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Smash Repairs Commercial Loan

We can help finance your business goals!

Have a bit of panel beating experience? Buy your own workshop with a smash repairs commercial loan.

There are a few lenders that will lend against the value of the industrial property and we can even help you with business finance down the track.

Discover how a specialist mortgage broker can get you approved at a great interest rate.

How much can I borrow?

  • Smash repairs workshop (freehold): Borrow up to 70% of the property value for a standard industrial unit.
  • Borrow up to 100%: This may be possible with a guarantor or if you have enough equity in an existing residential property that you own.
  • Maximum loan term: 15-20 years.
  • Maximum interest only term: 5 years.
  • Loans over $5,000,000: Considered on a case by case basis.
  • Business plan: Required if you plan to run your own smash repairer.
  • Experience: At least 5 years in the panel beating industry in a managerial role.
  • Low doc options: Available with select lenders.
  • Annual business reviews: Usually required but it depends on the strength of your financials.
  • Valuations: Save thousands by choosing a lender that doesn’t require new valuations.

There can be huge differences between lenders and the interest rate they’re willing to offer.

We can compare from a range of major and second-tier lenders and negotiate strongly on your behalf.

Do you want an indicative funding proposal?

Simply call us on 1300 889 743 or complete out our free assessment form, provide a few details and we can let you know if you qualify for a smash repairs commercial loan.

Why speak to a mortgage broker?

Commercial and business loans aren’t regulated under the National Consumer Credit Protection Act 2001 (NCCP Act).

Because of that, lending policy isn’t as black and white as it is in residential lending – in fact, it’s not really there at all!

That means getting approved for a smash repairs commercial loan comes down to building a thorough application that highlights your strengths as a borrower.

For example, showing that you have business experience and strong capital to run a panel beating business.

After that, lender choice is critical.

As commercial mortgage brokers, we know what bank appetite is like for smash repairers and have strong relationships with the key decision-makers in the credit department.

We know how to make the bank want your business!

Are you just buying the freehold property?

Workshops involved in smash repairs, panel beating, spray painting or car detailing are generally considered as industrial units.

This means that the lending policy is very similar to buying a factory or warehouse.

If you’re intending to buy the standalone unit as an investment, there are few things the bank will consider.

Location

Like other types of standard commercial properties, banks prefer to lend to workshops that are located near metro centres, although major regional centres will also be considered.

Worskhops won’t be located in central business locations but banks like to see infrastructure nearby including main roads and highways.

In terms of zoning, light or heavy industrial or mixed use are both acceptable to the bank.

Is your intention is to buy the freehold and redevelop it in order to take advantage of future zoning changes?

This happens quite often in inner city suburbs that were once industrial centres. Just look at warehouse conversions.

Most banks don’t put much faith in speculative investing so have a read of the commercial development loan page for tips.

Standard versus specialised

Some panel beating workshops are specially-built to carry out certain functions such as mechanical repair.

Because of that, the unit may be fitted-out with petrol pumps and oil traps.

Like a service station, these types of workshops are considered specialised because they cannot easily be refurbished and altered for other industrial uses.

They also require a special valuation and an environmental report is needed to ensure that petrol and other chemicals have been stored properly in underground tanks.

Specifically, banks are concerned about seepage of these chemicals into the soil and local water supply.

This can be a major PR issue if it gets into the media and can make it nearly impossible to sell the property in the future.

Special valuation and Environmental Protection Agency (EPA) reports can cost thousands of dollars and the reparations required to sell the security in the future can cost even more.

It doesn’t mean there aren’t lenders who won’t consider the security.

It just means you’ll need to take these costs into account and come up with a bigger deposit since it’s likely the Loan to Value Ratio (LVR) will be restricted.

Existing tenant

Banks don’t like vacant possession and like to see a strong lease agreement in place before lending against the freehold.

There aren’t set rules on how long the leasehold needs to have been in place but if the business has been there for the last 3-5 years, it’s a good sign that they will continue to pay their rent on time.

Some lenders will even consider a property with just 12 months left on the lease as long as you can show that the tenant intends to sign on for another 3-5 year term.

Alternatively, it may be that you have another business operator lined up.

You should ask the vendor for the last 6 months rental payment history for the tenants.

The bank may also ask to see their business financials to show that they’re running at a profit but this usually isn’t required.

What can I use as security?

  • Residential security.
  • Registered fixed or floating charge or Bill of Sale over the business assets.
  • Directors’ guarantee.
  • A deed of consent between lessor/lessee and the bank.

What should you look for in a property?

Banks may have certain characteristics they prefer but they’re not in it to make money from your business – you are!

Consider a modern industrial unit because it means you’ll spend less on repairs and maintenance on the building and the site.

As a minimum, you might want to organise for a specialist property inspector to walk through the unit to make sure that it’s structurally sound.

Workshops sometimes come with offices attached and parking bays for customers. These features can be a huge selling point for some businesses.

