Applying for an Automotive Business Loan:
Many of our applicants fall into two categories: they need a business loan for a commercial vehicle, or they need working capital for their automotive company. Below are the main business car loan requirements our lenders look at.
Bank Statements:
Applying for a loan requires little to no doc. The auto loan process is fast - our loan advisors only ask for your last 3 months of bank statements.
Average Monthly Revenue:
Business auto loan lenders like to see around $10,000 dollars in monthly revenue. The more money your business generates, the larger loan size you qualify for.
Outstanding Debt:
A business’s debt to income ratios (DTI) is considered when putting together loan packages. The preferred DTI ratio will vary lender-to-lender. Carrying low levels of debt will help you get the best commercial loan offers.
Amount of Time in Business:
Being around a long time is a good thing in the loan industry. Auto companies who have been operating for several years are considered lower risk than new businesses. We provide capital to businesses who have been operating a minimum of 6 months. We do not 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:
If you’re a business owner struggling to pay rent and keep the doors open, you’re not alone. 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. When you have to lay off team members due to budget constraints, the company suffers. Funds can help keep staff members on payroll during a financial hardship or hire more employees during periods of growth. For qualified Small Business owners, a Clarify loan advisor is available to assist with the Payroll Protection Program.
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 are not in a financial position to purchase automobiles and equipment outright. Others choose business vehicle financing because they want 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 ip overhead costs. Reduced business hours, shut downs, and a decrease in consumer demand have created drastic fluctuations in revenue for many. In these situations, financing can help to 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, financing may be needed to scale business. 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 used for business purposes. Business owners borrow capital from an auto lender to increase available resources and complete work-related tasks with greater efficiency.
Financing can be used to buy specific equipment, like light to medium duty trucks used for transportation or building. Companies within the auto-industry, like a body shop or car dealership, can use auto loans for a variety of 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 both a business expense and company asset. There are tax benefits to financing this way, like being able to deduct 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 application and provide recent bank statements for proof of income. Lenders validate your financials, make sure everything looks good, and provide you with multiple loan offers to select from. Once you make a decision, you’re all set to receive working capital.
The process is stream-lined 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.
