For an auto repair shop, the best loan depends on what the money is for. If you need capital within days and your sales are steady, Merchant Fund Express, our recommended funder, reviews your sales and deposits and works with credit from FICO 500. If your shop has years behind it, good credit and current tax returns, an SBA 7(a) loan is usually the cheapest. To buy the building or heavy equipment there's the SBA 504, and for a new lift or scan tool, equipment financing.
Below you'll find the ranked list with what each option asks for, a comparison table and a guide to choosing based on the investment you have in mind.
Key takeaways
- Match the product to the use: equipment with equipment financing, the building with an SBA 504, surprises with fast capital.
- Our recommended funder reviews sales and deposits: $5,000 to $5,000,000, with decisions often in 2 to 4 hours.
- The SBA 7(a) goes up to $5 million and usually costs less, but it's slower and takes more paperwork.
- Chase lists at least $100,000 in annual sales and a FICO of at least 660 for its term loans.
- Since March 2026, every owner of an SBA 7(a) or 504 applicant must be a U.S. citizen or national.
- Your repair orders, your deposits and your fleet accounts are your strongest arguments.
The best loans for auto repair shops, ranked
How we chose. We don't use ratings or scores. We compared every option on the same criteria: speed, minimum time in business, minimum credit, whether it accepts an ITIN or owners without an SSN, documents required, amounts and collateral. We only publish facts about other companies that we verified on their official site. Read how we rank business funding options.
- Merchant Fund Express (recommended funder). Our pick when you need money soon: a compressor that burned out, A/C season around the corner, or a new fleet account that means hiring more techs. It reviews your sales and deposits, not just your credit, funds $5,000 to $5,000,000 and works with credit from FICO 500. Collateral isn't required in most cases, applying is free and doesn't affect your credit, and it offers Spanish-speaking support and accepts ITIN applicants.
- SBA 7(a) loan. The SBA's main program. According to sba.gov, it goes up to $5 million and covers working capital, machinery and equipment, building improvements, refinancing debt or buying a business, including an existing shop. You apply through a bank or approved lender, not the SBA itself. If you qualify, it usually costs less than any private option.
- SBA 504 through a CDC. Built for big fixed assets: buying or building your location and machinery with a useful life of at least 10 years. According to sba.gov, it goes up to $5.5 million and runs through a Certified Development Company (CDC) together with a bank. Useful if you rent and want to stop.
- Term loan from a big bank (e.g., Chase). Chase lists loans up to $500,000 with monthly payments, terms that typically run up to five years and no origination fee. It asks for annual sales of at least $100,000, a FICO of at least 660 and no change in majority ownership in the last two years (per its site, checked October 2026).
- Equipment financing. For lifts, alignment and balancing machines, diagnostic scan tools or A/C recovery machines. The equipment secures the deal, so requirements are usually lighter than for an unsecured loan. Many equipment distributors offer their own plan; compare it with an independent funder.
- SBA microloan. Up to $50,000 through nonprofit community organizations. According to sba.gov, the average loan is around $13,000, the maximum term is seven years and rates typically fall between 8% and 13%. It works for tools, parts inventory or working capital, but not for paying existing debt.
Comparison table for repair shops
| Option | Amounts | Minimum credit | Speed | Collateral | Best shop use |
|---|---|---|---|---|---|
| MFE (recommended) | $5,000 to $5,000,000 | FICO 500+ | Decisions often in 2 to 4 hours | Not in most cases | Emergencies, seasons, hiring |
| SBA 7(a) | Up to $5 million | Set by the lender | Weeks or months | Often | Expansion, buying a shop |
| SBA 504 | Up to $5.5 million | Set by the lender | Weeks or months | The financed asset | Your own building, heavy equipment |
| Chase term loan | Up to $500,000 | FICO 660+ | Bank process | Case by case | Planned investments |
| Equipment financing | Based on equipment value | Varies | Days or weeks | The equipment | Lifts, scan tools, alignment |
| SBA microloan | Up to $50,000 | Set by the microlender | Weeks | Per the microlender | Tools and parts |
SBA and Chase figures come from their official sites, checked in October 2026. Terms change, so confirm them before you apply.
Which loan to use for each shop investment
A lift or an alignment machine
Equipment financing. The payment lines up with the equipment's useful life and you don't tie up all your working capital. Get a quote from the distributor and from an independent funder, and compare the total cost, not just the monthly payment. More in mechanic tool financing.
Scan tools and diagnostic subscriptions
Newer vehicles demand software and scanners that get replaced often. Because they lose value fast, a short term or working capital makes more sense than a seven-year loan.
