During a recent U.S. House Small Business Committee hearing, the Automotive Service Association (ASA) made a direct appeal: amend the U.S. Small Business Administration’s (SBA) rules to lighten the burden on independent collision and repair shops.
In testimony, ASA spotlighted two key changes: reducing the SBA’s 504 Loan Program’s 20% down payment requirement for businesses classified as “special purpose properties” — a category into which nearly all auto repair shops fall — and raising the maximum 7(a) loan cap from $5 million to $10 million.
SBA 504 loans can be used by borrowers to finance a range of assets that promote business growth and job creation, including existing land or buildings, new facilities, machinery and equipment with a remaining useful life of at least 10 years, and consolidating, repaying or refinancing qualified debt.
Committee Chairman Roger Williams (R-TX) asked Thomas Kimsey, the SBA’s associate administrator for the Office of Capital Access, whether the 20% equity injection requirement for special purpose properties should be revised. ASA argues that repair shops pose no greater default risk than typical 504 borrowers and should be treated on par.
Meanwhile, ASA supported bipartisan bills (H.R. 1893, H.R. 4513, and Senate counterpart S. 901) to double the 7(a) limit.
“The costs of operating an auto repair business and investing in its long-term viability are becoming increasingly more expensive” said Dan Stander, ASA Board of Directors chairman. “A higher allowable loan would allow more small independent auto repair shops to thrive.”
Stander thanked the legislators who introduced the bills, while noting, “ASA isn’t asking the SBA for special privileges. We just want small auto repair businesses to be treated the same as most other small businesses.”
Stander said ASA supports reducing the down payment requirement to 15%.
For collision repair shop operators, access to capital under favorable terms is more than a policy fight — it can directly impact shop growth, equipment investment and cash flow management in a high-cost, technology-intensive environment.
ASA’s case is that repair shops are almost always viewed as special purpose properties and thus face the 20% burden, even though their default risk may align with “general” 504 projects.
ASA’s push lands amid broader shifts in SBA lending. Overall SBA-backed lending surged 7% in FY 2024 to $56 billion, buoyed by volume in smaller-dollar loans, according to the Associated Press. Yet the number of approved 7(a) loans has declined, with June 2025 reaching its lowest point since early 2022, Politico Pro said.
Meanwhile, the SBA has reintroduced or increased lender fees, reversed fee-waiver policies, and re-tightened underwriting standards to enforce “zero subsidy” status for 7(a) lending. These shifts may raise the cost barrier for borrowers.
For specialized property borrowers such as collision shops, a combination of high equity injections and elevated fees may render SBA-backed financing less attractive, even where capital is otherwise available.
