Connect Now:
  • image
  • image
  • image
  • image
  • image
  • image
  • image

5 Ways to Get Financing for Your New Car Wash Business

5 Ways to Get Financing for Your New Car Wash Business

5 Ways to Get Financing for Your New Car Wash Business Img. Src:

A car wash business has great earning potentials as it capitalizes on the increasing trend of car sales and the rising number of people who would gladly hand off this chore to professionals. Depending on the type of car wash business, earnings per year can range from $55,000 to as high as $900,000. One of the most arduous processes you’ll have to go through is to get financing for your business.


Car Wash Business: How to Get Financing

Here is a list of financing options that you can explore:



Shelling out your own money is the most straight-forward approach you can take, provided that you have more than enough funds to support yourself in case your venture does not succeed.


Pros: You will be debt-free. You won’t need to pitch your business to anyone and be at their mercy. You go straight to executing your plan and making sure that things are in their proper place. You (and your business partner/s) have the free reign in deciding on aspects of your business (e.g. location and business strategies) that lending institutions normally scrutinize.


Cons: You will have to absorb all the risks. Hiring professionals to provide you financial and legal guidance would be wise.


Conventional Loan

Bank financing requires a lot of paperwork that would attest to your financial standing. These include financial statements, tax returns, mortgage information, etc. Another requirement is the loan-to-value ratio which sets the percentage of the market value of the business you are required to have on hand and the portion that will be financed (usually set at 25%:75%).


Pros: You’ll have a relationship with your bank that can provide you special deals for their other services (e.g. deposit accounts) and may open up opportunities for additional loans in the future.


Cons: Even with a strong financial standing, banks can also scrutinize your ability to run the business. Most local banks will look for a specific level of experience in terms of managing business operations.


Small Business Administration (SBA) Loan Program

There are two SBA loan programs applicable for car wash businesses: 7a and 504. In 7a, a bank underwrites the loan while the SBA acts as your loan guarantor. The 504 loan is made by the SBA directly. Some of the requirements that go along with the loan agreement are tax returns and income statements.


Pros: Both the 7a and 504 loan can be used for a variety of business expenses such as equipment, real estate, etc. 7a is known to have a high loan-to-value ratio and can cover up to 90% financing. The bank is more likely to approve your loan because of the SBA guarantee.


Cons: The 504 loan includes criteria on job creation that needs to be met. This is not applicable with 7a.


Vendor/Supplier Financing

You can try to make a deal with your supplier to lease out the things you need for the business with an agreed payment timeline. This arrangement can be done through a financial institution.


Pros: This option is optimal for entrepreneurs with not-so-good credit ratings as the conditions to secure the arrangement can be more forgiving. It allows you to have the items you need to start operating without having to spend as much on the onset.


Cons: Since financing is limited to the goods your supplier provides, you will have to look for means to cover your other initial expenses such as rental of space or construction expenses.


Peer-to-peer Lending

You can borrow funds from people you know. Use your affinity to your advantage, at the same time treat them as potential investors.

Pros: It will be easier to pitch your business idea to people you already know. You can expect more honest and in-depth feedback. Payment terms can be arranged to be as flexible as you want them to be.


Cons: There are times when your peers’/family’s only concern is how to get their investment back and earn profit. Expect them to demand something from you at some point like free services, discounts, or job opportunities.



It is when you share your business idea to the public and get people to be interested in investing in you and your business. Social media and sites dedicated to crowdfunding make it easier for start-ups to raise the money they need. You may want to consult with a legal professional on ironing out the terms and conditions of this option.


Pros: It is a way of securing the funds you need while tapping into your target market. Your investors will be your regular patrons and can promote your services for you.


Cons: It will require a one-of-a-kind pitch that will set your business apart from your competition. The timeline for raising funds will depend entirely on how well your proposal will be received.


Community Loans

Think of it as borrowing from your own customers. Some communities are willing to pull together funds to fund a business that will provide an immediate need. In return, the investors will have shares in your business.


Pros: You will have the community’s support in keeping your business thriving since they have a stake in it. Your business will be seen as providing a public need rather than just an arbitrary enterprise.


Cons: Having a stake also means the community may want a say in how you run things. The arrangement can also confuse the customer-investor dynamic – when your customers are more concerned with reaping their earnings rather than paying for the services you provide.


Starting a car wash business can be tough. But, if set up properly, you will be able to reap the rewards sooner that you expect. If you are decided to pursue this type of business yet you lack funds and the technical know-how, you might want to consider buying a franchise instead. Through franchising, you won’t have to build your brand from scratch. You can leverage on the name and the expertise of a known brand. Check out franchising opportunities at DetailXPerts today.




Leave a Comment (and please, use your name :-)

Getting Started

Fill out this brief form to start exploring the DetailXPerts Green Clean franchise opportunity today!

Information Request Form