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Options to Finance Your Car Wash

Car washes can be an excellent investment opportunity for just about anyone and there are available options to finance your car wash. Building the right car wash in the right location can give you solid profit margins, earning a consistent return on investment (ROI). The initial investment is entirely dependent on the type car wash you build. Your investment can be for equipment only or include real estate and buildout.

However, if you plan on investing in a full-service car wash then there is quite a bit more to consider, including employees and management. which adds additional cost on the front end and operationally.

options to finance your car wash
car wash image with text: Options to finance a car wash

Things to consider when looking for a car wash loan

Car washes can be as simple or as complex as you make them. The most basic and low-maintenance car wash will be a simple self-serve that completely automates the washing process or which is done by the car owner. Customers pay upfront and can drive-through or wash the car themselves. This keeps employees and management to a minimum. But it also relies heavily on the proper equipment and built-in automation.

This is ideal for owners looking for a “build it and leave it” minimal management style. While it won’t be completely hands-off, it can operate with minimal interaction needed.

On the other end, owners can invest in a full-service car wash which is considerably more complex. These types of car washes include equipment as well as employees to do detailing work and more. The addition of employees adds a considerable amount of cost as the building will need to provide amenities like bathrooms, waiting rooms, and more.

Today we are seeing more and more Express Car washes. These are 75ft to 150ft fully automated tunnels in which the customer uses his phone or a kiosk to select his wash and pay thus opening the gate. The car exterior is fully washed in a manner of minutes and after the wash the customer can use vacuums to clean the inside. A ground up project like this requires little labor but is an expensive project since it includes land, building and equipment.

But securing the upfront funds to build and launch your business can be a challenging task. Fortunately, there are several different options to obtain the funds needed to finance your car wash.

SBA 504 loans for car wash

Small Business Administration (SBA) loans are a government-backed loan program that’s offered through a private institution. SBA loans typically require less of a down payment than traditional loans. These loans also offer longer terms, which can go up to 25 years.

The SBA 504 loan is a type of SBA loan that offers a fixed interest rate and 20% down payment. Terms are typically 10, 20 or 25 years for the entire project which includes, land building and equipment. The SBA 504 loan is specifically geared towards real estate financing in the range of $125,000 to $20 million.

Conventional car wash loans

Conventional loans are the typical business loans you’d get from a bank. It isn’t government-backed, so acceptance rates are much lower. Conventional lenders will require more of an upfront investment from you. In the car wash industry, depending on the type of project, your experience in the industry and credit worthiness, the amount may vary from about 25% to about 40% down. However, these loans offer shorter terms. Conventional loan terms typically only go up to 10 years.

Choosing the right loan for a car wash acquisition

Finding the right financing comes down to what you’re looking for, and what you are willing to spend. SBA 504 loans are used to obtain the cash needed to fund your car wash when real estate is involved at very attractive low interest rates. Conventional loans generally are used for equipment only and have shorter terms.