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SBA Loans for Laundromats and Dry Cleaners
There's still a huge amount of demand for laundry services today. Find out how an SBA 7(a) loan could make a major difference in your business plans.
- SBA 7(a) Loans for Laundromats and Dry Cleaning Companies
- Working Capital
- Refinancing Eligible Business Debt
- Expanding Your Laundromat Business
- Purchasing Equipment
- SBA 7(a) Financing Can Also Be Great for Laundry Delivery Services
- Other Types of SBA Financing for Laundromats and Dry Cleaners
- Case Study: Buying a Dry Cleaning Business
- Find Your Best Loan Option
- Related Questions
- Get Financing
While the laundromat and dry cleaning industry has faced serious threats due to shifting consumer preferences and an increase in in-home laundry machines, there’s still a huge demand for laundry and dry cleaning services, especially in certain markets.
If you currently own or are looking to open a dry cleaning business or laundromat, and you want a loan to grow your company, getting SBA financing could be a great choice.
SBA 7(a) Loans for Laundromats and Dry Cleaning Companies
The 7(a) program is incredibly versatile, allowing borrowers to use loan funds for a variety of purposes, including financing equipment, funding working capital, and purchasing owner-occupied commercial real estate.
Laundromats and dry cleaning businesses can use SBA 7(a) loans for:
Working Capital
Paying utility bills, employee salaries, and other regular expenses can be a challenge, especially for newer businesses. Fortunately, SBA 7(a) program permits up to 10-year terms for working capital loans, helping businesses get the cash they need to stay afloat.
Refinancing Eligible Business Debt
If you’ve already taken out a loan to fund your laundromat and the high interest rate is cutting into your monthly cash flow, you may be able to refinance it with an SBA 7(a) loan.
Expanding Your Laundromat Business
If you want to build a new location, the 7(a) loan provides commercial real estate loans with terms of up to 25 years.
Purchasing Equipment
Acquiring new washers and dryers — let alone dry cleaning equipment — can be costly. Getting an SBA 7(a) loan can help cover some of the costs.
SBA 7(a) Financing Can Also Be Great for Laundry Delivery Services
With the rise of disposable income in recent years, laundromats and dry cleaning companies are facing significant competition from laundry delivery services, which pick up and drop off laundry directly to and from a customer’s home.
If you’re looking to start a laundry delivery service— or you want your current laundry company to expand into the laundry delivery business, an SBA 7(a) loan could be a great way to achieve your goals.
Other Types of SBA Financing for Laundromats and Dry Cleaners
SBA 7(a) loans can be a fantastic choice for many laundromats and dry cleaning companies, but they’e far from the only SBA loan option on the market.
For example, SBA microloans could be a superior choice for some laundry businesses, as they have somewhat lower credit requirements than 7(a) loans. SBA microloans have a maximum loan amount of $50,000, and some lenders will offer them to borrowers with credit scores as low as 575.
Another popular option is the SBA Express loan, which can close in as little as 30-45 days. Express loans offer amounts of up to $500,000, and require significantly less paperwork than 7(a) loans, making them a great option for businesses who need cash, but can’t afford to wait more than several weeks to get it.
Case Study: Buying a Dry Cleaning Business
Emma, an entrepreneur in Santa Fe, New Mexico, had always dreamed of owning a business that would contribute to her community's well-being. After conducting thorough market research, she identified a well-established dry cleaning business that had been serving the local residents for over a decade. The owner was retiring and looking for a suitable buyer to take over the business. Emma believed that with her management skills and strong work ethic, she could continue the business's success and make it even more profitable.
After approaching the owner and expressing her interest in purchasing the business, Emma began exploring financing options. The SBA 7(a) loan program caught her attention as a potential source of funds to acquire the dry cleaning business. She decided to apply for a loan of $250,000 to cover the purchase price and provide some working capital for the initial months of operation.
As Emma prepared her loan application, she meticulously documented her business plan, including her strategies for retaining existing customers and attracting new ones. She also highlighted her management experience and her dedication to providing excellent customer service.
However, during the loan application process, Emma encountered an unexpected challenge: The retiring owner disclosed that the dry cleaning machines were nearing the end of their usable life and would need to be replaced soon. This would require an additional investment, which Emma hadn't initially factored into her budget.
Undeterred by the surprise, Emma revised her loan application, requesting an increased loan amount of $350,000 to cover the cost of new dry cleaning machines. She also provided a detailed equipment upgrade plan, demonstrating how the new machines would improve efficiency, reduce operational costs, and minimize the business's environmental impact.
