Do you want to know how to buy a laundromat with no money? Starting a laundromat business does not have to mean a large outlay of money before you ever see any profit.
There is financing out there. Laundromat financing exists, and Credit Suite can help you make the right choice and qualify.
This blog post may contain affiliate links, meaning when you click the links for some products and make a purchase, Credit Suite receives a commission at no additional cost to you.
Financing Option 1 – the Credit Suite Credit Line Hybrid
For a would-be small business owner with good personal credit, the Credit Line Hybrid is a smart choice for several reasons.
Get up to $150,000 in “no doc’ funding. Get funding based strictly on personal credit quality. Our lenders will not ask for financials, bank statements, business plans, resumes, or any of the other burdensome document requests that most conventional lenders demand.
You can get approval with introductory rates as low as 0%.
The main requirement is that you or a credit partner will have to have a personal credit score of 700 or better. You can have no more than 3 unsecured accounts opened in the past 12 months.
Must have at least 2 open Credit Cards with 2+ Years of history and at least a $5,000+ limit. This must be a primary card.
No more than 4 inquiries per bureau in the last 12 months. This is not including secured inquiries like auto loans or mortgages.
No late payments in 2 years and no charged off accounts. You cannot have any bankruptcies, and must have under 40% utilization on all revolving accounts. Also, no open (unpaid) collections, liens or judgments.
Financing Option 2 – Lendio
Lendio offers funding for a coin operated laundromat business and other laundry business ideas. Keep in mind that Lendio is essentially a loan marketplace. Therefore, your loan will most likely come from a company other than Lendio itself.
Get funding based on your laundry business revenue. Terms are for one to 15 minutes, and you can get up to $1 million.
Or get debt funding (an example of this is a term loan). The terms can run from 6 months all the way up to 25 years. You can get up to $5 million.
Their marketplace offers equipment funding with terms of one to five years. You can get as much as $5 million. Or get a line of credit for up to $250,000, with terms of six to 24 months.
We like them because they have a great deal of choices. You will not have to be pigeonholed into just one or two ways of getting money for your laundry business.
Financing Option 3 – LaundryLux
While the laundry business is not officially considered high risk by the NAICS, vending machine operators are seen as a cash intensive business, which can make it harder to get money from a traditional lender.
This is an ideal situation for working directly with a company that really just works with the industry.
For a laundromat funding provider that knows the business well, try LaundryLux. LaundryLux offers flexible funding options with a 24 hour approval process. Beyond coin laundries, they also finance laundry services found on the premises, such as at hotels and gyms.
They even offer construction funding if you are building a new laundry facility from the ground up. Or get funding for ancillary services and products, like card readers, tables, chairs, and carts.
As a more full-service lender, LaundryLux also offers laundry management software, equipment rentals, replacement parts, and even marketing services. They offer real estate services for buying or selling a laundromat business.
LaundryLux is so committed to the laundromat business that they are even working with route operators (remember the Maytag repairman?) to reduce the number of service calls and maintenance visits.
Financing Option 4 – an SBA Loan
As they are an option for so many industries needing funding, try the Small Business Administration. They are a great loan provider for the costly equipment necessary to run any laundry business.
The SBA is also great for lending to buy real estate, and to repair or enhance buildings. You can also use a loan from the SBA to purchase an existing laundromat business.
Using an SBA small business loan to buy a business can be a smart investment if you are relatively new to the industry and do not want to spend the time and money (or maybe you don’t have the time) to get your new laundromat business off the ground.
But even if you want to start a laundromat business from scratch, you can get lending from the SBA. But keep in mind that a loan for over $25,000 will require collateral. Also, SBA loans have documentation requirements, and it can be a slow process.
The SBA wants your business to have a business plan. But a business plan isn’t just for the SBA application. A detailed business plan is also a vital document for running your laundromat business. So don’t just think of it as a box to tick off so you can get a loan.
