Financing
Most people who are interested in either purchasing, building or remodeling a coin laundry or card laundry will need some sort of help with financing their project. Few potential laundry owners have enough cash on hand to finance their own business without seeking the help of a lending institution or a private investor.. Even if you are fortunate to have enough cash to totally finance your whole project, it is not necessarily the best way to maximize your profitability for a variety of reasons. It is most often a better strategy to leverage some of your construction or equipment purchase expenses. It will within reasonably structured limits make your return on investment (ROI) greater. Very often equipment manufacturers will help you finance the cost of your equipment at very competitive rates. Sometimes a bank that you have a good relationship with will also help you with financing some of the “hard costs” such as equipment. “Hard Costs” are typically those costs associated with the purchase of equipment or assets from which a lender can recover some of its investment if for some reason the investor defaults on their Loan.
Almost no lender or private investor will finance “soft costs” such as leasehold improvements, impact fees, or start-up capital. Soft costs are non-recoverable costs, and finance companies typically do not like to finance that portion of your investment. The Small Business Administration (SBA) is another source for financing, which comes from the federal government. SBA, given proper credit and assets will generally guaranty between 80% to 90% of your total investment requirements through an SBA approved bank. You in return would need to have the remaining 10% to 20% in liquid capital. Sometimes they will even budget working capital and package it along with the loan. SBA does not make direct loans, they usually make their loans through a bank or other approved lending institution. Some equipment manufacturers have their own finance company whose only role is to finance some, most or all the equipment cost for your washers, dryers, and other related items at very competitive rates and terms. Banks will typically finance based solely on your assets, credit and business plan. ADL has been very successful in assisting it clients through the process of getting loans either for new, existing, or even the remodeling of laundry stores. Procuring suitable financing can be a “rocky road” to travel. If you do not apply for a loan correctly at first, the source of your financing may not want to consider your application a second time.
A very important consideration when going after a financing source; DO NOT OVER FINANCE OR OVER LEVERAGE, your business. Keep those finance costs within reasonable limits so that you can “weather the storm” if there is a change in the economy, or other factors that are beyond your control.
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