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SBA 7(a) Loans for Car Wash Businesses What to Know!

The car wash industry in the United States has proved lucrative. Currently, over 58,938 operations deliver more than $17.3  billion in revenue for car cleaning services each year across the nation, and the market keeps growing. The major challenge that most people face while seeking to establish or further their businesses in this promising market capital. The SBA 7(a) program, in particular, is perfect for car wash businesses that need funding.

by | Jul 5, 2024

SBA 7(a) Loans for Car Wash Businesses: What to Know!

Understanding Loan-to-Value Ratio in ABL

The car wash industry in the United States has proved lucrative. Currently, over 58,938 operations deliver more than $17.3  billion in revenue for car cleaning services each year across the nation, and the market keeps growing. 

The major challenge that most people face while seeking to establish or further their businesses in this promising market capital. The SBA 7(a) program, in particular, is perfect for car wash businesses that need funding.

Top SBA 7(a) Loans for Car Wash Businesses 

General 7(a) Loans

The general 7(a) loan program is the most frequently used loan program for small businesses, including car washes. It offers up to $5 million for any business need that you may have. The loan can be used for working capital, purchasing equipment, or real estate. Due to its flexibility, it is suitable for both start-up and already-established car wash businesses.

SBA Express Loans

There is also the SBA Express, where up to $500,000 can also be granted, but the approval time is shorter. The maximum loan amount is limited, but the approval time in such circumstances can indeed make a difference for the owners of car wash enterprises. The interest rates for such credit are slightly higher than those of traditional ones. However, the speed of access to credit is rather significant.

SBA Community Advantage Loans

SBA Community Advantage is a loan program targeted at small businesses in underbanked areas. These resources will provide up to $350,000 with easier credit terms than most traditional financing schemes and other forms of assistance. This loan is crucial for car wash owners who, perhaps in their areas, lack access to conventional funding. 

This loan enables such individuals to kick-start a new business or expand their existing business. The focus on underserved markets fits well with the SBA’s goal to support economic development and encourage business and consequently employment and growth.

Benefits of Opting for ABL Loans


The SBA CAPLines program has provided various types of lines of credit to fulfill the short-term and seasonal working capital requirements of businesses. There are four types of CAPLines: These are: Seasonal, Contract, Builders, and Working Capital. 

With up to $5 million available to finance short-term operational costs, the Working Capital CAPLine is the most ideal for car wash businesses. This type of loan is useful, especially for businesses that go through cycles that affect cash flow, such as when they have few sales.

Advantages of SBA 7(a) Loans for Car Wash Businesses

Access to Significant Capital

Funding is one of the critical strengths of SBA 7(a) loans due to the large amount of money business owners can borrow. For instance, a car wash owner may need $1 million for purchasing land and erecting another center. These costs can indeed be supported by the SBA 7(a) loan. This way, the enterprise will have all the required start-up capital needed without having to seek other sources of financing.

Favorable Loan Terms 

SBA 7(a) loans have better terms than normal loans as they are meant to support small businesses. Borrowing terms can go up to 25 years for real estate and up to 10 years for equipment and working capital. This gives car wash owners more time to repay the loan, and since the monthly payments are reduced, it is easier to plan the cash flow.  

Long-term loans have the capacity to help lighten up the burdens that small business owners have to go through during the repayment period of SBA loans.

Lower Interest Rates 

SBA 7(a) interest rates are slightly lower on average compared with other funding sources. Depending on the specific classification, the current rates range from 7 to 9 percent as of 2023. 5%. For a $1 million loan at a 7 percent interest rate and a 10-year term, the monthly pay would be approximately $11,870. The attractive nature of this rate makes the SBA 7(a) loan more appealing to car wash businesses.

Qualification Requirements

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Credit Score

Lenders of SBA 7(a) loans require that applicants have a good credit rating. The standard credit score should be more than 680 points. However, lenders also take into account other factors, including business experience and cash flows.

A car wash business with steady revenues and good prospects for expansion might be approved even with a slightly lower credit rating.

Business Plan

A good business plan needs to be formulated for the smooth running of the organization and for meeting organizational objectives and goals. The plan should identify financial requirements, legal structure, customer status, competitive landscape, and the areas of growth.

So, in essence, it reassures lenders that the business is in good standing and it has a workable strategy to return to profitability. Financial advisor Lisa Green of Morgan Stanley says, “Having a clear and well-developed business plan is the first and crucial step toward getting small business funding.”


Collateral requirements are flexible, but in most cases, lenders will ask for security. This could refer to business assets, such as car wash equipment, property, or personal assets. For instance, a car wash owner who requires $500,000 may need to provide his/ her equipment and perhaps some real estate as security. 

