Business Loan Options for Cleaning Service Businesses

Cleaning businesses may face scalability issues when their business model is proven, and clientele network is expanding. This can lead to unprecedented growth issues, and to scale immediately, cleaning service businesses may require urgent funds. They can look for multiple business loan options to fix their scalability issues, increase brand awareness, expand to new markets and give tough competition to all rivals.

When it comes to business scalability, only those players survive who tackle the challenges in a strategic manner. As the possibility of 100% success in new market penetration are fairly low, cleaning business owners must keep this in mind when scaling and strategically raise funds so that business assets, such as the commercial real estate property and receivables remain protected.

On the other hands, other factors like interest rates, loan tenure and repayment terms can also affect the business potential. In this article, we have thoroughly covered business loan options for cleaning service providers, ensuring they can select the right type of loan to meet their business needs.

Understanding Business Loan Options for Cleaning Service Businesses

In the cleaning service business, entrepreneurs can come across various challenges. These can include workforce instability, equipment shortages, poor marketing performance and more. All these adversely affect business growth, especially when you are in a startup stage and have a long-term vision to scale across a wider region. Let us discussion some use cases of business loan options for cleaning service businesses:

How to Use Business Loans for Cleaning Services?

1. Hire More Workforce

Workforce is essential for cleaning service businesses. In order to expand, or continue delivering services in existing regions, entrepreneurs require trained workforce, who can deliver better services than competitors in a highly professional manner. Hiring such workforce on a large scale will require funds. Moreover, considering the market is still fragmented and mostly unregulated, entrepreneurs will need to invest in their training as well. This is where business loan options can help.

2. Purchasing Equipment

Business equipment is the lifeline of any business. Cleaning service business includes equipment like computer hardware, cleaning supplies, and even mobile devices for gig workers. With the help of multiple business loan options, entrepreneurs can get a lump sum amount to finance their equipment. When it comes to costly equipment, like computer hardware and servers, the equipment itself may serve as a collateral, ensuring you lower interest rates.

3. Manage Working Capital

When expanding business operations, entrepreneurs may need to offer lucrative discounts to customers. These can immensely interrupt the cash flow and create working capital problems. With the help of business loans, cleaning service businesses can ensure working capital for 2-3 years of operations.

4. Marketing

Despite the growing gig economy in the US, the cleaning service industry is vastly unregulated. In such a market, it may become difficult to attract customers. Cleaning service business owners must understand consumer behavior, identify purchase triggers, peak seasons and develop marketing strategies to cater them. Business loan options can provide them with quick funds to deploy social media ad campaigns, invest in influencer market, and increase brand awareness in new regions.

5. Establish Customer Support Network

Businesses like cleaning service run on trust. This trust is established through good customer support. According to the thought leader, PwC, 93% of customers are likely to repeat a purchase after witnessing excellent customer support. Cleaning service businesses can set up this customer support network with micro business loan options.

6. Invest in Commercial Real Estate

Cleaning service startups may require commercial real estate, like an office or storage for cleaning supplies, a front desk office to hold client meetings, or just a professional office space address for business registration. If looking to expand to a new region, they may need to set up storage in different regions. The cost of setting up storage spaces can be covered through commercial real estate business loan options.

Reliable Loan & Financing Options for Cleaning Service Businesses

From US Small Business Administration (SBA) loans, real estate loans, and equipment financing to line of credit, revenue-based financing and traditional bank term loans, multiple business loan options and small business financing is available for cleaning service businesses.

Let us discuss some of the most reliable options one by one:

1. SBA Loans

The U.S. Small Business Administration loans are federal loan programs for business owners looking to set up, expand or grow their business. While the SBA itself does not offer loans, it connects business owners with non-profit intermediaries called Community Development Financial Institutions (CDFIs).

After connecting cleaning service businesses with CDFIs, SBA also guarantees the loan. There are two popular SBA loans for cleaning services business.

• SBA 504: These are like unsecured microloans with maximum loan amount of up to $50,000. The credit approval for SBA 504 loans is faster, and borrowers can repay them in short term. Cleaning service businesses can take SBA 504 loan to purchase inventory, set up warehouses, or provide last mile services.

• SBA 7(a): SBA 7(a) business loan options have maximum amount of up to $5 million As these loans are bigger, they usually have a longer application process. CDFIs also look at your annual revenue, tax returns, and accounts receivables to issue SBA 7(a) loans.

Under SBA 7(a) loans, there are other business loan options available. These include Small Loans and Express loans. Small business owners can select the correct loan

2. Business Line of Credit

Cleaning service businesses with ideally 18-24 months in operations may be able to prequalify for credit at multiple private lenders and banking organizations. Lenders issue this credit line based on the credit score, credit history and income stability of the borrowers. Once issued, cleaning service businesses can get the flexibility to withdraw any amount they want from the issued credit line at any time.

When it comes to repayment, businesses only need to pay interest on amount withdrawn instead of the entire credit line. With monthly payments, they can also free up the occupied credit line and withdraw more funds without any additional loan application.

3. Business Credit Card

For small business loan options, business credit cards can be used as well. These work similar to line of credit, but the loan amount is smaller. However, cleaning service businesses get the flexibility to pay monthly amount in full or make a part payment. They can opt for the prepayment option as well.

As credit cards are already linked with your business bank account, owners aren't required to make any financial statement disclosures and eligibility criteria remains easy.

4. Equipment Loans

Equipment loans are secured business loan options that keep the equipment in question as the collateral. Cleaning service businesses can finance essential business equipment that they require and expand business operations. As these are low risk loans for lenders, cleaning business owners can get lucrative interest rates on equipment loan with flexibility in repayment tenure. Even new businesses can opt for equipment loans to kicks start operations.

5. Revenue-Based Financing (RBF)

For startups, and especially in an unpredictable market like the cleaning service industry, fixed monthly payments can lead to cash flow problems, leaving less working capital in their hand. RBF is a type of financing that includes flexible monthly repayment options.

Instead of a fixed rate, owners pay a small percentage of what they make as a repayment against the loan. This helps business owners maintain cashflow and can be immensely useful for cleaning business startups. The eligibility criteria for revenue-based financing may be less, ensuring owners can secure funds from their preferred lender.

6. Commercial Real Estate Loans

For cleaning service businesses looking to establish a warehouse or build an office space, commercial real estate loans can be very helpful. These keep the commercial property as a collateral, safeguarding business assets and equity. However, as the loan amount is high, the application process is longer. Also, all online lenders may not offer commercial real estate loans. Business owners will need to consult professional loan advisors to find a commercial real estate loan provider for their requirements.

7. Refinancing

To decrease interest rate, increase repayment tenure, or simply drop-off a co-signer's name from any of the business loan options, cleaning service businesses can refinance their existing loans. Several lenders offer the refinancing option, and business owners get the flexibility to use the loan amount for any purpose they want. The interest rate and repayment terms in these loans is negotiable, giving more flexibility to business owners.

Final Thoughts

With the help of various business loan options, cleaning service businesses may be able to fulfill their short term and long-term business goals. Whether is it business expansion or simply streamlining existing processes, with quick accessibility to funds, business owners can overcome all financial burdens. They can choose from SBA loans and business term loans to revenue-based financing or line of credit. By timely securing funds, cleaning businesses can stay competitive in the market and also gain first mover advantage.