SBA Loan Auto Body Shop Weathers Expansion
Author: Valerie Mellema
Date posted: 07.01.21

Located in the midwestern United States in the suburb of a large city, a thriving auto body shop recently required additional capital. The company was doing well and making a name for itself, but even a flourishing business can run into problems, which is precisely what occurred in this case.

The Shop’s Big Problem

While this auto body shop was doing good business, the owner knew that it could do even better with a larger facility accommodating additional workers and projects. There were no issues with the labor force or the parts supply, so the company decided to move to a larger facility to be more competitive with other auto shops.

 

This decision would be expected to create new opportunities. For example, productivity could increase and additional customers were likely to start using the company for their auto repair needs. The only problem was that this kind of expansion would be expensive, and the business wasn’t thriving to the point where funding new real estate would be simple.

The Amount of Money Needed to Expand

Rather than giving up, the company owner decided to move forward with research. It turned out that about $750,000 would be needed to fulfill the brand’s goal of expanding into a larger facility with all the necessary equipment to run. Some of the costs would be covered by earlier revenue, a loan for the rest would be needed. By searching and finding the appropriate loan for their needs, the company was able to take out the amount needed to expand. Of course, it was always a risk to move into a larger facility, but it never would have been possible without a lender the business could count on.

 

The Use of the SBA 7(a) Loan to Acquire Proper Facilities

In the end, this midwestern shop chose to take out an SBA 7(a) loan. It could be used to cover real estate, business expansion, working capital, and equipment purchases. The company thought it would meet the qualifications for the loan, which included having a good personal credit score, profitability for at least two years and real estate collateral among other things.

Reasons for Choosing an SBA 7(a) Loan

The shop chose an SBA loan because the interest rates tended to be so low. However, it didn’t hurt that term lengths could be as long as 10 years and the loan amounts could reach as high as $5,000,000.

 

A Happy Ending for a Growing Shop

In the end, the auto body shop found the success it hoped for. With a larger space to work, more customers could be accommodated. In addition, there was space for additional equipment and employees which let the company increase its revenue and continue to grow toward a truly bright future.

About The Author | Valerie Mellema

Valerie has over 16 years of experience as a professional writer of blogs, eBooks, articles and press releases, with a focus on finance and alternative lending. Valerie resides with her family in Texas and is passionate about her horses.

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