Types of Car Washes That Can Apply for SBA 7 (a) Loans

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Self-Service Car Washes

Self-service car washing via customers’ own efforts is widespread and inexpensive. Washing equipment is provided to the clients. Such facilities may comprise a number of bays so that several customers can use them at the same time.

Automatic Car Washes

An automatic car wash is one in which cars are washed as they move along a tunnel with scrubbers and water sprays. These machines may clean many cars on a daily basis, which makes them suitable for busy zip codes.

Full-Service Car Washes

Both the inside and outside of the cars are washed and detailed by employees at full service car washing businesses. While these services are more expensive due to the labor factor, they appeal to clients who seek a clean and detailed solution.

 Express Car Washes

Conveyor express car washes clean cars quickly, focusing only on the external part of the car. Customers favor this service delivery style because it is designed to be fast in areas with a bustling urban lifestyle.

 Mobile Car Washes

Thus, mobile car washes are performed on-site by moving to the client’s address with equipped cars containing water tanks and providing supplies. They are convenient, as they perform services at the client’s place; they are versatile and can be located in areas with high demand.

 Eco-Friendly Car Washes

Green car washes include those that use less water, use environmentally friendly products, and use water recycling technology. This car wash focuses on the markets that favor using ecologically friendly approaches to cleaning vehicles.

Permitted Uses for SBA 7(a) Loans

Navigating the Due Diligence Process and Associated Costs

Facility Acquisition and Renovation

SBA 7(a) loans can be used to acquire and remodel car wash establishments. For instance, a business person may get a $1 million credit to purchase land and construct a car washing business. You can also borrow money to expand or change the current facilities, including installing new equipment and developing better infrastructure to increase clientele.

Equipment Purchase

Another area where SBA 7(a) loans are used is to buy the best car wash equipment on the market. With a $200,000 SBA 7(a) loan, one could acquire ‘smart’ wash systems, efficient dryers, and state-of-the-art water recycling facilities.

Such investments can improve the quality and effectiveness of services and intensify consumer satisfaction, thus increasing the possibility of generating greater revenue.

Working Capital

Working capital is usually utilized in the day-to-day functioning of the company to cover expenses such as salaries, electricity bills, and stock procurement. An SBA 7(a) loan often covers all the working capital that small business owners may need to manage their companies. For example, while $100,000 in recurrent expenses may be unbearable in a year, the same amount in terms of a loan can ensure that a car wash business provides optimal service during slow seasons.

SBA 7(a) Business Loans & Application Process

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Preparing Documentation

The first step is acquiring all the necessary documents, including personal and business financial statements, tax returns, a business plan, and a statement of loan purpose. Proper documentation is critical to easing the application process and providing investors with social proof of the business’s solvency.

Submitting the Application

After completing the documentation, apply to an SBA-approved lender. The lender evaluates the application and may ask for more documents and information about the evaluation process and SBA approval.

Once the lender has approved the application, it is transmitted to the SBA for the final endorsement. This step helps certify that the loan fits the SBA requirement and is thus eligible for the SBA guarantee. The process can sometimes take up to several weeks, so it is recommended that you apply before you obtain the required funds.

Let Us Help!

Flaney Capital assists car wash outlets in obtaining the desired funds from SBA 7(a) loans. Work directly with our experienced representatives and get access to low-interest loans ideally suited for you. Partner with Flaney Capital today to effortlessly take your business to the next level. Call 1-888-822-0844.

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Are you ready to take your business to new heights? Discover the power of the SBA Business Industry Program. With its comprehensive eligibility criteria, underwriting requirements, and loan guarantees, this program provides accessible and affordable loan options for businesses in rural areas.

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Here are some answers to Frequently Asked Questions.

What are the main advantages of ABL loans?
ABL loans allow companies to use their existing assets as collateral for financing, providing greater flexibility than traditional lending methods.
Are there any risks associated with ABL loans?
Yes, if a business cannot repay its loan, the lender may seize the assets used as collateral. Businesses need to understand this risk before opting for an ABL loan.
How does accounts receivable factoring work for ABL loans?
In accounts receivable factoring within the context of ABL loans, a business sells its outstanding invoices (accounts receivable) at a discount to obtain immediate cash.
What is involved in the due diligence process for obtaining an ABL loan?
The due diligence process typically involves assessing a company’s financial health, including reviewing its balance sheet, income statement, and cash flow statement, among other things.
Can all types of companies apply for an ABL loan?
While any company can apply for an ABL loan, it is particularly beneficial for those with a high volume of accounts receivable or significant tangible assets.