Why do banks turn down auto repair shops for loans?

Most independent shops fall below the revenue threshold a commercial lending team is set up to write. It is a size decision more than a risk decision.

The bays, the lifts and the diagnostic equipment are usually leased or financed, and the premises are usually rented, so there is little unencumbered to secure against.

Shops often run lean on paper for tax reasons, which is sensible and reads badly to a model looking at declared profit.

Daily tickets produce exactly the deposit pattern underwriting likes: frequent, consistent, and verifiable against card settlement.

The work is non-discretionary. Cars break regardless of the economy, and demand that holds through a downturn is a genuine underwriting positive.

Diagnostic equipment and lifts are financeable as equipment, which is cheaper than buying them out of working capital.

A merchant cash advance underwritten on daily ticket revenue is the usual fit, because steady tickets are exactly what that funder reads, and it typically funds in days.

Short-term working capital suits a larger one-off need, such as staffing a second bay. Where the need is a lift or diagnostic equipment, equipment financing costs less, because the equipment secures it.

Six months of business bank statements, plus card processing statements if you have them.

Average monthly deposits — count both card and cash going through the account.

Whether existing equipment is financed and with whom.