Impressed by Emma's proactive approach and well-prepared application, the SBA approved her 7(a) loan request. With the funds secured, Emma was able to purchase the dry cleaning business, invest in new machines, and smoothly transition the company under her ownership. The business continued to thrive, and Emma's dedication to her customers and commitment to sustainability earned her a loyal client base in the Santa Fe community.
This is a fictional case study provided for illustrative purposes.
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Related Questions
What are the eligibility requirements for SBA loans for laundromats and dry cleaners?
The eligibility requirements for SBA 7(a) loans for laundromats and dry cleaners vary depending on the lender, but generally speaking, you'll need to meet the following criteria:
- Be a for-profit business
- Be located in the United States
- Have a credit score of at least 650
- Have sufficient cash flow to repay the loan
- Have a debt-to-income ratio of less than 50%
For SBA microloans, the eligibility requirements are slightly different. You'll need to meet the following criteria:
- Be a for-profit business
- Be located in the United States
- Have a credit score of at least 575
- Have sufficient cash flow to repay the loan
- Have a debt-to-income ratio of less than 50%
For SBA Express loans, the eligibility requirements are similar to those of 7(a) loans, but the loan amount is limited to $350,000 and the paperwork requirements are significantly less. You'll need to meet the following criteria:
- Be a for-profit business
- Be located in the United States
- Have a credit score of at least 650
- Have sufficient cash flow to repay the loan
- Have a debt-to-income ratio of less than 50%
What are the advantages of SBA loans for laundromats and dry cleaners?
The Small Business Administration's SBA 7(a) program offers a variety of advantages for laundromats and dry cleaners. The 7(a) program provides up to 10-year terms for working capital loans, allowing businesses to pay utility bills, employee salaries, and other regular expenses. It also permits refinancing of eligible business debt, and provides commercial real estate loans with terms of up to 25 years for expanding businesses. Additionally, the 7(a) loan can help cover the costs of purchasing equipment.
What are the different types of SBA loans available for laundromats and dry cleaners?
The Small Business Administration (SBA) offers several loan products that can be used by laundromats and dry cleaners. The most popular option is the SBA 7(a) loan, which offers up to $5 million in financing and can be used for a variety of business purposes, including purchasing equipment, expanding operations, and refinancing existing debt. Other SBA loan products include SBA microloans, which have a maximum loan amount of $50,000 and can be used by borrowers with credit scores as low as 575, and SBA Express loans, which offer amounts of up to $350,000 and require significantly less paperwork than 7(a) loans. SBA Express loans can close in as little as 30-45 days. Additionally, SBA 7(a) financing can also be great for laundry delivery services, which pick up and drop off laundry directly to and from a customer’s home.
What documents are required to apply for an SBA loan for a laundromat or dry cleaner?
To apply for an SBA loan for a laundromat or dry cleaner, you will need to provide the following documents:
- Business plan
- Personal financial statement
- Business tax returns
- Personal tax returns
- Business financial statements
- Business license
- Business lease
- Business debt schedule
- Personal guaranty
For more information, please visit SBA Loans for Laundromats and Dry Cleaners.
What are the best practices for getting approved for an SBA loan for a laundromat or dry cleaner?
The best practices for getting approved for an SBA loan for a laundromat or dry cleaner include:
- Having a solid business plan that outlines your goals and objectives
- Having a good credit score and a history of on-time payments
- Having a good track record of managing finances
- Having a good understanding of the industry and the market
- Having a good understanding of the loan terms and conditions
- Having a good understanding of the loan repayment process
- Having a good understanding of the loan collateral requirements
- Having a good understanding of the loan fees and other costs
- Having a good understanding of the loan application process
For more information on SBA loans for laundromats and dry cleaners, please visit SBA 7(a) Financing Can Also Be Great for Laundry Delivery Services and SBA 504 Loans for Laundromats and Dry Cleaners.
- SBA 7(a) Loans for Laundromats and Dry Cleaning Companies
- Working Capital
- Refinancing Eligible Business Debt
- Expanding Your Laundromat Business
- Purchasing Equipment
- SBA 7(a) Financing Can Also Be Great for Laundry Delivery Services
- Other Types of SBA Financing for Laundromats and Dry Cleaners
- Case Study: Buying a Dry Cleaning Business
- Find Your Best Loan Option
- Related Questions
- Get Financing