Pool Business Financing: How to Fund Equipment, Supplies, and Seasonal Growth

While people often associate pools with summer fun and relaxation, it can be a lot of work to construct or maintain a pool. If you have a pool business that offers cleaning or construction services, you know the time, effort, and cost it takes. On top of that, you have to contend with shifting schedules, seasonal slowdowns, and busy periods.

At different times, you may need access to capital to keep your business running or expand to the next level. Pool business financing can be an effective solution. In this guide, we cover what you need to know and consider before borrowing.

What is Pool Business Financing?

Pool business financing includes various funding options to help pool construction and service businesses maintain or expand their operations. Unlike swimming pool loans for personal pool installation or renovations, pool business financing solutions are geared toward commercial enterprises.

So, instead of a homeowner using something like a home equity loan, home equity line of credit (HELOC) or home improvement loan to install a pool, a business owner would use a business line of credit or other small business loan option.

Businesses that build, service, or clean pools can incur a range of expenses. These can include supplies, equipment like pool vacuums, chemicals, hiring staff members or contractors, and company transportation.

How Pool Business Financing Helps Small Businesses

Running a pool business, whether it’s on the construction front, or focused on cleaning and maintenance services, means dealing with a peak busy season and an off-season. Given the seasonal swings, it can be even more challenging to manage cash flow.

In spring and summer, you might be booked to the brim. You might need additional labor support or more equipment to keep up. On the other hand, in fall and winter you may have very little activity. But you’re still on the hook for your business expenses.

That’s why it’s important to manage your cash flow. When things are good, stash more away for the off-season. But if you’re dealing with a cash crunch right now, pool business financing can be a lifeline.

With extra capital available, you can do what you need to focus on operations. You can hire new employees or contractors or buy new inventory like chlorine test kits. You can maintain your working capital while dealing with seasonal fluctuations or buy a company van to help you perform your services. If you have a pool construction business, you can buy the equipment you need to do your job safely and efficiently.

In other words, pool business financing can solve various problems that arise when you’re running a highly seasonal company.

Different Types of Pool Business Financing

Each pool company has different business needs. Depending on what you need and your goals, there might be a financing option that’s preferable to other alternatives. Here we cover the different types of pool business financing.

Working Capital Loans

Working capital loans help business owners cover their operational costs. They can be a good option to tackle any cash flow issues. So, whether you need to make payroll on time or pay your existing expenses, a working capital loan can help. This financing option covers day-to-day expenses and is a short-term loan, unlike other longer-term options for real estate or equipment.

Pool businesses tend to be seasonal, so you have peak times with more activity followed by slower periods. During those downtimes, your revenue can look much different. If you don’t have funds set aside for this time, it can threaten your business.

When you get a working capital loan, you can get funding to smooth things over. Just remember that it’s like a band-aid. In other words, it’s a short-term financing solution, but you’ll need to address the root cause of the cash flow issues to avoid similar problems in the future.

Equipment Financing

Whether you have a pool services business helping people with maintenance or cleaning, or own a pool construction company, you’ll need specialized equipment. Depending on your needs, it could be a costly investment upfront.

Having access to equipment financing can help. The term equipment financing refers to the different ways you can pay for equipment. Typically, this includes an equipment loan or an equipment lease.

An equipment loan is an appealing option for pool business financing. It gives you the capital to buy the equipment and breaks down the cost into monthly payments. Plus, you get full ownership at the end of your repayment term.

However, it’s important to note that some lenders require a 10% to 20% down payment for equipment loans. Not all do though, so do your research so you know what you’re responsible for from the start.

An alternative to an equipment loan is an equipment lease. This allows you to access the equipment through an agreed-upon arrangement. Each lease agreement may be different. Some allow you to buy the equipment at the end of the lease, while others let you extend the lease or give back the equipment.

Both options can get you the equipment needed for your pool business. Each has unique pros and cons to consider. For example, an equipment loan generally has higher loan payments than an equipment lease. But you have the benefit of ownership at the end of the repayment term. However, you run the risk of having outdated or obsolete equipment later on.

An equipment lease gives you more flexibility. While you may have more affordable payments, you don’t have ownership rights. Also, if for some reason you want to get out of the lease, you will likely face early termination charges. Compare both options carefully and read the fine print. Consider your short-term and long-term business goals to help you decide which option is more beneficial for you.

Business Line of Credit

A traditional loan gives borrowers a lump sum of money. That can come in handy if you have large expenses that require a significant investment. But especially in a seasonal business such as a pool construction or services business, your financing needs may be ongoing.

A flexible pool business financing solution is a business line of credit. Instead of getting a lump sum, you get a line of credit that you can tap. You have more flexibility because you can access the amount you need up to the limit.

While this can be a great option for some pool businesses, be aware of the repayment term and how payments are structured. Additionally, some lenders may have draw fees or annual fees.

Final Thoughts

The seasonal nature of a pool business can make it difficult to manage cash flow. Preparation is key, but you can also look into working capital loans. If you need to get the latest equipment or need access to revolving credit, equipment financing and a business line of credit can help.

Before applying for pool business financing, work on improving your credit. You can do so by minimizing your credit usage, making on-time payments, and not applying for new credit.

Having good credit can help you qualify for the lowest rates. Research several lenders and compare loan terms, fixed rates vs. variable rates, and potential fees or prepayment penalties. Additionally, to avoid some of the hassle of applying, start preparing your financial statement, tax returns, and cash flow statements now to make the loan process easier.

If you apply and get approved, you can get the pool business financing you need, which can help you with operations or expansion. To build your credit, consider autopay so you never miss a payment. When used responsibly, loans can help you grow and build credit and, in the future, you may have other low-interest financing options available.

FAQs About Pool Business Financing

Want more information about pool business financing? Here you can see frequently asked questions and answers.

What Small Business Loan Funding Options Are Available for Pool Cleaning Businesses?

If you have a pool cleaning business, various pool financing options are available, including working capital loans, equipment loans, business lines of credit, and business credit cards. You can look for secured loans that require collateral or unsecured loans that don’t require collateral from borrowers. These pool business financing options can come from banks, credit unions, and online lenders.

What Credit Score Do You Need for Pool Business Financing?

If you need pool business financing, your lender will review your credit history and may have minimum credit score requirements. Though each lender has different underwriting criteria, you may need a credit score of 620 to qualify for pool financing options.

How Do You Get Funding for Your Business?

If you have a new business, funding options are available. You can get small business loans, business line of credit, equipment financing, SBA loans, and more. Research the most competitive rates from multiple lenders.

How Can You Get Customers with a New Pool for Your Pool Service Business?

If you have a swimming pool services business, you want to target homeowners who have an inground pool. You can use social media marketing, direct mail marketing, advertising, and referrals.

What’s the Application Process to Get Pool Business Financing?

To get pool business financing, first research your loan options and potential lenders. Then you can compare interest rates, monthly payments, maximum loan amount, and more. Then you can apply with a lender, and they will review your credit profile and financial information to see if you qualify.

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