Are you running your own workshop?

Banks can be very conservative when it comes to someone buying a freehold smash repair workshop as a going concern.

You need experience

Banks want to see that you’re a qualified panel beater with around 5 years industry experience, speifically in a management position.

Any work references and examples of your business acumen that you can provide will help your application.

You need to be in a good financial position

Banks don’t offer start-up capital finance so you need to be in a strong financial position with some assets and little to no debt.

This will give the bank more confidence that you will be able to meet your smash repairs commercial loan repayments if business income gets tight.

Having the ability to inject capital into the business or your mortgage is a good reflection of your character as a borrower.

You need a business plan

Going hand-in-hand with your financial situation, banks want to see that you’ve done your due diligence on the local business environment.

With the help of a qualified accountant, you should show:

  • A cash flow forecast for the business.
  • A study of the local demographics of the area.
  • A competitor study and how you plan to run a successful workshop.

Many smash repair businesses “cross-sell” or offer other services outside of standard panel beating work.

This is becoming more common as industry revenue becomes constrained by safer vehicles and fewer accidents on the road.

These services include:

  • Spray painting.
  • Replacing tinted glass.
  • Interior repairs.
  • Cleaning, washing and detailing services.
  • Specialised repairs for motorcycles and trucks.
  • Offering a courtesy car.

Are you buying a freehold going concern?

Buying the freehold property and the smash repairer as one purchase is known as a freehold going concern purchase.

We can help you lend against the freehold but banks won’t lend against the value of the existing business.

However, if you have enough equity in an existing property, you may be able to borrow up to 100% of the business costs.

Please complete our free assessment form if you need finance to buy an existing panel beater and can provide a residential property as security.

The only time banks will lend against the business value is if the business itself is an accredited franchise.

Auto Masters is an accredited franchise with a couple of our lenders and it could be your opportunity to fulfil your business dreams in the car repair industry.

Will the bank help me fund equipment purchases?

We’re specialists in business loans and we can help you qualify for a number of finance options including invoice discounting and an overdraft facility.

As long as you can provide around 2-3 years business financials showing good turnover, we can even help you with equipment finance so you can buy or replace anything you need for the workshop including:

  • Screw compressors and air dryers
  • Compact paint systems
  • Autorobot pulling racks
  • Semi downdraft diesel heated spray booths
  • 3-phase MIG welders
  • Measuring equipment
  • Hydraulic jacks, stands racks, shelving, computer and assorted equipment
  • Various hammers and dollies used for planishing
  • Body files and flippers
  • Assembly tools such as socket sets, screwdrivers and spanners
  • Hydraulic pushing/pulling devices
  • Vehicle measuring and aligning devices
  • Vehicle lift hoists
  • Personal safety equipment such as boots, overalls, safety glasses, welding helmets, gloves, respirators and hearing protection
  • English wheels
  • Power hammers
  • Pear shaped mallets and sandbags
  • Benders/folders
  • Rollers
  • Beaders/swaging machines
  • Station bucks
  • Templates
  • Oxyacetylene welding equipment
  • Lead loading equipment

Speak to a solicitor

Apart from a specialist broker and an accountant, you should consider having a commercial solicitor on your professional team.

They can check to see that the Contract of Sale for the property is in your best interests.

They can even negotiate with the vendor to ensure that they undertake any reparations to the property prior to the sale.

If you’re buying the business, the Heads of Agreement will tell you what is actually included in the sale such as equipment, tools and machinery.

As part of the transaction, your solicitor can even help you to negotiate a handover period with the current owner.

Insights into the smash repair and panel beating industry

Safer vehicles are reducing accidents, constraining industry revenue, according to research from IBISWorld.

Over the past few years, a combination of safer new vehicles and more risk-averse drivers has reduced vehicle accidents and limited industry revenue growth.

Simply put, more people than ever are buying new cars and these new cars come with modern safety features like better brakes and even self-driving technology.

As a result, car insurers are holding more influence over the industry. More and more panel beaters are relying on smash repair agreements.

However, what’s helping the industry as a whole is the growth in registered vehicles.

Aussies love their cars and that means a greater need for smash repairers.

Becoming a recommended panel beater

Becoming an authorised smash repairer with one of Australia’s big insurers can help you to build a trusted brand and attract new customers.

You’ll also be able to take advantage of insurance claim agreements.

As a minimum, you need to have a motor vehicle repairers licence or your state’s equivalent to carry on a panel beating business.

See below for links to apply to become an authorised smash repairer:

Do you want to buy a smash repairer?

Discover if you qualify for a smash repairs commercial loans by calling 1300 889 743 or by completing our free assessment form today.

  • Afroken

    Is a residential real estate absolutely necessary when it comes to security?

  • Hi there, a residential property is not absolutely necessary and you can also use registered fixed or floating charge or Bill of Sale over the business assets, directors’ guarantee or a deed of consent between lessor/lessee and the bank as security.