Applying for an Automotive Business Loan:
Many applicants fall into two categories: They need a business loan for a commercial vehicle or working capital for their automotive company. Below are the main business car loan requirements and disclosures our lenders look at.
Bank Statements
Applying for a loan requires little to no documentation. The auto loan process is fast — our loan advisers only ask for your last three months of bank statements.
Average Monthly Revenue
Business auto loan lenders like to see around $10,000 in monthly revenue. The more money your business generates, the larger the loan size you qualify for.
Outstanding Debt
A business’s debt-to-income (DTI) ratio is considered when putting together loan packages. The preferred DTI ratio will vary from lender to lender. Carrying low levels of debt can help you get the best commercial loan offers.
Amount of Time in Business
Being around for a long time is good in the loan industry. Auto companies that have operated for several years are considered lower risk than new businesses. We provide capital to businesses that have operated for at least six months. We don’t fund startups.
Common Uses for Business Auto Loan
We understand the importance of meeting wide-ranging business needs. We’ve provided working capital to businesses for all sorts of reasons. Here are some popular uses for commercial funding.
Commercial Rent
You’re not alone if you’re a business owner struggling to pay rent and keep the doors open. Small businesses experience ups and downs all the time. Auto financing can be used to pay all types of overhead expenses, including rent, utilities, and recurring bills.
Payroll
Finding the right talent is hard enough. The company suffers when you have to lay off team members due to budget constraints. Funds can help keep staff members on payroll during financial hardship or hire more employees during periods of growth. For qualified small business owners, a Clarify loan adviser is available to assist with the Paycheck Protection Program (PPP).
Taxes
When profit margins are slim, tax season can seem daunting. Fortunately, business owners can take out a loan to offset a large tax burden and free up additional cash reserves. Financing allows borrowers to space out repayment rather than pay a lump sum at once. We get that Uncle Sam can’t always wait, and we’re here to help.
Buying and Leasing Equipment
Vehicles are an essential resource for businesses. Some small business owners can’t afford to purchase automobiles and equipment outright. Others choose business vehicle financing to increase liquidity and maintain a cash buffer.
Pandemic-Related Costs
For many small businesses, navigating the new norm has meant dealing with additional costs and a reduction in revenue. Keeping customers and staff safe might mean purchasing personal protective equipment (PPE) and sanitation supplies, which can drive up overhead costs.
Reduced business hours, shutdowns, and a decrease in consumer demand have created drastic fluctuations in revenue for many. In these situations, financing can help bridge cash flow gaps.
Emergency Expenses
Sometimes, the worst-case scenario happens, and life throws a curveball. Part of being a business owner is persevering through the unexpected. An infusion of working capital helps businesses weather difficult times.
Growing Your Company
During an expansion, businesses may need financing to scale. If your company is undergoing an exciting period of growth, a loan can provide the means to buy more inventory, make business acquisitions, open a new location, and more.
What Are Commercial Auto Loans?
A commercial auto loan, also known as a business auto loan, is a form of funding used to purchase, refinance, or lease cars for business purposes. Business owners borrow capital from an auto lender to increase available resources and complete work-related tasks with greater efficiency.
You can use financing to buy specific equipment, including new cars and light- to medium-duty trucks for transportation or building. Companies within the auto industry, like body shops or car dealerships, can use auto loans for various business expenses.
Business Auto Loans and Personal Auto Loans: What’s the Difference?
If you’ve taken out a personal auto loan, you’ll find a lot of overlap with how business auto loans work. The main distinguishing factor is that with a commercial auto loan, the automobile is paid for with business funds and considered a company expense. Personal loans are usually used for passenger cars meant for personal travel and leisure.
How you plan to use the vehicle makes all the difference. In many ways, commercial financing is the better option from a cost-savings perspective. The vehicle is considered a business expense and company asset. There are tax benefits to financing this way, like deducting up to 100% of the vehicle purchase price.
How Do I Get an Auto Loan for My Business?
Getting small business vehicle financing is simple. You fill out a short online loan application and provide recent bank statements for proof of income. Lenders validate your financials, such as your FICO score, to determine your creditworthiness and provide multiple loan offers to select from. Once you make a decision, you’re all set to receive working capital to your business bank or checking account. Then, you’ll make monthly payments until you pay off the loan.
The process is streamlined and fast, so you can get your auto loan and be on your way! We understand you have a business to run and don’t want to be held up by heaps of paperwork.