Adding a bay or remodeling
If you rent, check your lease and get the landlord's permission first. For big projects, an SBA 7(a) or a bank loan. If the build-out lets you take more cars soon and you need to move fast, working capital from a funder that reviews sales and deposits is an alternative.
Buying the building
SBA 504 or a commercial real estate loan. It's the longest-term decision your shop will make, so work through it with your accountant and an attorney.
Buying another shop
The SBA 7(a) can finance changes of ownership. Ask for the bank statements, tax returns and fleet customer list of the shop you're buying.
What funders look at in an auto repair shop
- Steady deposits. A shop that deposits every day signals stability. If customers pay cash, deposit all of it.
- Customer mix. Fleet accounts, insurers and dealerships bring more predictable revenue than walk-ins alone, even though they sometimes pay in 30 days or more.
- Average repair order and bay utilization. Your shop management system helps prove capacity and growth.
- Licenses and insurance. Business license, environmental permits for oil and fluid handling, and current garage liability coverage.
- Time in business and credit. Banks usually want two years or more; revenue-based funders focus more on your recent months.
- Current debt. If you already have an advance with daily payments, say so. A second daily payment can choke your cash flow.
Build your file before you apply. Put your recent business bank statements, license, garage insurance, a list of fleet customers with their monthly spend and a weekly summary of repair orders in one place. Add quotes for any equipment you want to buy. With that file you can apply at two or three places the same day and compare real offers, instead of waiting for each funder to ask for a different document. It also helps you spot problems before they do: negative-balance days, deposits that dipped or a big account that stopped sending cars.
Pros and cons of each path
| Path | Pros | Cons |
|---|---|---|
| Fast sales-based capital | Fast, no collateral in most cases, accepts lower credit | Usually costs more; shorter terms |
| SBA 7(a) and 504 | Long terms and low cost | Slow, heavy paperwork, all owners must be citizens or nationals |
| Traditional bank | Reasonable cost, long-term relationship | High credit, minimum sales and years of history |
| Equipment financing | The equipment secures the debt | Only covers equipment; the dealer may pad the price |
| Microloan | Accessible, comes with coaching | Capped at $50,000 |
If a bank already turned you down, read our broader guide to business loans for auto repair shops before you apply somewhere else, so your next application lands where your profile fits.
Common mistakes when financing a shop
- Using short-term money for the building. A daily payment is not how you buy real estate.
- Buying the most expensive equipment without checking usage. A machine you run twice a week won't pay for itself.
- Not separating accounts. If shop sales land in your personal account, nobody can measure your business.
- Forgetting the season. Many shops get busier in the heat (A/C work) and in the cold (batteries, brakes). Line up the money before the peak, not in the middle of it.
- Signing without comparing. Get at least two offers and compare total cost, term and payment frequency.
Our guide to financing for auto repair shops explains each product in more detail. If your shop sells well and you don't want to wait weeks, you can apply with Merchant Fund Express. Prefer Spanish? Leer en español.
Frequently asked questions
Can I get a loan for my auto repair shop with bad credit?
Yes, there are options. Banks usually want high scores (Chase lists a 660+ FICO), but revenue-based funders look mostly at your sales and deposits. Our recommended funder works with credit from FICO 500. Equipment financing can also be more flexible because the equipment itself secures the deal.
What's the cheapest loan for an auto repair shop?
In general, SBA 7(a) and 504 loans and bank loans are the cheapest because they carry long terms and lower rates. In exchange, they want good credit, tax returns, several years of history and, since March 2026, every owner must be a U.S. citizen or national.
Can I finance a lift or a scan tool?
Yes. Equipment financing is built for that, and the equipment secures the debt. Compare the distributor's plan with an independent funder. For scan tools that lose value quickly, a short term or working capital can make more sense than a long one that outlives the tool.
How long does my shop need to be open?
It depends on the option. Banks usually want two years or more, and Chase requires that majority ownership hasn't changed in the last two years. Microlenders and revenue-based funders can work with newer shops that show steady deposits, so a young shop still has paths.
Can I use an SBA loan to buy an existing auto repair shop?
Yes. According to sba.gov, the 7(a) can be used for full or partial changes of ownership. Be ready to hand over tax returns, the target shop's financial statements and a plan. The process takes weeks or months, so start before you close the deal.
Does Merchant Fund Express work with ITIN shop owners?
Yes. Merchant Fund Express accepts applicants with an ITIN, no SSN needed, and offers Spanish-speaking support. It reviews your shop's sales and deposits, works with credit from FICO 500, and applying is free with no impact to your credit.