Industry

Auto dealers funding in Canada: what funders actually read.

The deposit patterns, seasonality and timing that decide how a Canadian auto dealers file is read.

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How funders read auto dealers files

Dealers move large dollar amounts in a small number of transactions, so deposits are lumpy and floor-plan costs are the main pressure.

Deposit patterns across the sales month
Inventory turn and days on the lot
Reconditioning and advertising costs
Existing floor-plan or inventory financing

The cash-flow rhythm

Spring and tax-refund season lift sales, and winter can be quieter in many markets. Month-end pushes create bunching.

Where the pressure usually shows up

Inventory is bought in lumps and sold in lumps
Reconditioning delays sales and cash
Floor-plan interest runs while a car sits

What the money usually does

Inventory purchases at auction
Reconditioning equipment or a detail bay
Advertising ahead of a seasonal push
Bridging a slow month

Eligibility for dealers varies by funder and file. Deposit-based review is typical, and the request is usually sized against several months of deposits, not one strong month.

A worked example

Illustrative arithmetic

A independent used-car dealer depositing about $150,000 a month asks for $60,000 for inventory and a reconditioning bay. At a 1.22 factor the payback is $73,200, a cost of $13,200. Over roughly 6 months that is about $581 per business day, or close to 8% of monthly deposits.

Total payback: $60,000 × 1.22 = $73,200.
Cost: $13,200.
Payment: about $581 per business day, or 8% of monthly deposits.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Before you apply

Provide a clean picture of monthly sales deposits
Note existing floor-plan arrangements
Have an inventory plan with expected turn

Typical starting points

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Common questions

Are dealers eligible?

Eligibility varies by funder and file. Applying is the quickest way to find out.

Does floor-plan debt matter?

It is read as an existing obligation alongside deposits.

How big a request is sensible?

Sized against several months of deposits so the payment fits a normal month.

Keep reading

Merchant cash advance CanadaHow an advance against future card sales works Revenue-based financing CanadaRepay a fixed multiple as a share of revenue Cash-flow affordability calculatorCan the month carry the payment?IndustriesHow each trade is read by funders Funding use casesPayroll, inventory, expansion and more Underwriting situationsCredit, NSFs, time in business and more

Educational information only. It is not legal, tax or accounting advice.

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