Business Loans for Auto Dealerships: Inventory Floor Plans and Facility Financing
Learn about financing options for car dealerships including floor plan lines, facility financing, working capital, and specialized automotive dealer lending programs.
Auto Dealership Financing Overview
Auto dealerships operate with substantial capital requirements: inventory floor plans can run into the millions, facilities require significant investment, and working capital needs fluctuate with seasonal sales patterns. Understanding the specialized financing products available helps dealers optimize their capital structure.
Whether you operate a franchise dealership, independent used car lot, or specialty vehicle dealership, multiple financing sources serve the automotive retail industry with products designed for dealer-specific needs.
Common Financing Needs
Auto dealerships require capital across several operational areas.
- Floor plan financing for vehicle inventory
- Facility purchase or construction
- Service department equipment
- Working capital for operations
- Lot improvements and customer amenities
- Technology systems (DMS, CRM)
- Acquisitions of other dealerships
- Franchise requirements and facility upgrades
Best Loan Products for Dealerships
Specialized financing products serve auto dealer needs.
| Loan Type | Best For | Amount Range | Typical Terms |
|---|---|---|---|
| Floor Plan Line | Vehicle inventory | $250K-$25M+ | Revolving, prime + 1-3% |
| Commercial Real Estate | Facility purchase | $500K-$20M | 15-25 years, 5-8% |
| Equipment Financing | Service equipment, lifts | $25,000-$500K | 5-7 years, 6-12% |
| Working Capital Line | Operations, payroll | $100K-$2M | Revolving, 7-15% |
| SBA 504 | Facility expansion | $500K-$5.5M | 10-25 years, 5-7% |
| Acquisition Financing | Buy another dealer | $1M-$50M+ | Structured, varies |
Floor Plan Financing
Floor plan lines are revolving credit facilities secured by vehicle inventory. They fund the purchase of new and used vehicles, with the loan paid down as each vehicle sells.
- Typical advance rates: 100% of invoice for new, 85-100% for used
- Interest accrues daily on each vehicle
- Curtailments required if vehicles age on lot
- Audit requirements to verify inventory
- Most manufacturers require floor plan for new car dealers
- Independent dealers can access from banks and specialty lenders
Floor plan cost is typically prime rate plus 1-3%, meaning a vehicle costing $35,000 accrues roughly $250-350 in floor plan interest per month. Fast inventory turns are critical to profitability.
Qualification Requirements
Auto dealerships face specific qualification criteria.
| Factor | Floor Plan | Real Estate | Working Capital |
|---|---|---|---|
| Credit Score | 680+ | 680+ | 650+ |
| Time in Business | 2 years | 2 years | 1 year |
| Net Worth | Substantial | Varies | Varies |
| Dealer License | Required | Required | Required |
| Franchise (if applicable) | Good standing | Good standing | Good standing |
| Financial Statements | Audited/reviewed | Required | Required |
What Lenders Evaluate
Auto dealer lenders assess specific operational and financial metrics.
- Inventory turn rates and aging
- Gross profit per vehicle (front-end and back-end)
- Fixed absorption rate in service department
- Floor plan utilization and payoff speed
- CSI scores for franchise dealers
- Market position and competition
- Management experience and dealer principal background
- Manufacturer relationship and allocation
Example Scenario: Independent Used Car Dealer
An independent used car dealer generating $3 million in annual sales wants to expand inventory from 40 to 80 vehicles. Average vehicle cost is $15,000, requiring a floor plan increase from $600,000 to $1.2 million.
A specialty floor plan lender provides a $1.5 million line at prime plus 2.5% (currently 10.5%), with 90% advance rate on used vehicles. The dealer must turn inventory at least 10 times annually to maintain profitability after floor plan costs.
Floor plan financing creates leverage that amplifies both gains and losses. A 60-day average inventory holding period doubles floor plan costs compared to 30 days. Monitor turns carefully.
Ready to Finance Your Dealership Growth?
Auto dealerships have access to specialized financing designed for the unique capital requirements of vehicle retail. From floor plans to facility financing, lenders understand dealer operations.
Get matched with auto dealer lenders who can structure financing for your specific situation, whether you are a franchise dealer or independent operator.
Ready to explore your options?
See what financing you qualify for in minutes — no impact to your credit score.
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Read more →Important Disclosure
Not Financial Advice: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. You should consult with qualified professionals before making any financial decisions.
No Guarantee of Financing: Liminal Lending Co. is a business loan marketplace that connects borrowers with third-party lenders. We are not a lender and do not make credit decisions. Submitting an application does not guarantee approval or funding. Loan terms, rates, and availability vary by lender and are subject to borrower qualifications and lender criteria.
Third-Party Lenders: All loan products are offered by independent third-party lenders. Liminal Lending Co. is an Independent Sales Organization (ISO) and receives compensation from lenders for successful referrals. Terms and conditions of any loan are between you and the lender.
Rate Information: Rates, terms, and fees mentioned in this article are estimates based on publicly available information and may not reflect current market conditions or specific lender offers. Actual rates depend on creditworthiness, business financials, and lender policies.
Information May Change: Financial markets, lending regulations, and economic conditions are subject to rapid change. While we strive to keep our content accurate and up-to-date, information in this article may become outdated. Always verify current rates, terms, program availability, and regulatory requirements with lenders and official sources before making financial decisions.