If you own a car dealership, you know the demands involved with this type of endeavor. From the on-site time you dedicate to your dealership to the customer service issues to the budgeting required to keep your dealership running smoothly, there are numerous balls in the air at any given time. Many car dealership owners are increasingly seeking financing for their businesses. Borrowers can use a small business loan for car dealerships in various ways as you strive to facilitate daily operations and ensure that you stay on course to achieve your big picture goals.
In this article, we take a look at the process of applying for a small business loan for a car dealership and some of the things that you may be able to use the funds for to help grow your organization.
Getting a Business Loan for Your Dealership
The process of applying for a loan for your car dealership will, in some ways, come down to the type of loan for which you decide to use. For example, if you choose to get a line of credit, the process may work a bit differently than if you were to apply for an SBA loan for your car dealership. SBA loans can take longer to process and may require more documentation as you are, in essence, having to be approved by both the SBA and the lender.
Among the documentation that you are going to have to provide are:
– Tax returns (personal and business)
– Financial statements to include P&L statement, cash flow statement and balance sheet
– Any leases
– Licenses and permits if applicable
– Articles of incorporation if applicable
– Contact info for all owners
You also may want to supply a business plan as this can help offset any red flags against you. This shows the lender that you are serious about the future of your dealership and have a plan in place to grow your organization.
Uses for Small Business Loans for Car Dealerships
The good thing about getting a loan for your dealership is that, mainly if you’re working with an online or alternative lender, you can use the money for just about anything associated with your dealership. Below are a few of the more common uses for loan funds.
1) Expand your operation
While you may be starting as a smaller dealership, you probably aspire to grow your business. This is the perfect use for a business loan. Use it to purchase more inventory, hire more sales associates or physically expand your location. There are various business loan options that borrowers can use to this end.
2) Weather the slower sales periods
The nature of the car sales industry is that there are usually times that prove to be slower than others in terms of sales. When these slumps occur, you might find that you need additional capital to keep things moving forward. Business loans for car dealerships can help weather more difficult financial times.
3) Buy out a competitor
It is not uncommon for a car dealership to purchase a smaller dealership and thus expand it’s business and portfolio. The term “family of dealerships” usually comes into play when a car dealer buys another out. A commercial loan is likely necessary if you intend to purchase another business.
4) Purchasing another lot
Among the primary things that car dealers need are lots to park their inventory. If you find you need additional space by way of more parking lots, then you might want to consider getting a business loan for your car dealership to purchase more space and then transform this raw land into finished lots.
First Union Lending Has a Solution for You
We work with car dealerships across the US getting them the cash they need when they need it—not weeks or months from now. Even if your credit score is less than ideal, we may still have a financing option for you. With short-term loans, lines of credit and SBA loans among other products, we can help your dealership thrive and grow. Call today and let’s get started!