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The US laundromat industry is constantly shaped by urban demands and evolving consumer behaviors. Further, over the past five years, the laundromat industry's revenue grew at a CAGR of 3.2%, reaching $7.1 billion in 2025, as per IBISWorld. So, new or established business owners, trying to enter this segment, should know about laundromat financing.
As per Laundry Association Org, the market value of coin laundries can range from $50,000 to more than $1 million. Further, the report notes that they can generate cash flow between $15,000 and $300,000 per year. The value of new coin laundries is based on construction and equipment costs while existing coin laundries' value is based mainly on net revenues. In line with these trends, this page details the financing options for laundromats, tips to improve approval chance, eligibility criteria and documents needed. It also includes frequently asked questions about laundromat financing, for a clear industry insight.
Costs to Consider When Financing a Laundromat Business
Before applying for a laundromat financing, a realistic grasp of the total costs is needed in comparison to the requested loan amount. It's often more than just the price of the machines. Getting a handle on these figures, helps to know the required financing amount.
Cost of Equipment
This is the largest expense as it involves heavy-duty commercial machinery for constant use. Costs vary, depending on brand, size, capacity, and features.
- Washers and Dryers: The main cost. This includes various capacities for front-load versus top-load washers, and stacked versus single-pocket gas or electric dryers.
- Payment Systems: Costs for coin-operated mechanisms, card swipe systems, and mobile payment readers.
- Water Heating System: A robust, high-capacity system is needed for a successful laundromat business.
- Ancillary Items: Costs for support items, like change machines, soap dispensers, laundry carts, and folding tables.
Cost of Renovations and Plumbing Upgrades
Unless an investor is taking over a recently updated location, renovation and build-out costs should be counted in. If converting a different type of space, the costs can be hefty, as the space must comfortably hold high utility demands.
- Plumbing: Laundromats require specialized, heavy-duty plumbing, including water lines for washer, drainage, and floor drains. This can be a huge expense, especially in older buildings.
- Electrical and Gas Lines: Ensuring sufficient electrical power for all machines and installing proper gas lines for dryers or water heaters, where applicable.
- Ventilation: Proper dryer venting is important for safety and business efficiency.
- Flooring and Aesthetics: Installation of durable, water-resistant flooring, painting, and basic aesthetic upgrades to create a clean, inviting space.
- ADA Compliance: Ensuring the facility meets accessibility standards for people with disabilities.
Fees, Permits, and Initial Bills
These are the required administrative and operational costs, that must be covered from the start.
- Business Licenses and Permits: Fees for local, state, and potentially federal business licenses.
- Utility Deposits: Gas, electric, water, and sewer companies often require deposits to establish new commercial accounts.
- Initial Utility Bills: Utility costs must be factored into the budget from day one. Even during the renovation phase. Laundromats are usually utility-intensive, and these ongoing costs are a major component of initial working capital needs.
Cost of Marketing and Branding
A budget for attracting customers is essential for success. Funds must be allocated to ensure the laundromat is digitally visible.
- Signage: A clear, attractive sign is vital for street visibility.
- Promotions: Keeping funds for events or promotions to generate initial customer traffic.
- Online Presence: Costs related with creating a basic website, establishing a local search engine optimization (SEO) strategy, and managing social media presence.
- Advertising: Expenses for local outreach, such as flyers, newspaper advertisements, or targeted social media marketing.
Financing a Laundromat Business: Common Options
Financing options for a laundromat typically include options like SBA loans (7(a) & 504) for low rates and terms, traditional bank loans, equipment financing/leasing, and seller financing. These often require good credit, strong financial reports, and may need a certain amount of down payment. Lenders assess business plan, credit scores, and financial history, to fund startups or expansion. Specialist lenders and manufacturers may also offer industry-specific funding. Here's a list of common financing options:
01 SBA Loans (Small Business Administration)
These loans, particularly the popular SBA 7(a) program, are a cornerstone of laundromat financing. They offer gov-guarantees, allowing lenders to offer highly favorable terms. These loans are flexible, covering everything from the acquisition of a business to major renovations. Their primary appeal lies in their extended repayment periods, up to 25 years for real estate and 10 years for others, and competitive interest rates. The lower down payment requirements compared to conventional loans, make them accessible to a wide set of entrepreneurs.
