Our largest sector, and the one most lenders get wrong.
Dealerships are declined constantly by lending institutions that do not understand how the trade is financed. The businesses are not weak. The reading of them is.
Why the balance sheet looks worse than the business
Stocking finance sits against the forecourt. The stock is a current asset, the facility against it is a current liability, and the two move together every time a car is bought or sold.
Run that through a generic credit model and the business looks overleveraged with thin or negative net assets. It is not. That is what a properly stocked dealership is supposed to look like.
The lending partners that fund this sector properly already know that. The ones that do not decline on sight, and a dealer sent to three of those carries three declines for no reason.
Knowing which is which is the entire difference between a decline and a completion.
The pressure right now
Margins
Dealership operations are running at roughly 2.5% EBIT margins, a structural problem made materially worse by National Insurance increases, EV discounting pressure and rising compliance overhead.
Cost per unit
Preparation costs are approaching £700 a unit, and the average value of a funded car reached £11,018 in early 2026, up 4.6% year on year.
Supply
The missing new car registrations from the Covid era start hitting the five to seven year old bands from 2026, exactly the stock independents rely on.
More capital tied up per unit, more prep cost per unit, and a thinner margin at the end of it. That is a working capital problem before it is anything else.
What dealers actually want
Traders, not borrowers. A dealer deploys capital, turns it, takes the margin and goes again. The facility is a tool, not a commitment, and the question is how fast it works, not what it costs over five years.
Speed, because a decision made on Tuesday is acted on that week.
Early repayment that genuinely reduces the cost, because carrying a facility to term was never the plan.
Facilities that sit alongside stocking finance instead of replacing it. Most dealers already have a stocking line. What they are short of is everything else.
What it gets used for
Stock outside the line
Buying at auction or from a trade source, where the stocking line is drawn or the car does not fit its criteria.
Prep and reconditioning
A serious line of its own now, at close to £700 a unit.
Q4
When working capital pressure is heaviest.
Expansion
A second site, an MOT bay, a workshop, a prep centre. Service revenue that is not tied to units sold.
Refinancing
Expensive short-term borrowing built up on cards and revolving facilities, restructured into something with a fixed cost and an end date.
The card pattern
A common sequence here. A dealer takes a business credit card, uses it for spending and drawdowns because it is the fastest money available, and builds a balance over months.
Then carrying it becomes the problem, and the right move is restructuring that balance into a term facility at a lower cost with a defined end date.
Normal, healthy, and usually the second conversation, not the first.
If a dealership case is being read wrong somewhere, that is usually fixable. Tell us the amount and what it is for.
What we need
Send six months of statements and you will know where you stand, usually the same day.
Six months of business bank statements. Five to seven minutes from a banking app.
Not the accounts. In this sector particularly, the accounts are the least useful document in the file, for the reason set out above.