Current Car Wash Loan Options

Looking for options on car wash loans? You’ll probably find that you have limited options as most of the national banks and lenders that use to lend within this building type have pulled out due to the “credit crisis”. Car wash facilities that are strictly self serve and located in smaller towns will have additional challenges finding decent cash wash loan options.

What are your current options? You still have the SBA 7a, portfolio lenders and a few conventional sources, sometimes. Conventional sources, i.e. traditional larger banks, will have very conservative guidelines.

You’re looking at around 60% loan to value on purchases and 55% on refinances. Loan programs themselves will normally be a 5 year fixed, 20 year amortization and the subject property must cash flow very well with a minimum Debt Coverage Ration at 1.4. No exceptions on credit scores, liquidity etc will be made. I.e. all other aspects of the deal/borrower must be solid.

Borrowers will be better off spending their time with SBA lenders and specialist within the automotive/car wash arena. Primary benefits with the SBA lenders include some of the most flexible underwriting guidelines in the industry, the highest leverage (85% loan to value on purchases and 80% on refinances on car washes).
Keep in mind though that not all SBA lenders are the same. Some SBA lenders and banks are almost as conservative as conventional sources. So if you’ve been turned down by an SBA lender, it does not mean that all will decline your loan.

For example we work with a bank out of New York that will fund deals with borrowers that have credit scores in the 400’s… Also, they will fund loans that do not cash flow. In addition, we work with another bank that offers the SBA 7a loan as a 5 year fixed, 25 year amortization loan. 99% of banks out there offer the 7a as a floating rate loan. So do your best to keep your patience and an open mind.

Portfolio lenders, meaning that they lend their own cash, can offer some of the more creative options. We see a few sources that will consider not only the real estate value, but also the equipment and business value as well. One will go up to 80% of the combined value. This can be a huge feature if say your real estate value went down and you can’t meet the typical loan to value requirements.