An automotive property is eligible. Repair shops, body shops, tire and service centers, transmission shops and general mechanical facilities are financeable under our small balance commercial program as Tier II collateral — most auto-related properties are eligible, including those performing major mechanical work. The disqualifiers are narrow, specific, and mostly have nothing to do with how dirty the work is.
What kills an automotive file is fuel infrastructure, below-grade oil handling of a particular kind, and land that outweighs the building. Everything else — lifts, compressors, paint booths, a bay floor that has seen thirty years of service — is ordinary Tier II collateral, underwritten on cash flow, credit and value like anything else.
What the guideline actually says about automotive
Automotive appears twice: in the eligible property type list as a Tier II type, and in Appendix A with a definition that carries the exclusions.
That sentence does four jobs: it confirms the category, names four disqualifiers, tells you the used-car lot problem is a valuation problem rather than a use problem, and strips equipment and enterprise value out of the appraisal.
Disqualifier one: a gas dispenser or an underground storage tank
This is the one that ends files. The text is not conditioned on whether the tank is in use — it says any property with a gas dispenser or underground storage tank (UST). The infrastructure is the disqualifier, not the business on top of it.
That matters because many independent repair shops sit on sites that used to sell fuel. The pumps came out in 1994, the canopy came down, the building became a two-bay service shop, and nobody has thought of it as a gas station since. If the tanks are still in the ground, the property does not fit the program.
The guideline writes no separate rule for tanks that have been removed. It names the exclusion and hands the rest to the environmental review, where a documented removal and closure is evaluated on its own facts rather than against a bright line. What the removal did or did not resolve — the extent of any release, who carries liability, whether a state closure letter ends the exposure — is for your environmental consultant and your attorney.
Above-ground tanks are a different word. The exclusion as written names underground tanks and gas dispensers. It does not address above-ground waste-oil storage, and we will not tell you it does. That falls through to the environmental screen below.
Disqualifier two: quick-lube and below-ground oil-change pits
Two named types: custom-built quick-lube facilities, and oil-change facilities with below-ground pits.
Both are aimed at a specific building form — the purpose-built drive-through lube bay with a basement-level service pit under the vehicle lane. The building is single-purpose, the pit is expensive to fill or convert, and the structure has spent its life with oil moving below grade.
Notice what the exclusion does not say. It does not exclude hydraulic lifts, in-ground lift cylinders at a general repair shop, or a shop that changes oil among twenty other services. The named categories are the quick-lube facility and the oil-change facility with a below-ground pit.
We would rather say the guideline is silent than invent a rule. What the review looks at is whether the building converts to standard retail, warehouse or office use with limited cost and a reasonable timeline, and what the environmental screen returns.
Disqualifier three: used-car lots that are really land
The third exclusion is a valuation exclusion wearing a use exclusion's clothes. A used-car lot is out when its land-to-building ratio significantly exceeds the market norm for standard retail/office use — and the guideline says why: those are treated as land loans.
A two-acre gravel lot with a 900-square-foot sales office is a land purchase with a shed, and land is not what this program does. No threshold ratio is published, so do not go looking for one — the test is the market norm for standard retail and office use in that submarket, an appraisal judgment. A dealership with a real building on a normal amount of parking is not the target here.
Where automotive shades into a gas station
The gas station line is drawn three separate times. The redundancy tells you how firm it is.
| Where it appears | What it says |
|---|---|
| Ineligible Property Types list | Gas Stations, listed outright, with no asterisk |
| Unacceptable collateral, item (a) | Special use properties, with gas stations given as a named example |
| Appendix A — Automotive Services | Any property with a gas dispenser or UST is an ineligible type |
The asterisk matters more than it looks. In the ineligible list, types marked with an asterisk are permitted as third-party tenants in a Tier II property when they generate 25% or less of total property cash flow — adult entertainment, churches, education, gambling and gun ranges all carry it. Gas Stations does not. Neither does Car Wash.
So the minority-tenant carve-out is not available to either. A retail strip with a fuel island at the corner does not become eligible because the fuel operator pays only 18% of the rent, and a service center with an attached wash bay is not cured by the wash being a small share of income.
The special-use test underneath all of this is the real principle: any property with a special use component is ineligible unless it can be readily converted to standard retail, warehouse or office space with limited cost and a reasonable timeline — the guideline specifies under 90 days. A service bay with an overhead door converts. A fuel canopy with tanks under it does not.
The 25,000 square foot ceiling
Size is a separate disqualifier, and it catches larger automotive properties that are otherwise clean.
A single-occupant automotive building at or above 25,000 square feet of GBA is outside the program. A multi-tenant automotive or flex property can be larger overall, provided no single tenant takes 25,000 square feet or more.
The environmental review on an automotive file
Every property in the program gets screened. This is not automotive-specific and it is not triggered by anything you do or fail to do.
Three things in that passage matter to an automotive borrower.
The ETS is a database and historical search, not a site visit. It looks at what regulatory records exist for the address and those around it — faster and cheaper than a site assessment, and it runs first on every file.
The standard is low risk or no further action. Not "manageable risk", not "risk priced into the rate".
Surrounding areas count. The screen assesses the property and its surrounding areas. A clean automotive site with a former dry cleaner or fuel retailer two doors down can return a rating driven by a neighbor.
When the screen escalates to a full site assessment is covered in our separate piece on [when a Phase 1 environmental report is required for a commercial loan](/blog/when-is-a-phase-1-environmental-report-required-for-a-commercial-loan), and we will not restate those triggers here.
Historical use is what actually catches people
The most useful phrase in the environmental provision, for an automotive borrower, is that we review the property's current and historical uses.
