankrupting themselves or putting themselves and their business in tight positions regarding debt. They also have the option of remembering to save an emergency fund for a rainy day as well.

Using the Funds Properly

Shop owners should not acquire funds or borrow money for anything lightly. They should always assess all sources of funding thoroughly before accepting a loan from any lender. The cost of borrowing money goes beyond ensuring that a shop owner can afford the monthly payments.

Business owners need to calculate how long it is going to take them to pay those monthly installments off as well. They should always think about whether the cost of borrowing money makes sense and whether this is an option to consider compared to paying with cash flow. Once shop owners do this, they will not face any challenges acquiring funds from trustworthy lenders who are not traditional banks.

All shop owners need to do is read the fine print carefully. This can save them a lot of unexpected costs caused by penalties lenders create when life happens to borrowers who acquire loans. Only time will tell which decisions were worth it for other shop owners searching for loans or funding options. They will likely create a sustainable lending solution if they approach funding realistically and with a good strategy, considering their needs now for rewarding returns in the future.

Building good credit can take time. Loans must never be presented as a solution for poor decisions. For shop owners who want to acquire equipment that generates income for them, however, it makes sense as an excellent solution if realistic sensical solutions do not exist anymore.