SBA lenders approved 159 7(a) loans to motor vehicle supplies and new parts wholesalers from October 2023 to June 2026, $92,883,600 from 54 lenders. The median loan was $304,000, about twice the national $150,300, at a median 10.25%, level with the national rate. Only 5% went to start-ups; 7.5% financed acquisitions, at a median of $696,500. Lenders decide on inventory quality and turnover, receivables from repair shops and dealers, customer and supplier concentration, and whether a revolving line should carry the working capital instead of the SBA term loan.
| Measure | Motor Vehicle Supplies and New Parts Merchant Wholesalers | All industries |
|---|---|---|
| SBA 7(a) loans approved | 159 | 162,355 |
| Median loan | $304,000 | $150,300 |
| Middle half of loans | $100,000 – $513,500 | $50,000 – $500,000 |
| Loans of $1 million or more | 15.7% | 12.9% |
| Median rate at approval | 10.25% | 10.25% |
| Middle half of rates | 9.5% – 11.25% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 12 (7.5%) | 16,849 (10.4%) |
| Median acquisition loan | $696,500 | $693,000 |
| Lenders that made these loans | 54 | 1,648 |
| SBA 504 loans (real estate, equipment) | 14 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 159 (Oct 2023 – Jun 2026), from 54 lenders
- Median loan / rate
- $304,000 at 10.25%
- Loans of $1 million or more
- 25 (15.7%)
- Start-ups
- 5% of loans
- Acquisitions
- 12 loans (7.5%), median $696,500 at 9.88%
- SBA 504
- 14 loans, median $1,301,000
The figures, read against the national ones
Motor vehicle supplies and new parts merchant wholesalers (NAICS 423120) took 159 SBA 7(a) loans worth $92,883,600 from 54 lenders between October 2023 and June 2026. The median of $304,000 is about twice the national $150,300. The middle half ran from $100,000 to $513,500, the 90th percentile was $1,568,080, and 25 loans (15.7%) were $1 million or more.
| Figure | Parts wholesalers | What it points to |
|---|---|---|
| Median loan | $304,000 | About twice the national $150,300 |
| Middle half | $100,000 to $513,500 | Inventory and working capital, not build-outs |
| 90th percentile | $1,568,080 | Warehouses, purchases and multi-branch distributors |
| Median rate | 10.25% (middle half 9.5% to 11.25%) | Level with the national 10.25% |
| Fixed-rate share | 13.2% | Most borrowers take the variable rate |
| Median term | 120 months | Ten-year working-capital and goodwill terms |
| SBA Express | 32.1% of loans | Smaller working-capital needs |
| Start-ups | 5% of loans | An industry of established businesses |
| Acquisitions | 12 loans (7.5%), median $696,500 at 9.88% | Below the national 10.4%, but large |
| SBA 504 | 14 loans, median $1,301,000 | Owner-occupied warehouses |
| Median jobs supported | 4 | Lean headcount against a large balance sheet |
The low start-up share, 5%, is the telling number. Distribution needs supplier lines, a customer base and a stocked warehouse before it earns anything, and lenders rarely fund that from scratch. What they finance here is an existing distributor adding stock, a branch, a building or an owner.
A balance sheet made of parts and receivables
A parts distributor's assets are mostly inventory on the shelves and money owed by repair shops, dealers, fleets and retailers. Both can support borrowing, but not through an SBA term loan in the usual way. Asset-based lenders lend against them directly with a borrowing base that moves with the business; see how a borrowing base works.
| Asset | How an asset-based lender typically treats it |
|---|---|
| Receivables under 90 days | Advanced at 80% to 90% of eligible balances |
| Receivables more than 90 days past invoice | Typically ineligible |
| A single large customer | Commonly capped at 20% to 25% of eligible receivables |
| Inventory | Up to 85% of net orderly liquidation value, or roughly half of cost |
| Slow-moving, obsolete or discontinued parts | Usually excluded or reserved against |
| Cores and returns awaiting credit | Often excluded until the supplier credit is received |
That is why many distributors end up with two facilities: an SBA 7(a) term loan for the long-lived needs (a building, a purchase, a permanent layer of inventory) and a revolving line for the seasonal and growth swings in stock and receivables. SBA has its own revolving programs as well; see SBA CAPLines vs a conventional line of credit and lines of credit for wholesale distributors.
