There has been a major decline in home ownership — especially among millennials. A Census national summary report shows that in the 3rd quarter of 2014 there were 24,250,000 rentals in the United States.
With an increase in renters comes the need for coin-operated laundromats. A unique aspect of coin operated laundromats is the fact that a singe laundromat location can generate as much as $300,000 in revenue annually with very little overhead, while also having no inventory or receivables.
Bank Loans For Laundromats
If you do happen to get a traditional loan or line of credit from a bank (who only approve 1 in 4 small business loans) you will like obtain rates between 5-10% with repayment terms ranging from 1-10 years.
SBA Loans For Laundromats
SBA small business loans are always an attractive financing option because of their low rates (currently around 6-8%) and long terms (up to 7 years for working capital, 10 years for equipment financing and 25 years for real estate).
But if you’re looking to secure SBA laundromat financing, you’re going to need to make sure the laundromat’s books are in great shape. You’ll generally need 3 years of business and personal tax returns, along with 3 years of the company’s financials.
Equipment Leasing For Laundromats
Over the years of usage, there is wear and tear on machinery. A cash intensive business audit finds that coin-operated laundromat equipment is used, on average, between 3 and 8 times a day. Many laundromat owners find leasing business equipment is the best way to go when financing their machines.
Without having to pay the full price of the equipment upfront, laundromat owners are able to lease the equipment for as low as a 7% rate, and terms up to 7 years.
Alternative Laundromat Loans
Being that laundromats are an all cash business, sometimes laundromat owners don’t have all their financial documentation in order. Or maybe their credit isn’t quite good enough for bank-rate small business financing.
The next best option is an alternative small business loan. With a simple application, bank statements and YTD financial statements, a laundromat owner can obtain financing for their business in the matter of days to a couple weeks. Current mid prime alternative loan interest rates start as low as 7% with repayment terms up to 5 years.
Merchant Cash Advances For Laundromats
For coin-operated laundromat owners that have bad credit and need a business loan, or lack any financial records other than bank statements, a merchant cash advance financing facility can be the best — and only — financing option
Merchant cash advance financing isn’t a loan, but is instead the sale of the bank’s future deposits in exchange for an upfront sum. Rates are pretty expensive ranging from 16-100%, with repayment terms between 4-24 months.