Laundromats depend on large amounts of essential equipment and must keep it in top shape. But it’s only natural for washing machines and dryers to break down, especially older models. If one machine breaks, there’s a good chance another one made in the same year will follow suit. The average cost of washers and dryers for laundromats can exceed $1,000 each.
In addition to broken machines, laundromats often have plumbing problems caused by excessive water usage. These issues must be fixed immediately, and not just because new technology is more efficient. Too many “out-of-order” signs will persuade customers to give their business to one of the several other coin-operated laundromats in the area.
Maintaining an up-to-date supply of machines would likely be much easier if not for the massive utility bills associated with thriving laundromats. They use a high amount of electricity, water, and sewage daily. Monthly rent is incredibly high, which isn’t much of a surprise when you consider the role of location in a laundromat’s success. Real estate costs in high-traffic areas can quickly consume operating budgets.
Speaking of location, adding a property is extremely difficult for laundromats. They can only open new locations in busy, expensive areas, assuming they can afford to buy all those new machines. Another popular route to expansion for laundromats is offering new services, like dry cleaning or laundry delivery services. However, these new services could take several months to bring in enough revenue to finance their cost.
Laundromats have been a constant presence in our communities for so long that the struggles of running them often go overlooked. Monthly expenses are enormous, equipment constantly needs repair, and a less-than-perfect location can easily put an otherwise-prepared laundromat into bankruptcy.
The key to avoiding these scenarios is a little extra capital provided by a quick-thinking alternative business financing company. This will allow your laundry business to cover a necessary investment while funding day-to-day operations without impacting revenue.
Laundromats typically rack up massive utility bills due to the high amount of electricity, water, and sewage they require daily. The water bill is always subject to skyrocket because laundromats use more than enough water to trigger plumbing leaks. The older a washing machine gets, the less efficient it becomes in terms of water usage. Electrical problems are a hazard due to the complex wiring of laundromats, particularly older washers and dryers.
Monthly rent is incredibly high for laundromats as well. This might seem like a surprise until you consider the role location plays for such businesses. To stay competitive, laundromats must be located in a highly-populated area and neighbor numerous businesses that can keep customers entertained. At the same time, they wait for their laundry to finish. In addition to a busy road, laundromats require an ample parking lot because few customers will deal with having to walk with large loads of clothes in hand.
Now, imagine fixing or replacing a few machines or securing a second location while covering monthly expenses. It’s possible, but you’ll probably have to dig into operational funding or severely obstruct cash flow. Either of these outcomes can jeopardize any business’s future, and having insufficient money in the bank makes it very difficult to be approved for any financial assistance.
Plus, what happens if yet another machine breaks shortly after?
Even new washing machines and dryers can wear down much earlier than expected after regular use. Many laundromat owners prefer to lease equipment rather than buy because, according to the Houston Chronicle, the latter option can cost upwards of $150,000, depending on the model’s sophistication. It often takes several days to repair a single machine, so it must be repaired right away if something breaks. The sight of an “Out of Order” sign on a machine could very well persuade customers to seek business elsewhere, and chances are, there’s another laundromat just a few miles away from your own.
Companies like United Capital Source that have access to small business loans for laundromats have repeatedly proven that a couple of broken machines or a high down payment on a new location do not hinder but foster a laundromat’s growth.
When fixing or replacing machines, two of the most appropriate funding programs are a standard business term loan and a working capital loan, which provides enough funding to cover typical monthly bills and all other operational fees. The latter plan is best for laundromats that count regular expenses as their biggest obstacles, while the former is meant for laundromats looking to spend much more on the repairs or replacements than they will on staying open.
If your laundromat is receiving so much business that every single machine must be in top shape at all times, you might want to consider using a loan to attend a washer and dryer service school, which will teach you how to fix your own machines and how to spot problems ahead of time. You’ll save money from not having to hire a repair specialist every time something goes wrong. When a machine does need fixing, you’ll be able to take care of it right away and build a reliable reputation for your laundromat around town.
It is common for laundromats to open up additional properties due to their ability to capitalize on optimal locations and the desire to offer more services, like dry cleaning. Both options can lead to substantial revenue increases but are incredibly costly since they require ordering large volumes of new equipment. You’ve also got to secure that new location before someone else does, and this is easier said than done.