What lenders question in parts inventory
A parts catalogue runs to thousands of numbers, and the value is uneven. Fast-moving filters, brakes and fluids turn over and resell; parts for older or low-volume models can sit for years. A lender will ask for the inventory by age or last sale date and compare it to the balance sheet figure. Where stock that has not moved is carried at full cost, the lender adjusts earnings and collateral both.
- Turnover: how many times a year the stock sells through, by product line.
- Return privileges: which suppliers take back unsold or superseded parts, and on what terms.
- Cores: how core deposits and credits are tracked, since they sit between the customer and the supplier.
- Warranty returns: who bears the cost when a part fails, and how that shows up in margin.
- Supplier rebates: whether volume rebates are booked when earned or when paid, which can move a year's profit.
None of this is exotic, but a file that answers these questions before the lender asks them reads as a well-run distributor. See inventory advance rates.
Customers, suppliers and coverage
On the sales side, a distributor serving hundreds of repair shops has diversified credit risk but many small, slow accounts; one selling heavily to a few dealer groups or fleet operators has the opposite. The receivables aging, by customer with days outstanding, shows which one the business is. On the supply side, a distributor that depends on one manufacturer's line or territory carries the risk that the line is moved to someone else. Lenders read the distribution agreement for its term and termination rights.
SBA requires debt service coverage of at least 1.15x, or earnings of 1,150 against payments of 1,000, and 1.0x globally including the owners. Distribution margins are thin, so a lender will test coverage on the year's full cost of carrying inventory, including interest on any line. From 1 October 2026, a change of ownership must show 1.25x on historical results. See debt service coverage ratio.
Buying a parts distributor
Twelve loans, 7.5%, financed a change of ownership, at a median of $696,500, more than twice the industry's overall median, and 9.88%. The size comes from what is being bought: goodwill, the inventory, and often the receivables. Buyers should expect the inventory to be counted and valued at closing, with obsolete stock excluded or discounted in the price, and should budget working capital to carry receivables in the first months. See working capital at close.
- At least 10% of total project costs as equity. A seller note counts for up to half of it only on full standby for the life of the SBA loan.
- No earnout to the seller.
- An independent business valuation where the amount financed, less appraised real estate and equipment, exceeds $250,000; the purchase loan cannot exceed it.
- Supplier and territory agreements that survive the sale, with any consents in hand before closing.
- From 1 October 2026, financial due diligence on every change of ownership, and a quality of earnings report on acquisitions of $3 million or more excluding real estate.
Larger purchases can exceed what 7(a) alone reaches, since the loan tops out at $5 million and the guaranty at $3.75 million. See acquisitions above the SBA limit.
The warehouse and SBA 504
The 14 SBA 504 loans, at a median of $1,301,000, finance owner-occupied warehouses and long-life equipment such as racking and forklift fleets. A 504 project is typically 50% from a bank, 40% from the CDC and 10% from the borrower, and the borrower must occupy at least 51% of an existing building or 60% of new construction. Real estate under 7(a) can run to 25 years. See SBA 7(a) vs 504.
Preparing a distributor's file
The SBA list: 2–3 years of business tax returns, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. A distributor should add what an asset-based lender would ask for: an AR aging by customer with days outstanding, an AP aging, an inventory report by product line and age, the distribution agreements, and the existing liens on the assets.
Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in. Its book holds 278 lenders that write SBA 7(a) and 504 and 235 that write asset-based loans and lines, so both halves of a distributor's financing can be placed from the same file. On SBA loans the lender pays Transparent, not the borrower.
Common questions
- How large are SBA loans to auto parts wholesalers?
- The median from October 2023 to June 2026 was $304,000, about twice the national median, and 15.7% of loans were $1 million or more.
- Can an SBA loan finance parts inventory?
- Yes, a 7(a) can fund a permanent layer of inventory. For stock and receivables that rise and fall, a revolving line against a borrowing base is often the better fit.
- Can I start a parts distributorship with an SBA loan?
- It is possible but rare: start-ups were 5% of the industry's loans. Lenders want supplier lines, customers and a record of margin before they lend against a warehouse of parts.
- How do lenders value obsolete parts?
- They usually exclude them, or discount them heavily, from both collateral and earnings. An inventory report by age or last sale date lets the lender see how much stock is at risk.
- What does an SBA lender need to finance buying a distributor?
- The letter of intent, the target's latest full year of figures, the inventory and receivables detail, the distribution agreements and the buyer's personal financial statement and tax returns.