Commercial Financing for an Auto Services Business
There are many businesses falling into the auto services category, and they generally involve activities that include automobile body repairing and painting. These properties are apparently viewed as riskier loans by some lenders. There are unique environmental issues for auto services properties that frequently result in difficulties getting a commercial real estate loan.
As a prime example of how AEX Commercial Financing Group looks at difficult loan situations differently, auto services properties have been moved to a LESS RISKY underwriting category.
Environmental Issues and How We Solve the Problem
Properties involving environmental issues will often be politely declined by a traditional commercial lender. Auto services and related businesses are frequently mistreated in this manner. If such commercial mortgages are not declined outright, then typically a Phase I/II environmental report will be required (which can easily add $15,000 to $20,000 or more to the cost of the loan if a Phase II report is needed). The commercial borrower could end up paying this entire cost even if the report produces findings that result in loan disapproval. If the cost for a Phase I/II environmental report wasn't already a sufficiently negative issue, this requirement also adds substantial time to the commercial loan process.
As a practical time-saving and cost reduction strategy for addressing this unique but solvable problem, an environmental insurance fee can be used to meet the special commercial loan needs of environmentally-sensitive properties (thus avoiding the need for Phase I/II environmental reports). Using this strategy, AEX Commercial Financing Group can usually get an environmental approval in 5-7 days.
Other Recommended Financing Strategies for an Auto Services Business
Seller seconds and other variations of subordinate financing should be considered. This will permit the most aggressive Combined-Loan-to-Value (CLTV) for an auto services business mortgage, up to 90% of the property value. This is important if you are the buyer because it will provide another financial tool to help with financing. It is important to the seller because it might enable someone to buy the property who could not otherwise do so.
Subordinate financing (including seller seconds) is not permitted by many/most traditional banks.
For auto services business loans under $2 million, a Stated Income Commercial Mortgage should be actively considered. This form of commercial financing will not require income tax returns or other income verification. Stated Income commercial real estate loans are not provided by many/most traditional banks.
AEX Commercial Financing Group believes that one of the primary underlying reasons for a high failure rate among many auto services businesses is directly due to the commercial borrower being forced into short-term financing when long-term financing is essential to the health of the business investment. As we stated elsewhere on our websites: Businesses should not be financed with short-term funds. It is essential to obtain long-term financing of at least 15-20 years (and longer is even better).
A retail auto services business will frequently benefit from using credit card receivables to convert future cash flow into immediate working capital.
The Business Cash Advance and Working Capital Management Guide
Suggested Websites for More Information
Avoiding Commercial Mortgage Problems
Special Purpose Commercial Real Estate Loans
Contact Information
AEX Commercial Financing Group
Stephen Bush
Chief Executive Officer
Phone: (937) 780-4030
bush@aexllc.com
PO Box 353, Leesburg OH 45135-0353 USA
Chief Executive Officer
Phone: (937) 780-4030
bush@aexllc.com
PO Box 353, Leesburg OH 45135-0353 USA
AEX Commercial Financing Group specializes in quick closings for difficult commercial real estate loans from $100,000 to $25 million and business cash advances up to $300,000 throughout the United States.
About AEX Commercial Financing Group
