Finance question
Can I get finance to buy a smash repair business?
Often yes, but a smash repair purchase is funded differently to a servicing workshop. Lenders weigh how much of the profit comes from insurers, so expect a larger deposit and more weight on the plant, the lease and any property you can put up. In our guide's worked example of an $800,000 shop, debt covers a little over half the price, subject to lender assessment.
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The short answer
Insurer work is what a lender looks at first
A smash repair shop is priced on the profit left after the owner is paid, and on how much of that profit depends on insurers. Our smash repair business guide surveyed 14 live listings with asking prices from $200,000 for a small owner-run shop to $3.3m for a 23-staff shop turning over $6.5m. The shops that live on insurer work ask about 2.4 to 4.5 times EBITDA, which is our arithmetic from the listings. A shop in Mount Gravatt, Queensland is about 95% insurer-referred and asks $2.6m.
That concentration is the lender's question. If most jobs come from one or two insurers, what happens when an insurer moves volume to another shop, caps its prices or drops the shop from its repairer network? Network status is the insurer's to give, not the vendor's, so a lender does not value it like equipment or property. The guide's view is to expect a larger deposit than for a servicing workshop, a shorter loan on the goodwill, and more weight on the plant, the lease and your own security.
The purchase is usually split into layers. A business acquisition loan can cover part of the goodwill, equipment finance can cover part of the spray booths, bench and plant, and the rest comes from savings or a property-backed loan on your home or another property. Ventas is a broker across 40+ lenders, not a single bank, and there is no upfront fee to you; the lender pays us on settlement.
Do you qualify?
What a lender looks at on a smash repair purchase.
Spread of work
Several insurers plus fleet, dealer and private work, shown in statements.
Trading history
Two to three years of financials that reconcile to BAS and bank statements.
A committed lease
A term at least as long as the loan, with the landlord's consent.
Staff who stay
Qualified painters and panel beaters still on the floor after settlement.
How a smash repair purchase is typically funded
Plant on its own layer
Booths and benches can be financed as equipment, valued at resale.
Goodwill needs support
There is nothing to repossess, so lenders look to cash flow and security.
Property can close the gap
Equity in your home can fund what the shop's assets cannot.
A worked example
From our guide: an independent shop at an $800,000 asking price, with $60,000 of stock and work in progress on top, needs about $926,000 in cash once legal, licence and a $100,000 working capital buffer are added. A $250,000 acquisition loan and $200,000 of equipment finance cover $450,000, a little over half the price. The other $476,000 comes from savings or a loan secured on property. Illustrative only.
Common questions
Frequently asked questions
Will a lender fund a shop that relies on one insurer?
It is harder. Lenders ask what happens if the insurer moves work or drops the shop from its network, so expect questions, a larger deposit or more security. Several insurers plus fleet and private work reads better.
Can I finance the spray booths and frame bench separately?
Often yes, as equipment finance secured on the gear. A lender values used equipment at what it would resell for, which can be less than the vendor allocates, so get the plant priced independently.
Does the repairer licence transfer when I buy?
Our guide found that the NSW and WA regulator pages do not say whether a licence transfers on a sale, so ask the regulator before you sign. We did not confirm a rule in other states.
What else do I need cash for besides the price?
Stock and work in progress at cost, legal and due diligence (Bsale puts legal at $1,500 to $8,000), transfer duty that varies by state, and working capital for wages and parts while insurers pay.