02 Commercial Term Loans
These are traditional bank loans, offering a single, fixed sum of capital that the laundromat owner repays, along with interest, over a predetermined schedule. This may typically range from three to 10 years. These loans are often used to buy business property, fund large-scale construction work, or huge renovations. While the qualification standards may be stricter than for government-backed loans, term loans offer flexibility in fund uses. These may be secured quickly for established businesses with strong financial performance.
03 Seller/Owner Financing
This is a financing option, when the current owner of an existing laundromat agrees to fund part of the sale directly. The owner actually acts as the lender for the buyer. This approach involves the seller accepting a promissory note for a portion of the purchase price, receiving instalments over an agreed-upon term. This frequently used in business acquisitions, as it may simplify negotiations and speed up the closing process.
04 Equipment Financing
These is a specialized financing product, specifically made to cover the high cost of commercial machines. In the context of laundromat financing, these may be used to purchase washing machines, dryers, and related payment systems. In this arrangement, the machine acts as the collateral for the loan. This funding solution prevents the owner from having to tie up other business or personal assets as collateral. Repayment terms are typically aligned with the expected useful life of the equipment, making sure that the asset is paid for as it generates revenue.
05 Equipment Leasing
In regard to laundromat financing, this allows a laundromat operator to use new machinery for a fixed monthly payment, without taking on the burden of immediate ownership. This is often taken up by owners looking to protect capital or frequently update their equipment. Leasing arrangements can be structured in various ways, including Buyout Lease and a Fair Market Value (FMV) Lease. Under the former framework, the business gets the equipment for a nominal sum at the end of the term. In the latter structure, the business has the option to return the equipment, upgrade it, or purchase it at its appraised value.
06 Business Line of Credit (BLOC)
This provides a revolving financial resource, allowing the laundromat owner to draw funds up to a set limit, repay the amount, and then draw again as needed. This makes it an important tool for managing cash flow, covering unexpected maintenance, closing gaps between utility bills and revenue intake, or funding inventory purchases. Interest is only charged on the drawn amount, making it a cost-effective way to make sure of operational stability without committing to a fixed, continuous debt burden
07 Revenue-Based Financing (RBF)
This involves receiving a cash advance in exchange for a fixed percentage of the laundromat's future daily or weekly gross sales. This type of funding is highly relevant to laundromats due to their consistent, predictable cash flow from daily transactions. Repayments are automatically adjusted, based on revenue; it goes higher during busy periods and lower during slow times. This helps prevent defaults. While RBF provides rapid capital for emergencies or opportunities, it generally carries a higher factor rate. a higher factor rate.
08 Microloans
These are small, short-term loans. They typically fall under a specified amount, put forward by non-profit organizations and community development financial institutions (CDFIs). They are useful for new laundromat startups or existing small operators, who may not qualify for larger bank loans due to limited credit history or collateral. As the amounts are smaller, microloans often come with lower interest rates than high-cost alternative lenders.
09 Franchise Financing (if the laundromat is a franchise)
(if the laundromat is a franchise): Some lenders may offer funding for laundromat franchises, covering franchise fees, equipment, buildout, and working capital. This significantly enables new franchise owners meet brand requirements and setup operations speedily.
Eligibility Criteria and Documents Needed For Laundromat Financing
To secure laundromat financing, typically lenders need documents that outline a business's identity, plans, stability, and financial reports. Lenders commonly check registration proof, relevant licences, financial records, and tax filings before approving laundromat business loans. So, below are typical eligibility requirements and the approval process, to get laundromat financing:
Eligibility Criteria
Documents Needed
Personal and business identification
- Government-issued ID such as a passport or driver's licence.
- Employer Identification Number (EIN).
- Business address proof such as utility bills or lease agreements.
- Passport-sized photographs when required by the lender.
Business and operational documents
- Business formation documents such as Articles of Incorporation, Articles of Organization, Partnership Agreement, or Operating Agreement.
- Proof of business, such as state business registration or local business permits.
- Required licences for laundromat operations
- Business plan, highlighting business model, market strategy, team experience and long term goals.
