The Small Business Administration (SBA)’s small business loan programs help entrepreneurs across the country access capital to start, build, and grow their businesses. Car wash owners are using the accessible funding to rev up their profitability and meet growing customer demand.
Just last year, the SBA approved more than $670 Million in financing for car washes nationwide.
In this guide, we cover what you need to know about financing your car wash with an SBA loan. Keep reading to learn about the benefits of these government guaranteed loan programs and how you can leverage them.
What can car wash owners do with an SBA loan?
How would you improve your car wash if you had extra capital? If any of your ideas would ultimately grow or strengthen your business, you may be able to fund the projects with an SBA loan.
The SBA loan programs were created to power America’s small business growth. Car wash owners can use these loans to improve their existing business or start a new one.
The most popular SBA loan program is the SBA 7(a) loan. If you qualify, you’re eligible to use SBA 7(a) funds to do the following:
Start Your Car Wash Business
Use an SBA loan to purchase a car wash business or start up your own. Whether you need financing to acquire a car wash or to start one from the ground up, an SBA loan could ignite your next car wash venture.
Build or Expand Your Next Car Wash
As you expand your car wash service capacity, you may need to build a new property or purchase machinery or equipment. You can use the SBA car wash loan to build new bays, purchase a new site for a car wash, convert self-service bays to automated bays, or lay the foundations of a brand new car wash facility.
Rev-Up Your Car Wash Business
Hire more staff, increase your marketing spend, update your point-of-sale technology, invest in Green Initiatives, or replace car wash equipment to service new luxury car models. You can do all of that with an SBA loan. You can even refinance some existing debt using an SBA loan, increasing your car wash’s monthly cash flow. SBA loans offer lots of flexibility for investing in your car wash business growth.
How do SBA Loans Compare to Conventional Business Loans for Car Washes?
The biggest difference between a conventional business loan and an SBA loan is that an SBA loan is guaranteed by the Federal Government. The government absorbs some of the risks associated with the loan, which helps banks offer reasonable loan terms and small-business friendly benefits. In turn, this helps more small business owners access more financing options.
Some of the key SBA loan program benefits include:
- Longer loan maturities free up more working capital month to month
- Flexible use of loan proceeds gives you more freedom to use the funds the way you need to
- Maximum Interest Rates on the loan are set by the SBA. The rates are set so that small business owners can compete in the current economy.
The application process for SBA loans compared to conventional loans is a bit more thorough. You’ll need to submit more documentation and may have a slightly longer timeline for funding. However, if you can take the time to apply, you could enjoy loan terms created to serve entrepreneurs’ interests.
For car wash owners, the SBA loan programs unlock opportunities to compete in an increasingly consolidated market.
How much money can I get through an SBA Loan for a car wash?
You can secure up to $5 million for your car wash business through the SBA 7(a) loan program. Depending on your eligibility, your project, and your need for financing, you have a few different options for SBA car wash loans:
SBA 7(a) Loans: Up to $5 million to buy, grow, or build your business.
SBA 7(a) Small Loans: $350,000 to expand your business.
SBA Express Loans: $500,000 to grow your business.
504 Loans: Up to$5 million to purchase long-term fixed assets like real estate, property, machinery, or equipment.
Make sure you’re weighing your options based on how much you’ll need for your intended expansion.
How do I know if I’m eligible for an SBA Loan for my car wash?
The SBA requires entrepreneurs to meet a few basic criteria to qualify for one of their loan programs. You must:
• Be considered a small business by the SBA. You can check your SBA loan eligibility using this tool.
• Operate for profit
• Use the funds for an eligible use
• Do business in the United States or its territories
• Prove alternative financial resources are not available before pursuing an SBA loan
These qualifications are straightforward for many small to medium-sized car wash businesses in the US. But what if you’re opening a car wash franchise location?
A certain list of franchises are also eligible for SBA funding. This list is determined based on franchise requirements and the owner’s role in the business. If the SBA finds that the franchise meets its standards as an “independent business”, it’s listed as eligible for funding in the SBA Franchise Directory.
Currently, there are at least 10 different car wash franchises that meet the ‘small business standard’ and are listed in the directory. This list includes Cactus Car Wash, Green Shine Waterless Car Wash, and Prime Car Wash among others.
Unsure if the SBA loan programs are right for your car wash business? Ask yourself these 5 questions to help determine your next steps for car wash financing.
How do I get an SBA Loan for a Car Wash?
Ready to move forward with SBA financing for your car wash? Your road to financing can be broken down into these 5 steps:
- Check your eligibility
Before you go through the full application process, check to see if your business meets the baseline requirements for SBA funding. (You can use our form at the bottom of this page to do so!)
- Talk with a lender
An experienced lender will review your information, and discuss your options for moving forward with SBA financing for your car wash.
- Prepare Your Documents
Get ready for the formal SBA loan application by preparing your essential business documents. This will help streamline your application process and speed up the timeline to funding.
- Apply for Your Loan
Set aside at least an hour to complete your application. After it’s approved, you’ll work hand in hand with your lender’s team to get the loan across the finish line. Assuming all your documents are in order, this process can take from 20-60 days.
- Get Funded
Once your loan closes, you’ll have access to your funding. It’s time to grow your business!
Get started on the Road to Financing, check your eligibility using the form below:
Check your SBA loan eligibility using the form below. One of our small business lending experts will be in touch shortly to discuss your financing options.