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Around the Wash Where’s The Money<br />
with needed information?<br />
6. What are the applicable ratios of gross income,<br />
net, and overall debt load of the buyer?<br />
7. Do they require the buyer to personally<br />
guarantee the loan? 8. If the buyer has other<br />
income, is that factored and accounted for<br />
even if the purchase is for a self serve held<br />
in an LLC, which is a separate legal entity?<br />
8. When the ratios are applied, are they calculated<br />
against EBIDTA or tax returns?<br />
9. If the seller doesn’t produce financial<br />
statements that include EBIDTA but merely file<br />
tax returns, are those sufficient records for the<br />
SBA to apply their qualification ratios against?<br />
10. Or do you need to have an accountant<br />
or CPA produce a financial statement showing<br />
EBIDTA?<br />
Great question, but the answer may be intense.<br />
1. Yes, the SBA 7A loan program is probably<br />
where you will wind up; the other option<br />
right now being an EIDL loan if you qualified<br />
for enough to cover the purchase.<br />
2. Purchasing a car wash always involves<br />
three parts:<br />
a) the real estate<br />
b) the car wash business, and<br />
c) the personal property.<br />
3. Each state defines the lines between these<br />
three differently. In my state, we pay real<br />
estate taxes on the ground and building<br />
only, the car wash equipment is all personal<br />
property and taxed separately. The<br />
personal property should be listed on a<br />
bill of sale, and separately from the real<br />
estate purchase contract.<br />
4. Keeping your credit score over 700 should<br />
eliminate any problems in that area.<br />
5. Down-payments are usually 20% on a<br />
commercial purchase.<br />
6. I usually close in 30 to 45 days, but that is<br />
aggressive.<br />
7. The bank will be looking for a ratio of 1.2<br />
to 1.3 on money available to make the<br />
loan payment from the business revenues.<br />
8. Based upon your net worth, experience,<br />
etc., a personal guarantee from both<br />
principals may be required. Emphasis on<br />
required, as banker will always ask, don’t<br />
be afraid to balk and say no.<br />
9. Other incomes may be considered as secondary<br />
repayment sources. Your personal<br />
incomes and financial strength will add to<br />
the attractiveness of the loan to a banker.<br />
10. What does the revenue you are being<br />
shown reflect? Make sure you know the<br />
answer to this question as it impacts the<br />
value of the car wash and what you can<br />
actually expect your revenue numbers to<br />
look like. MANY car wash owners do not<br />
know the proper way to record revenue<br />
numbers. If car wash sales are taxable in<br />
your state, then the money you receive is<br />
part revenue and part sales tax liability.<br />
11. For example: If you receive $500 in revenues<br />
and owe 7% sales tax on that revenue,<br />
you should be posting (500/1.07) =<br />
$467.29 in income and a sales tax liability of<br />
$32.71. The $32.71 are trust funds owed to<br />
your State Department of Revenue and not<br />
an asset of the car wash business. So, posting<br />
an income of $500 and later expensing the<br />
sales tax is not correct accounting and skews<br />
the actual income numbers of the business.<br />
When you go to buy a car wash always<br />
learn how the owner is posting so you can<br />
adjust the numbers properly.<br />
Delivered Price – Quantity Discounts<br />
WaterCannon.com<br />
1.800.333.9274 (WASH)<br />
en Espanol: 1.800.917.9274<br />
Hydraulic Driven<br />
20 GPM up to 5000 PSI<br />
Portable<br />
Electric -<br />
Low<br />
RPM<br />
3.5 GPM<br />
3500 PSI<br />
7.5 HP<br />
Portable<br />
Gas<br />
4000 PSI<br />
Honda<br />
Kohler<br />
Lifan<br />
Car And<br />
Truck<br />
Detailer<br />
Auto-Stop/Start -<br />
Complete<br />
with Reel<br />
100' Hose<br />
Hot Water<br />
Portable<br />
420 cc<br />
Gas<br />
4 GPM<br />
4000 PSI<br />
120 Volt<br />
Hot Water<br />
Portable<br />
440 cc<br />
Gas<br />
4 GPM<br />
4000 PSI<br />
120 Volt<br />
Hot Water<br />
Portable –<br />
Electric<br />
3.5 GPM<br />
3500 PSI<br />
7.5 HP<br />
Portable<br />
Auto/Truck Detailer<br />
Hot Water<br />
Portable<br />
Honda<br />
389 cc<br />
4 GPM<br />
4000 PSI<br />
120 Volt<br />
Hot Water<br />
Electric<br />
Powered –<br />
Oil Fired<br />
Up to 50 HP<br />
Up to<br />
8000 PSI<br />
Diesel<br />
Engine -<br />
Diesel<br />
Burner<br />
Yard duty<br />
Trailer –<br />
100 Gallon Up to<br />
10 GPM<br />
11,500 PSI<br />
Hot Water<br />
Portable<br />
440 cc<br />
4 GPM<br />
4000 PSI<br />
12 Volt<br />
Electric<br />
Heated –<br />
Electric<br />
Motor<br />
High Capacity<br />
10 GPM<br />
Up to<br />
5000 PSI<br />
Hot Water LP<br />
Natural Gas<br />
Oil Fired<br />
Up to<br />
2,000,000<br />
BTU’s<br />
20 GPM<br />
Hot Water<br />
Portable<br />
Honda<br />
389 cc<br />
4 GPM<br />
4000 PSI<br />
12 Volt<br />
7000 PSI<br />
Gas or<br />
Diesel<br />
Powered<br />
Industrial<br />
Package<br />
Hose Reel<br />
Cabinet<br />
Hot Water<br />
Heaters<br />
12 or 120 Volt –<br />
Up to 2,000,000<br />
BTU’s<br />
20 GPM<br />
Indoor Electric<br />
5 to 50 HP<br />
208/<br />
440/<br />
575 Volt<br />
Up to<br />
15000 PSI<br />
Hot<br />
Water<br />
150° F –<br />
6'x6"<br />
225 Gallon<br />
Gas and Diesel<br />
Customizable<br />
Jetter Packages<br />
12 GPM –<br />
3500 PSI<br />
Orlando | Phoenix | Minneapolis | Hattiesburg | Melbourne | Toronto | Bogota Int’l: 1-321-800-5763<br />
Industry Trained Staff available from 8:30 a.m. to 6:00 p.m. weekdays E.S.T.<br />
Water Cannon is proud to be a MWBE<br />
SUMMER 2020 • 45
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