Auto repair shop loans are harder to come by these days. With the recent downfall of the American automobile industry, there has been a lot of speculation on the ripple effect. Manufacturers that supply raw materials such as steel, plastic, and glass have no doubt been affected by this conundrum.
At the center of the debate in the lending world is the viability of auto repair shops. There are two main opposing theories on the impact that will be felt on their bottom lines, and its tough to choose a side when both seem like common wisdom.
The first theory is that as a result of consumers purchasing fewer autos, there will be less work for auto repair shops, body shops, and mechanics to perform. This is a logical argument and has become the mantra for banks to avoid lending to this industry. Some auto shop owners have decried this as an unfair, discriminatory, lending trend. There?s nothing worse than having a year over year increase in profitability, meeting the bank?s underwriting criteria, and being rejected for being auto industry related.
The opposing theory is that as a result of consumers purchasing fewer autos, they will make more trips to fix their existing cars. As cars age, inevitably more visits will be made to auto repair shops, oil changers, auto part stores, tire shops, etc. With less new cars on the road, this could even mean an increase in business to the repair and parts industry. This is also a logical argument.
Either way, banks and traditional lenders have placed this entire segment of the retail and service market in the high risk or do-not-lend category. This does not mean that funds are not available to finance their growth and operations at all. Private finance groups such as Merchant Cash Advance Providers are recognizing the opportunities the auto repair industry stands to offer.
There are over 200 Million cars on the road today. One could argue that parts suppliers, tire shops, and auto repair shops are one of the most sustainable facets of business in America. For those business owners looking to buy inventory, upgrade equipment, expand, and conquer, Merchant Cash Advances are a valuable, easy to obtain option.
A Merchant Cash Advance is not a loan and it is structured to repay by allocating a percentage of each credit card transaction back to the provider automatically. There is no set time frame to repay, credit requirements for approval are lax, and the entire process lasts about a week.
Research conducted shows auto repair shops are the second most funded business type in the Merchant Cash Advance arena, right behind Restaurants. In an industry that has injected over $3 Billion into the economy, it?s evident the auto repair field is filled with opportunities. Every oil change shop and parts store in the country should be taking advantage of the liquid cash available for growth through a Merchant Cash Advance.
Once the traditional lenders have realized the success, it?s possible they will call on their old clients to come back. But once a business has gotten used to the quick speed of obtaining funds, easy process, and incredibly flexible repayment terms of a Merchant Cash Advance there won?t be any reason to go back.
By: Sean Murray
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