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Intro To Business Loans For Landscaping Companies
Success in landscaping requires quality equipment and employees. However, both resources are challenging to obtain due to external factors like seasonality and increasing competition. Residents of busy areas have many landscaping companies to choose from, many of which might be looking to poach workers by promising higher hourly wages. And since most people view landscaping as a luxury, the state of the general economy can directly impact demand. United Capital Source has access to small business loans for landscaping companies that wish to retain employees and secure equipment as cash flow fluctuates throughout the year.
In this guide, we’ll answer the following questions and more:
What Are Landscaping Business Loans?
Landscaping Business Loans are business loans geared towards the cash flow cycles and capital expenditures of construction contractors. In addition to covering short-term needs and larger purchases, these business loans can bridge revenue gaps during slow periods or when projects get delayed.
Landscaping Business Loans can come in the form of:
- SBA Loans
- Equipment Financing
- Business Line of Credit
- Working Capital Loans
- Merchant Cash Advance
- Revenue-Based Business Loan
- Accounts Receivable Factoring
How Do Small Business Loans For Landscaping Companies Work?
Each of the products listed above can suit a different type of expense or cash flow issue. For example, one of the biggest challenges of landscaping businesses is seasonality. Demand drops when temperatures do the same. But once the weather changes, landscaping businesses must recruit workers and secure equipment to prepare for the busy season. Landscaping Business Loans can provide the means to acquire both resources in the weeks (or even months) beforehand.
Logical solutions for this common dilemma include short-term Working Capital Loans and a Business Line of Credit. Working Capital Loans are typically best for keeping the business running during slower months since the borrowing amount is directly based on monthly bills. On the other hand, a Business Line of Credit makes more sense when the slow season comes to a close. Interest rates are lower when you can pay off the full balance as quickly as possible.
Both options can also be used to cover unforeseen expenses for large projects (i.e., extra supplies) or cover payroll when projects get delayed. If either situation is prevalent for your business, a Business Line of Credit will prevent you from having to apply for more funding every time they occur.
Maybe you’re in the middle of a project, and you need cash now, but your customer isn’t scheduled to pay for several weeks. In this case, you might consider Accounts Receivable Factoring. The business loan provider purchases the account for a discount price and then assumes the responsibility of collecting from your customer. Once the payment is collected, you receive the remainder from the initial sale, minus fees. You can also decide if you want all the money upfront or a little bit at a time.
Landscaping Business Loan Options Compared
|LOAN TYPES||MAX AMOUNTS||RATES||SPEED|
|Merchant Cash Advance||$7.5k – $1m||Starting at 1.09||1-2 business days|
|SBA Loan||$50k-$10m||Starting at 5%||3-5 weeks|
|Business Term Loan||$10k to $5m||Starting at 5%||1-3 business days|
|Business Line of Credit||$10k to $250k||Starting at 8%||1-3 business days|
|Receivables/Invoice Factoring||$50k-$10m||Starting at 5.8%||1-2 weeks|
|Equipment Financing||Up to $5m per piece||Starting at 5%||3-10 business days|
|Revenue Based Business Loans||$10K – $5m||Starting at 9%||1-3 business days|
What Are The Advantages of Business Loans For Landscaping Companies?
Landscaping Business Loans can help landscaping businesses overcome several industry-wide challenges. At the very top of that list is employee retention. Landscaping businesses struggle to retain employees because of the industry’s seasonal nature and the fact that they don’t get paid for projects until they are finished. If landscaping businesses had easy access to more funding, they could give employees the stable payment structure they are looking for.
Another major challenge for landscaping businesses is the rising cost of equipment. Tools for the landscaping industry are continually evolving, and a new piece of equipment could potentially accomplish the same amount of work as multiple people for a significantly lower price. Landscaping Business Loans allow landscaping businesses to secure new equipment amid financial obstacles like seasonality or other mounting expenses.
Speaking of stability, landscaping businesses grow and retain employees by capitalizing on the demand. Landscaping Business Loans ensure that you always have another project lined up during busy periods. You can continue taking on projects even though they require more resources, like additional workers or supplies.
Lastly, established landscaping businesses are currently dealing with an influx of competitors looking to undercut their prices. The only way to prove your business’s worth is through high-quality work. Landscaping Business Loans can fill whatever void prevents you from making this happen, whether it’s insufficiently experienced workers, not enough workers, outdated equipment, etc.
What Are The Disadvantages of Business Loans For Landscaping Companies?
