If you want to open your own car wash but don’t have enough personal savings to make it happen, car wash loans could be the answer. The amount you need depends on the type of car wash. From mobile units to a full-scale automatic wash, there’s a funding partner to get you started. However, take time to compare your options and research all the details, from interest rates to repayment terms.

See our guide on how much it costs to start a car wash if you’re interested in an affordable mobile cleaning business with multiple profit centers.

Car Wash Cost Overview

Planning your car wash startup cost comes first. So, before you dive into financing options, have a realistic idea of how much money you’re going to need. Here are some examples:

• A mobile detailing business is the most affordable option. You need funding for a vehicle, cleaning equipment, and supplies. Alternatively, you can partner with a mobile car wash franchise. For example, initial investment costs with DetailPerts range from $103,500 to $240,100.
• Self service car wash startup costs can range from $200,000 to $750,000. However, the amount depends on the size and the number of bays.
• Automatic car washes are the most expensive options. You’ll need at least $1 million for land, construction and the latest equipment. Costs could even exceed $5 million. See in bay automatic car wash.

How to Finance a Car Wash Business

Family and Friends

Borrowing from the people closest to you can be one of the quickest ways to get money to open a car wash. However, you must go about it professionally. By all means, introduce the idea over dinner or drinks. But keep the official pitch formal. I.e., schedule a meeting, introduce your car wash business plan, and clearly outline what’s in it for them.

Join a Franchise to Get Car Wash Funding

If you’re struggling to raise capital for your car wash, how about becoming a franchisee? Investors often prefer franchises over independent startups. This is because they like a proven franchise business model and a brand with loyal customer support. Additionally, franchise training and ongoing support can strengthen your business plan.

Also, speak to franchisors about franchise financing. Many will already have built relationships with preferred lenders over the years. And their credibility can help improve your chances of getting a loan. Some franchises may even offer in-house financing programs.

Car Wash Business Financing Via a Bank

Taking out a bank loan is a popular option. Compared to alternative lenders or credit cards, banks generally offer lower interest rates. Moreover, if you have a fixed-rate loan, you know exactly how much you’ll be paying each month. Also, you might be able to secure a larger loan amount if you’re opening an automatic car wash.

However, banks can be cautious when lending to startups and small businesses, even if you have initial capital. For example, they may turn you down due to stricter regulations or low profit margins on smaller loans. If that happens, you’re not out of options. You could be eligible for SBA financing, see below.

SBA Loan

Can’t get a traditional bank loan? Look into an SBA (Small Business Administration) loan. There are various options available. The 7(a) loan program is probably the most suitable one for a car wash startup. This government-backed loan can help make it easier for you to get money from lenders. You can also explore an SBA loan for franchise.

However, first, you have to prove that you are a small business according to their size standards. Second, you need to show that you have tried but failed to get loans from other financing options. Then, the SBA needs to see proof that you will be using the funds for your car wash. Also, lenders typically look for a credit score of 640. 

Rollover for Business Startups

If you have enough money in your retirement plan, a rollover for business startups (ROBS) could get your car wash up and running without taking on debt. And there’s no penalty fee for withdrawing this money. You can also use your ROBS as a down payment on your SBA loan.

However, it’s not just a case of lifting the money out of your retirement fund and putting it into your car wash business. There are strict regulations and a process to follow. This includes setting up a C Corporation. If you’re not familiar with how it works, consult a ROBS provider or a franchise lawyer if you’re buying a franchise.

Crowdfunding 

Thanks to crowdfunding, you can raise financing from people around the world or right in your local community. All you need to do is show them that you have a brilliant product or service that has the potential to improve people’s lives and the world. 

A standard brick-and-mortar car wash might not attract much attention on typical crowdfunding sites. But an eco-friendly car wash that uses waterless or steam cleaning technology could inspire backers who care about sustainability. Or a busy car wash that creates local jobs and boosts community spirit.

Platforms like Kickstarter, Indiegogo, or GoFundMe make it easier to tell everyone what makes your car wash different and how it benefits others, whether it’s protecting the environment, offering mobile convenience, or supporting local causes.

Real Estate Equity Loans

Your home is another way to get car wash financing. But be very careful. Lenders are especially interested in this type of loan because it benefits them in more ways than one. I.e., they get a secure loan, earn from the interest, and profit further by repossessing your home and reselling it if you default. So, make sure you don’t default. Do your research to find out how to use this option wisely.

How to Get Funding for a Car Wash With a Low Credit Score

It can be hard to secure car wash financing if you have a low credit score, but it’s not impossible. For instance, consider bringing in a co-signer with stronger credit. Or work on improving your credit score before contacting lenders. For example, pay your bills on time and talk to your bank about credit cards to help build or rebuild credit. Yes, this will set your car wash dream back a few months. However, these steps can make a big difference to your loan eligibility. Or approach alternative lenders, see below.

Alternative and Online Lenders 

If traditional bank loans aren’t an option, alternative lenders and some professional finance services can provide faster access to funds, often with less paperwork. These businesses may offer flexible credit requirements and quicker approval, making them a good fit if you need to move fast. But convenience comes at a price. Expect higher interest rates and shorter repayment terms.

Equipment Financing

Car wash equipment, like the latest automatic tunnel systems, can be expensive. Equipment financing lets you borrow money specifically to purchase these assets. Using the equipment as collateral can reduce risk and help you free up cash flow for other startup costs.

Conclusion

To sum up, if you want to know how to finance a car wash business, your options include family and friends, bank financing, SBA loans, or joining a franchise to make your loan application more appealing to lenders. Having a solid business plan and a passion to pursue your dream will also set you off to a strong start.

If you’re keen to enter the car wash industry, DetailXPerts is a green mobile cleaning franchise with an excellent training program and support. Our trusted brand makes it easier to attract car wash loans and launch your business successfully.

See our guide on how much it costs to start a car wash to give you an idea of what size loan you’ll need.