Car Wash Loans

Most Frequently Asked Questions


How Much Cash Down Is Needed to Buy A Car Wash?

Between 10% and 25% cash down is required to purchase a car wash.

The exact amount of cash down needed to acquire a car wash business depends on several factors including the loan type, amount of the loan, pro-forma debt service coverage, personal financial state and creditworthiness, industry experience, and the strength of the underlying asset of the car wash and any associated property being purchased along with such.

How Long Is the Average Car Wash Loan?

Twenty years is the average length or term of the average car wash loan.

Car Wash loans typically vary from 10 to 25 years in length of the loan. The largest determining factor that contributes to where within this large range is achievable relies on whether or not the land / real estate is being purchased with a car wash (as opposed to buying the car wash business along with a lease, but not the land / real estate itself).

How Long Does It Take to Get A Car Wash Loan?

30 to 45 days in the average amount of time it takes to get a car wash loan.

This time range holds regardless of whether the car wash loan being attained is an SBA Loan (7(a) or 504) or whether it is a conventional (aka Bank) loan.

Assuming competence and appropriate bandwidth of the lending institution to be issuing the carwash loan, the single largest determinant of how long it takes for someone to close on a car wash loan is the readiness and availability of the required information and documentation by the borrower that is required for the underwriting of the loan itself.

Are SBA Loans or Conventional Bank Loans Better For Car Washes?

Neither of the two primary loan options are necessarily "better" than the other.

When deciding between SBA vs. Bank loans for car wash financing sources, it's important to determine which fit and accomplish your specific goals best.

The largest trade-off between SBA and Conventional Car Wash loans is that:

  • SBA Loans have a higher interest rate BUT require less cash / equity down
  • Conventional (aka "traditional bank") loans have lower interest rates but typically require more equity / cash down from the acquiror

What Is the Average Interest for A Car Wash Acquisition Loan?

The average interest rate for car wash acquisition or purchase financing is between 4.0 - 5.5%

Is Seller Financing for Car Washes A Good Idea?

Seller financing is only a good idea when it successfully and contemporaneously accomplishes both the buyer and the seller's goals.

Seller financing is typically used for two primary reasons:

  1. To bridge a valuation gap and desired purchase price when the buyer is unable to fulfill the necessary true cash equity down required for a purchase of the carwash at the agreed upon acquisition price
  2. To enable a traditionally incapable or ineligible purchaser to buy a car wash when other more common financing arrangements are unavailable to them for the acquisition at hand

Is A Car Wash Sellers Unwillingness to Do Seller Financing A Red Flag?

No. The unwillingness of a car wash owner to "take back paper", "hold a note", or to partake in and accept any form of seller financing as either majority or minority of the purchase price structure for a buyer looking to purchase their wash is not a red flag.

Car washes are operator dependent businesses. Due to such, what a car wash seller and current owner is doing in accepting any form or amount of seller financing from any purchaser is actually "backing" and putting faith in not necessarily the car wash itself, but arguably more so in the buyer and to-be new owner / operator.

Selling a car wash takes work - just like anything else worth doing. Due to the work required, car wash sellers aren't looking to forcibly take the wash back if there is a default on the seller financing that they accepted as whole or part of the purchase price structure for which they sell their wash for. A car wash seller sells their car wash to sell it - not to get some quick cash and then have to take it over again and not get the money they are due to be paid.