That’s why United Capital Source strongly suggests that Laundromats consider a Merchant Cash Advance if additional property is in their sights. This funding program supplies a lump sum today in exchange for future credit card sales. There are no fixed monthly payments, and depending on the urgency of the situation, this lump sum could find its way to your bank account in a matter of days.
Say you’ve come across the perfect space for your second laundromat. It is located around the block from a series of apartment complexes, has a big parking lot, and the building’s utility bills are relatively low. The only problem is business is slower than usual, so you can’t afford to make a hefty down payment nor immediately begin paying off debt at this exact moment. A Merchant Cash Advance would allow you to secure the location as soon as you hear about it.
More and more laundromats are now accepting debit and credit card payments for various purposes. Merchants can buy “laundry cards” for machines or pay for different services. Laundromats that still only accept cash might be more likely to adopt a new payment system once they learn that it could make them eligible for certain small business loans.
The primary requirement for a merchant cash advance, for example, is substantial debit and/or credit card transactions. Less-than-perfect credit and cash flow won’t ruin your eligibility. So, if a machine breaks when revenue isn’t exactly at its peak, you wouldn’t have to wait to have it fixed or replaced.
Merchant cash advances are highly appropriate for investments needed to keep revenue flowing or increase revenue over a long period of time. New machines might not increase revenue right away, so it would be hard to make fixed, monthly payments after receiving funds. But with a merchant cash advance, payments are only made following debit and credit transactions. You would theoretically pay off most of the debt when revenue increases, and your utility bills decrease thanks to your new machines’ efficiency.
Expanding your services would also likely not increase revenue right away. But since you would be projected to generate more revenue from debit and credit cards as a result, a merchant cash advance would prevent the cost of this service from damaging cash flow.
Other types of investments might be better suited for more traditional types of business loans. Working capital loans can help you fix or replace multiple machines while simultaneously covering monthly bills. For significantly larger investments, like adding locations, we might recommend a standard business term loan. It really depends on whether your biggest financial obstacle is monthly expenses or machine maintenance. Either way, rest assured that your terms will account for inevitable circumstances like rising expenses, seasonality, and of course, the need to fix a problem just days after it occurs. Apply now to see how much you qualify for!
Laundromats have been a constant presence in our communities for so long that the struggles of running them often go overlooked. Monthly expenses are enormous, equipment constantly needs repair, and a less-than-perfect location can easily bankrupt an otherwise-prepared laundromat.
The key to avoiding these scenarios is a bit of extra capital provided by a quick-thinking alternative business financing company. This will allow your laundry business to cover a necessary investment while funding day-to-day operations without impacting revenue.
Business loans for laundromats and dry cleaners come in the form of:
Laundromats and dry cleaning businesses often face unique challenges such as equipment breakdowns, rising utility costs, slow seasons, or expanding services to stay competitive. Business loans for laundromats and dry cleaners can help solve these challenges by offering access to fast, flexible funding.
Working capital loans provide a reliable solution for managing day-to-day operations, such as covering payroll, utilities, or rent during slower months. This financing type helps ensure steady cash flow even when revenue fluctuates.
Revenue-based financing is ideal for laundromat and dry cleaner owners who experience variable income patterns. With this funding, repayments are based on a percentage of future revenue, offering flexibility that aligns with your business’s cash flow cycles. These are especially helpful for existing laundromat owners who face seasonality.
When laundromat owners want to renovate or open a second location, business term loans provide a lump sum with fixed repayment terms. This makes them suitable for long-term investments like remodeling a storefront or expanding a footprint.
A business line of credit offers a flexible option for handling unexpected repairs or replacing consumables like detergents and plastic garment bags. You can draw funds as needed and only pay interest on what you use—perfect for seasonal or recurring expenses.
For businesses with inconsistent credit or urgent funding needs, a merchant cash advance provides quick access to capital in exchange for a portion of daily credit card sales. This can help bridge cash flow gaps without the lengthy application process traditional loans require.
Equipment financing is one of the most valuable loan types for laundromats and dry cleaners. This financing option lets you purchase or lease high-efficiency washers, dryers, dry cleaning equipment, pressing machines, or point-of-sale systems without draining your working capital. Dry cleaning machines can cost tens of thousands of dollars each.
SBA business loans are ideal for owners with strong credit and a longer timeline for funding. These loans are partially backed by the Small Business Administration, allowing for more generous loan terms. They come with low rates and long repayment terms, making them well-suited for significant investments like purchasing commercial property or high-capacity washers and dryers.