Automotive sites have layered histories. A tire shop in 2026 was a full-service station in 1988 and a bulk fuel yard in 1961. Those uses generate regulatory records, and records are what a database search returns. The property you are buying can screen against a use that ended before you were born.
The guideline defines an Operations and Maintenance Plan — a written plan for controlling and maintaining environmental contaminants in a building until they are removed — but does not state when one is required, for automotive or anything else. We will not manufacture a condition the guideline does not impose. Whether your site needs one is a question for your environmental consultant.
No equipment value, no business value
The last clause of the automotive definition is a valuation instruction, and it changes the arithmetic on a lot of deals.
No FF&E and no business value is included in the value. Lifts, alignment racks, tire machines, balancers, compressors, diagnostic equipment, the paint booth, the customer list, the franchise agreement, the name on the sign — none of it sits in the appraised value the loan is sized against. You are borrowing against the real estate.
For a borrower buying an operating shop, that is usually the gap between purchase price and loan amount.
Personal property does not disappear from the transaction — the program takes furnishings, fixtures, equipment, leases and accounts receivable as additional collateral, secured by a UCC-1. But collateral secured by a UCC-1 is expressly not used as eligible collateral for calculating LTV. It secures us. It does not raise your proceeds.
Owner-occupied treatment and business experience
Most automotive borrowers occupy their own building.
A property is owner-occupied when the borrower's business occupies and operates from it, or it is leased to a related entity majority owned or controlled by the borrower. The borrower must utilize 50% or more of the property's net rentable area. Below that threshold, underwriting may classify the property as an investment property. Business experience then sets the leverage ceiling.
| Business type | Classification | Experience | Maximum LTV |
|---|---|---|---|
| Standard owner-occupied business | Inexperienced | Less than 3 years | 70% |
| Standard owner-occupied business | Experienced | 3 years or more | Program maximum LTV |
An automotive business is a standard owner-occupied business. It is not in the restaurant, bar and daycare bucket, which is ineligible under three years and capped at 70% between three and five. Three years of experience in the same business or industry immediately preceding the application gets an automotive borrower to program maximum leverage.
Note the wording: ownership, operational, or employment experience in the same industry. A technician who ran someone else's shop floor for eight years and is now buying a building for his own business is not starting from zero.
The primary income used to qualify has to be generated by the business occupying the subject property. Other recurring, verifiable income may also be considered.
The core numbers
These apply to automotive the same as to any other Tier II type.
| Parameter | O/O purchase | O/O cash-out or refinance |
|---|---|---|
| Loan size | $100K – $2.5MM | $100K – $2.5MM |
| Maximum LTV | 80% for loans with FICO 725 or higher | 75% |
| Minimum FICO | 650 | 650 |
| Global DSC | 1.20x | 1.20x |
| Occupancy | 75% | 75% |
| Underwriting method | Global DSC | Global DSC |
Two numbers, not one. The primary guarantor carries 650; every other guarantor on the file has to clear 640. A partner at 631 is a problem on an otherwise clean file, and better found at application than at approval.
Loans above $2,000,000 require senior management approval; loans below $100,000 are allowed case by case.
Six months of liquid reserves, measured in months of the qualifying principal-and-interest payment on the subject property, are required on purchases and on both refinance types. Cash-out proceeds may be used for reserves where FICO exceeds 700, provided they equal or exceed the required six months. Gift funds cannot be used to meet reserve requirements.
Before you spend money on an automotive property
Cheapest question first. All of these can be answered before an appraisal is ordered.
1. Are there tanks or dispensers on the site, now or historically? Ask the seller in writing; check the state tank registry.
2. Is there a car wash component? Separate ineligible type, no minority-tenant carve-out.
3. Is the building a purpose-built quick-lube, or an oil-change facility with a below-ground pit?
4. Is a single occupant taking 25,000 square feet or more of gross building area?
5. On a used-car lot, how does land area compare with building area against local retail and office norms?
6. How much of the purchase price is equipment and goodwill? That portion is not in the value the loan is sized against.
7. What is the site's history, and what documentation exists for it?
One through five are eligibility. Six and seven set proceeds and timeline.
What this page does not do
This describes how our small balance commercial program treats automotive properties as of the 8/3/2026 guideline. It is not an approval, a quote, or a commitment to lend.
It does not price anything. Rate, margin and prepayment structure are set by the current pricing matrix against your specific program, property type, credit score, LTV, amortization term, loan amount and occupancy.
It does not tell you whether your site is contaminated, what a release would cost to remediate, who bears liability for a historical release, or what a state closure letter does and does not extinguish. Those are technical and legal questions for an environmental consultant and an attorney. We state the lending treatment only.
It does not cover when a Phase 1 environmental site assessment is triggered generally — that is [its own page](/blog/when-is-a-phase-1-environmental-report-required-for-a-commercial-loan) — and it does not walk the full ineligible property type list, covered in [what property types commercial lenders will not finance](/blog/what-property-types-commercial-lenders-will-not-finance).
It does not address zoning, use permits, air permits for paint operations, hazardous waste generator status, or any other municipal question. Those go to your municipality and your attorney. And it does not resolve the in-between cases the guideline itself leaves open — the converted lube building, the open service pit, the site with tanks removed years ago. Where the guideline is silent, we have said so rather than filling the gap with a number that would read well and mean nothing. Those files are decided on the appraisal, the environmental result, and the exception process, applied case by case.
Guideline SBC 08/03/2026 · Reviewed August 31, 2026
Published September 1, 2026 · Updated September 1, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.