Let’s take a look at the most preferred options, so that you can make an easier choice which one works for your business.Many dealerships start with small personal finances and then look for additional financing for their inventory.
Don’t forget that you need a good auto dealer business plan to get approval.
You are also very likely to be asked for collateral, an additional form of security such as property or other personal assets.
Back in 2009-2010, there was a heated public discussion over whether auto dealerships should qualify for small business programs.
The reason was that dealerships were earning about $40 million per year, while the SBA defines a small business as a business that earns no more than $29 million.
Starting an auto dealership is an exciting challenge – but often a costly one.
The estimated average investment is about 0,000, which means you need to have a sound financial plan when launching your startup.In this case, you can turn to commercial banking solutions such as Wells Fargo, BBVA Compass and Ameri Credit, as they offer dealership financing.With such providers, you can also get financing for floorplanning, real estate or equipment, or you can simply look for a working capital loan for your business.Commercial banking solutions often include loans for buying property, so there are a variety of such financing opportunities on the market.Another option for financing comes from government small business programs, like the ones organized by the Small Business Administration (SBA).Getting external funding does not have to be tied to a specific business cost such as inventory or real estate.Starting auto dealers can also turn to general loans for their budding business.The SBA also offers Permanent Loan Programs targeted at all small businesses.Depending on the profile of your business, you might be eligible for some of them as well.Eventually, the SBA offered the Dealer Floor Plan Financing Pilot Program (DFP), which ran in 2010.Make sure to check SBA’s website regularly so that you don’t miss out when these dealer-specific programs are announced.