- Executed commercial lease agreement (if applicable), including renewal options.
- Recent utility bills for water, gas, and electric consumption.
- Equipment list and quotes detailing existing equipment and/or new vendor prices for purchases.
- Franchise Agreement, if financing a franchise laundromat.
Financial and tax documents
- Recent balance sheets and Profit and Loss statements.
- Income Tax Returns for the business and its owner(s)
- Recent bank statements
- Sales and turnover records of the current year.
Other documents
- Property papers when collateral is offered.
- Loan repayment history for any existing or past loans.
- Environmental Site Assessment (Phase I ESA) report, required when purchasing commercial real estate.
Tips to Improve Laundromat Financing Approval Chances
Regardless of the loan program, there is a list of common tips to improve loan approval chances when applying for laundromat financing. These include:
Review Personal and Business Credit Scores
A solid credit history for both is important for approval.
Gather Financial Documents
Keep 2-3 years of tax returns, bank statements, and audited financial statements ready.
Develop a Solid Business Plan
Mention business goals, market analysis, and financial forecasts.
Organize Legal Documents
Prepare business registration certificates, and any relevant contracts/permits.
Review Collateral
Determine which business or personal assets may be available to secure the loan, if necessary.
Research Lenders
Explore, compare and select lenders who have experience with the specific type of financing requirement.
Ways to Use Laundromat Financing Funds
If and when approved, laundromat financing funds need to be used in strategic ways, to make the most out of them. Below are the common and clever uses of laundromat financing:
Upgrade Equipment
Use laundromat financing to buy new, efficient machines that cut down water and gas bills.
Boost Revenue
Use the borrowed money to start high-profit services, like wash-and-fold, pickup, and delivery.
Improve the Space
Invest laundromat financing in remodeling the store with new floors, better lighting, and comfortable seating.
Expand Business
Finance the opening of a second or third location to grow income streams.
Reduce Operating Costs
Strategic financing focuses on trading high utility costs from old machines for manageable monthly payments on new, efficient ones.
Laundromat Financing: Wash Away Funding Worries, Iron Out Business Plans
Coin laundries are small businesses, which have no inventory or receivables. These small laundromat businesses are also referred to as coin-op laundries, coin-operated laundries, self-service laundries or laundromats. As more Americans live in urban regions where in-unit laundry is not very common, the convenience of professional laundry services is incomparable. Truly, laundromat financing is important for owners who want to manage high startup costs, upgrade machines, or expand at new locations. With steady demand and stable cash flow, operators often rely on flexible financing, the right loan product, and a well-prepared loan application. Options like SBA loans, laundromat equipment financing, laundry equipment financing and equipment leasing, help owners cover diverse capital needs. These tools make it easier for both new entities and existing ones, to secure a loan for laundry business activities.
Strong financials and clear plans improve approval odds, and laundromat financing can support everything, from new builds to modernizing old stores. Many entrepreneurs use laundromat financing to meet startup costs, streamline operations, and boost monthly revenue. With the right structure and lender, laundromat financing allows owners to grow with confidence and build a profitable, long lasting business.
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FAQs About Laundromat Financing
1. What is the most popular loan for buying a laundromat?
Some common options include the SBA 7(a) loan as it offers competitive rates and long repayment terms. This loan can fund acquisitions, equipment, and renovations.
2. Can I finance old or used laundry equipment?
Financing used equipment is more difficult to secure. Lenders prefer new equipment because it is more reliable. New, high-efficiency machines have better long-term collateral value.
3. How are laundromat utility costs financed?
Initial utility bills may be covered by the working capital portion of the loan. Lenders typically require a reserve for operating expenses. This ensures the business stays stable during startup.
4. Is Revenue-Based Financing (RBF) a good option for laundromat financing?
RBF is quick and useful for covering small, immediate cash flow needs. However, the factor rates may result in very high costs. RBF should only be used as a short-term solution for emergencies.
5. Does personal credit score matter when it comes to laundromat financing?
Personal and business credit scores are highly important, when it comes to getting laundromat financing. Lenders check it to assess financial responsibility. An average to good score or even higher, may typically improve loan terms; however, it depends on loan and lender type.
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