Financing Option 5 – a Laundry Equipment Loan
Like with other types of equipment lending, this is a small business loan option where the equipment itself serves as the collateral for the loan product. A lender is less likely to concern itself with personal credit because the equipment does all the talking.
A commercial washing machine or dryer can easily top $1,000 apiece. They can also take a pounding, often having a useful life of ten to fifteen years. As a result, they are a great choice for collateral for a loan for a coin laundry.
Dry cleaning equipment costs even more, regularly topping $5,000 per machine. It’s probably the largest expense involved in starting a dry cleaners business.
For either type of laundromat business, equipment and real estate are going to be the two biggest expenses. Much like you would get a mortgage for a building and/or land, spreading out the payments for equipment over time will help you save your business’s cash flow.
Financing Option 6 – a Business Line of Credit
Business lines of credit work a lot like a credit card but without the plastic. And, the truth is, with some lines of credit coming with a payment card these days, the lines are becoming even more blurred between the two.
You can get either a line secured by collateral or not. But the unsecured options will tend to come with heightened interest rates.
One of the major advantages of a line of credit versus other forms of funding is that you only pay interest on the amount that you draw, and not on the entire amount available. Draw the funds, use them, pay them back—and then you get to use them again!
But one of the downsides to this form of funding is that there are regular draws on your small business bank account. These draws are going to happen whether your laundry business is turning a profit—or not.
General Requirements For Financing
As is the case with much business lending, getting money for your laundromat business or laundry service business will entail being fundable to the working capital provider.
Often, to get funding, you will need to have a business plan and a business bank account. Other requirements are for the laundromat owner to have good personal credit. Often, the laundromat business needs to have good business credit as well.
Many money providers will want to see a balance sheet or a profit and loss statement, not to mention business tax returns if not personal tax returns as well.
Money providers will want to understand your business model before they lend you anything. They want to see if you have considered contingencies and if there is some way for them to recover if your business goes under.
A money provider like the SBA will want to know some personal information on any of the small business owners with a 20% or more stake in the business. If you are a new laundromat owner, then they want to know if the business owners have reputations for paying back money owed.
If you are looking for money for a used laundry machine (like a washer), then the lender will likely want information on the age of the machine and any estimates that you may be able to produce which will speak to its depreciated value.
A money provider will also want to know if you have ever run a successful laundromat before or, really, any type of business. So, there are some which will want to see a copy of your resume.
Even if you are new to the industry, having been successful in business before goes a long way toward reassuring a money provider that your small business is going to make it.
FAQs
How Profitable is Owning a Laundromat?
If there was ever a recession-proof business, it would be a laundromat. Regardless of the economy, any customer will always need to clean their clothes, and in an economic downturn, they are unlikely to be able to purchase a big ticket item like a washing machine and/or a dryer.
Likewise, a dry cleaning business can do well in poor economic conditions because a customer going to job interviews is going to want to look their best.
How Much Money do you Need to Invest in a Laundromat?
According to NorthOne, in 2023, the average cost is between $200,000 and $500,000 to open a laundromat. This all depends on whether you are buying an existing laundromat or starting from scratch. It will also depend on the average property prices in your city.
Costs include real property, equipment, supplies, and utilities.
Is it Hard Owning a Laundromat?
Laundromat investors should know that the success rate for laundromats is an astoundingly high 94.8%! They have a 20 – 30% return on investment as well. This is for a new or an existing laundromat.
The equipment is straightforward and labor costs can be kept to a minimum. There is a low barrier to entry—your customer base knows what a dryer does, whereas not everyone knows what a debenture is.
Your main concerns will be maintenance and any competition in the area. Also, it is expensive to replace a machine, so you will need to either know how to repair them yourself or develop a good relationship with someone who can.
Environmental regulations will have to be followed. And, business insurance is a must.
Takeaways
While it may not be the most glamorous small business out there, a laundry is a good source of steady income for budding business owners or a seasoned business owner.
So, make sure to contact us today to explore your funding options and find out how Credit Suite can help you (bad pun alert!) clean up!