The SBA does not issue loans directly but connects borrowers to its lending partners who provide the loans. SBA 7(a) loans offer competitive terms for working capital loans, allowing terms of up to 10 years.
The SBA 504 loan can be used to pay for equipment necessary for laundromats and dry cleaners. SBA financing options may also require personal tax returns and a detailed business plan during the loan application process.
SBA microloans are available for laundromats and have a maximum loan of $50,000. SBA Express loans can close in as little as 30-45 days and offer up to $500,000.
| LOAN TYPES | MAX AMOUNTS | RATES | SPEED |
|---|---|---|---|
| Merchant Cash Advances | $7.5k – $1m | Starting at 1-6% p/mo | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at Prime + 2.75% | 8-12 weeks |
| Business Term Loan | $10k to $5m | Starting at 1-4% p/mo | 1-3 business days |
| Business Line of Credit | $1k to $250k | Starting at 1% p/mo | 1-3 business days |
| Receivables/Invoice Financing | $10k-$10m | Starting at 1% p/mo | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 3.5% (SBA) | 3-10+ business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 1-6% p/mo | 1-2 business days |
Business loans can help laundromats and dry cleaners improve operations, meet customer demands, and maintain consistent cash flow. Access to capital enables owners to repair or replace aging machines, invest in eco-friendly equipment, or upgrade their facilities to attract more customers.
Flexible financing solutions allow owners to respond quickly to emergencies, like broken washers or boiler issues, without derailing their budget. These loans also help cover payroll, utilities, and other essential operating costs during seasonal slowdowns or economic downturns.
Additionally, access to business loans can support expansion efforts, whether opening new locations, offering delivery and pickup services, or incorporating new technology such as mobile payment systems or app-based laundry scheduling. These upgrades are particularly valuable in the growing laundry delivery business segment.
By securing the right type of financing, laundromat and dry cleaning businesses can stay competitive, improve efficiency, and better serve their local communities. Alternative lenders offer flexibility that banks or the SBA do not and, unlike traditional banks, offer loan products that align with business needs.
While business loans offer many benefits, they also come with potential drawbacks. One of the biggest challenges is the cost of borrowing. Depending on your credit profile and the loan product, you may face high interest rates, fees, or daily repayment obligations that can strain your cash flow if not properly managed.
Some loans, particularly revenue-based financing or merchant cash advances, can cost more than traditional funding. If your laundromat or dry cleaner has thin profit margins, these repayment structures may put financial pressure on your operations.
Additionally, if your business relies on large equipment, delays in funding or difficulty securing equipment financing could lead to prolonged service disruptions. And for SBA loans or traditional term loans, the application and approval process may be lengthy and require extensive documentation.
Lastly, overborrowing or using financing for non-essential expenses can lead to debt accumulation, making it harder to manage future financial obligations. It’s important to borrow responsibly and ensure your loan aligns with clear business goals, eligibility requirements, and debt-to-income ratio.
Pros:
Cons:
The amount of paperwork required depends on the product you choose. Funds can be approved and distributed for most products within 1-3 business days. Here’s how to apply:
The first step is choosing the most sensible solution to the problem at hand. This should require some 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 expense? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Here are the documents and information required for Laundromat & Dry Cleaner Loans:
SBA loans require additional documents and information, such as financial statements. To learn what’s needed for the SBA-backed loans, visit our SBA loan page.
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.
Once you apply, a representative will contact 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.
If you’re approved, we’ll contact you within 24 hours. After closing, funds for most business financing products should appear in your bank account within 24 hours to one week.
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 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.
If your application is declined, it’s possible that you applied for the wrong product to meet your cash flow needs. In this case, we would likely recommend a different product with a less hazardous repayment structure.
Your application might also be declined if it is determined that you cannot afford to take on more debt now.
If your credit score is holding you back from accessing financing, consider working with a reputable credit repair service to raise your scores.
Documentation for a laundromat loan application includes a business plan, financial statements, personal tax returns, and bank statements. Many lenders consider laundromat businesses to be higher risk due to fluctuating revenues. Some lenders may ask for more documentation before loan closing, but many alternative lenders have fewer documentation requirements.
A trend in the laundromat industry is replacing coin-operated washers and dryers with digital, cashless machines. Many business owners want to add additional laundry services to their current laundromats.
After the 2008 financial crisis, banks became very particular about lending to small businesses. Approximately two-thirds of small business borrowers seek alternatives to bank financing.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
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