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 is constantly in need of 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.
Expenses You Would Never Imagine
Laundromats typically rack up massive utility bills due to the high amount of electricity, water and sewage they require on a daily basis. The water bill is always subject to skyrocket because laundromats use more than enough water to trigger plumbing leaks and the older a washing machine gets, the less efficient it becomes in terms of water usage. Electrical problems are a hazard as well 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. In order to stay competitive, laundromats must be located in a highly-populated area and neighbor numerous businesses that can keep customers entertained while 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 having to fix or replace a few machines or secure 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 the future of any type of business, and having insufficient money in the bank makes it very difficult to be approved for any sort of financial assistance.
Plus, what happens if yet another machine breaks shortly after?
Some Things Can’t Be Put Off
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 sophistication of the model. It often takes several days to repair a single machine so if something breaks, it must be repaired right away. 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.
Don’t Let One Problem Sink Your Ship
Companies like United Capital Source that offer 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 it comes to fixing or replacing machines, two of the most appropriate funding programs are a standard 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 that are 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 and 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’s All About Location
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 increases in revenue but are incredibly costly, since they tend to 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.
No Time To Waste
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 an ample parking lot, and the utility bills on the building 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.
We Know Our Way Around Laundromat Business Loans
More and more laundromats are now accepting debit and credit card payments for a variety of purposes. Merchants can buy “laundry cards” for machines or pay for different services. Laundromats that still only accept cash might be more likely to adapt 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 the majority of the debt when revenue increases and your utility bills decrease thanks to your new machines’ efficiency.
Utility bills don’t have to hold you back
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!