Taking out a business loan is always risky in highly competitive industries. All the workers and equipment in the world won’t matter if you’re struggling to find work. Sometimes, lower prices are all your longtime customers need to hear to start using a new landscaping service. Even worse, your competitors could steal your new workers from you by offering higher wages or better health benefits.
It’s challenging to figure out how much to borrow with so many potential expenses lying ahead. You might not know precisely how many workers you’ll need or how much supplies to order until the project starts. Borrowing too little could prevent you from covering sudden expenses and completing the project on time, whereas borrowing too much could give you more debt than you can afford to pay back.
It also doesn’t help that due to today’s increasingly unpredictable weather, the parameters of slow and busy periods aren’t exactly clear. How long will you need your new batch of workers? When will the slow season begin? The landscaping industry’s various uncertainties can make it very easy to choose the wrong borrowing amount or repayment structure.
Who Qualifies For Landscaping Business Loans?
Approved businesses generally met the following criteria:
How To Apply For Landscaping Business Loans:
The amount of paperwork required for the application depends on your chosen product. For most products, funds can be approved and distributed in up to three business days. Here’s how to apply:
Step 1: Choose the Right Product
The first step is choosing the most sensible solution to the problem at hand. This should require a decent amount of research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? What is the project’s billing schedule?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Step 2: Gather Your Documents
Here are the documents and information required for all Landscaping Business Loans:
- Driver’s license
- Voided business check
- Bank statements from the past three months
- Invoice for equipment (for Equipment Financing)
- Credit card processing statements from the past three months (for Merchant Cash Advance)
- Accounts Receivable Aging Report (for Accounts Receivable Factoring)
- Accounts Receivable (for Accounts Receivable Factoring)
- Debt Schedule (for Accounts Receivable Factoring)
SBA Loans require additional documents and information. To learn what’s needed for the SBA Loan application, visit our SBA Loan page.
Step 3: Fill Out Application
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
Step 5: Receive Approval
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should then appear in your bank account in anywhere from 24 hours to one week. For SBA Loans, it usually takes 3-5 weeks to receive funding.
Your Medical Practice Financing Gets Set Up – Now What?
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
What If I’m Declined For a Landscaping Business Loan?
If we decline your application, it might be because you applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with a less hazardous repayment structure.
We might also decline your application after determining that you cannot afford to take on more debt at this time. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan. Both options can be accessed through UCS and are usually much easier to qualify for than business loans.
If your credit score is preventing you from accessing financing, you should consider our credit repair services. We can help you identify the issues that are keeping your score down and develop practical solutions for eliminating them.
People Also Ask:
What Kind of Landscaping Equipment Can You Finance?
At United Capital Source, we finance equipment valued at up to $5 million per piece. Thus, some examples of landscaping equipment we can finance include:
- Utility trailers
- Vehicles (flatbed trucks)
- Snow removal equipment
If you’re considering Equipment Financing, the equipment’s lifetime value should be more important than the actual price. We usually don’t recommend financing equipment that will likely become outdated or irrelevant in under three years. In this case, leasing would probably make more financial sense than buying.
Is It Hard For Landscaping Companies To Get Business Loans?
This depends on where you apply and the product you have in mind. If you’re looking for a bank loan, you’ll need excellent credit, perfect cash flow, collateral, plenty of money in the bank, high annual revenue, and at least two years in business.
Products from companies like United Capital Source are much more accessible. Your ability to meet the requirements mentioned above will determine your borrowing amount, rates, and terms. But falling short in any (or more than one) of these areas won’t stop you from qualifying for multiple products. With some products, your credit score is practically irrelevant. For example, eligibility for a Merchant Cash Advance is based entirely on the size and volume of your debit and credit card sales. With Accounts Receivable Factoring, approval is based on your customer’s ability to repay instead of your own.
What Can Landscaping Companies Use Business Loans For?
Landscaping Business Loans can be used for a myriad of purposes. This includes:
- Purchasing additional supplies (gravel, mulch, sod, etc.)
- Hiring additional workers
- Covering expenses during the slow season
- Purchasing new equipment
- Local advertising
- Purchasing new tools (trimmers, hedgers, grading tools, cutting tools, digging tools, etc.)
Can I Get a Landscaping Business Loan With Bad Credit?
Yes, six of the seven products mentioned above are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because bad credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less impact on your rates and terms. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.
The only option that is not accessible with bad credit is SBA Loans. Compared to the other products, SBA Loans carry higher borrowing limits, lower rates, and longer terms. If you have bad credit, you’ll be assigned shorter terms to ensure you repay the loan in full.