Navigating through the vast assortment of financing options can be a daunting task, whether you are a veteran or a rookie in the carwash industry.

However, with sufficient planning and a comprehensive understanding of the different options, you will be on the right track toward securing the best investment strategy for your new carwash.

SBA versus conventional

For new investors interested in financing their new or recently acquired carwash location, finding a loan comes down to two main options: SBA or conventional loans.

Backed by the Small Business Administration, SBA loans are more popular than conventional loans for financial institutions in the U.S. And, these loans can be utilized by new investors and existing owners, explains Michael Ford, managing director with Coast Commercial Credit, adding that the terms for SBA loans go up to 25 years and are fully amortizing — meaning it’s a long-term loan without a renewal clause or balloon payment.

“The SBA is here to help foster, build and grow businesses in the U.S.,” notes Ford. “The SBA is here to create jobs and create business, which helps our economy. New businesses are a large part of what the SBA does.”

In contrast, conventional loans are written by banks and financial institutions that do not have a government guarantee, states Ford. And to help compensate, these loans often will require higher down payments and/or shorter terms; and, even with slightly lower fees upfront, these same fees could be higher in the long run, he adds.

However, this loan type does have benefits and can be a great option if constructed properly. Although down payments can be over 50 percent, they can also be as little as 20 percent for a conventional loan. Moreover, having shorter terms can be another appealing advantage. And, consider asking your lender for a fully amortizing loan with a longer term, advises Ford.

Ford suggests keeping in mind all the factors — positives and negatives — when evaluating which loan type to choose.

Financing your new wash

No one-size-fits-all solution exists. Choosing the right financing option for your new carwash will depend on your unique needs. However, allowing enough time to sort through the array of lending choices is crucial for any owner.

If you don’t take time into consideration, when it comes down to the wire your choices will be limited, and your ideal fit may no longer be an option, asserts Ford.

Backed with adequate time, a deep understanding of your options and a financial institution/bank with the right expertise, you will be headed down the right financial path to produce a profitable carwash. “Financing for carwashes is available,” says Ford. “[The difference] is using the right tools to get the right loan.”