How to Fund Renovations and New Rides with a Water Park Business Loan

Business owners often use small business loans to achieve a wide range of purposes, but when you’re running a larger business with major expenses, it can feel overwhelming to consider your financing options. Operating a water park has significant operational costs and, depending on where your business is, major swings in seasonal revenues. With that kind of inconsistent cash flow, you may think lenders will be less willing to provide loans to help you address business needs or finance expansion.

However, even higher-risk businesses like water parks can get financing to make safety upgrades, perform maintenance, bridge revenue dips, and maintain the working capital necessary to support expansion.

In this article:

• How financing for businesses can support startup needs, maintenance, and much more.
• The best financing options for a business looking to expand, from equipment financing and working capital loans to SBA loans.
• How to qualify to get funding for your water park business.

What is Water Park Funding?

Financing for businesses is often crucial to address both short-term and long-term business needs. The theme park industry often has significant seasonal revenue swings, so entrepreneurs must find ways to address operating costs during the busy season and take advantage of potential opportunities in the offseason.

Some of the things financing for businesses can help with include:

• Expanding attractions: From purchasing new equipment to building new rides, financing for businesses can help you invest in high-impact attractions like new slides, wave pools, and interactive splash zones. It’s vital to keep your attractions fresh and exciting to improve the guest experience and keep them coming back. Not only can financing for businesses support building new attractions to support your growth, but it can help you maintain existing ones.
• Improving safety and reducing liability risks: Every water park owner has an obligation to provide a safe, efficient guest experience. That includes running safe, clean water throughout the park, ensuring rides are up to code and safe for use, and practicing robust emergency protocols. Whether you’re a relatively new business or innovation has offered new safety developments, small business financing can help you bring your park up to compliance standards and reduce the likelihood of litigation against your park.
• Balancing cash flow: Water parks typically earn more of their revenue during the summer months and may not open at all in the offseason. Financing for businesses offers a lifeline during prolonged revenue shortages to maintain staff, manage utilities, pay taxes, and start preparing for the next summer.
• Supporting marketing efforts: From launching a new ride to hosting a summer concert series, you want to get the word out there that there’s a lot going at your water park. Loans can help small business owners pay for digital ads, influencer partnerships, local sponsorships, and special event planning.
• Pursuing sustainability goals: Today’s water park clientele wants to know that the park isn’t a major drain on the environment. Green technology upgrades like solar panels, water recycling systems, and sustainable construction materials can reduce your park’s environmental impact and make customers feel better about visiting.

This is really just the tip of the iceberg of how small business finance can support your water park business. Essentially, when you get funding for your business, you can address a wide range of business needs upfront and grow your business’s profit potential while paying back the money over time.

Why Financing for Business is Difficult for Water Parks

Financing for businesses is widely available, but water parks are inherently risky businesses, and borrowers may find their loan options more limited. Traditional banks, online lenders, and venture capital all may be viable options for water parks, but eligibility requirements will vary between financial institutions and some may determine the risks of loaning to a water park to simply be too great.

Some of the most significant risks that can make it difficult to get financing include:

• Scale: Water parks tend to be bigger than the average small business and, therefore, likely need large loan amounts to address a wide range of financing needs.
• Cost to build: Even if you already own the land, building a new water slide is a much costlier endeavor than something like acquiring a food truck, and carries additional liability concerns.
• Liability: Water parks are generally safe these days, but there’s always a risk that somebody could get hurt on a slide or slip on wet pavement. You certainly have liability insurance, but lenders may still view the potential for litigation as a limitation on their willingness to approve financing for businesses.
• Seasonality: The significant revenue swings throughout the year may make some types of financing less appealing than others, and some lenders may not be willing to offer flexible loan terms to support your unique business challenges.

Types of Financing for Businesses for Water Parks

Ultimately, like most businesses, water park business owners will be judged on their creditworthiness and business performance. Financing for businesses is available if lenders are confident you have a good business plan for the money and will be able to pay it back.

Some types of financing available may include:

• Term loans: Conventional loans offered by funding providers, term loans provide an upfront lump sum of money in exchange for monthly payments with interest. These could be short-term working capital loans or longer term loans designed to support a wide-scale expansion. Typically, traditional lenders offer more competitive rates and have stricter eligibility requirements for your business or personal credit, but online lenders may offer faster funding and more flexible repayment terms.
• SBA loans: The U.S. Small Business Administration offers several loan programs that provide favorable financing for businesses. The SBA 7(a) program is one of the most popular and can provide favorable fixed rates for qualified applicants to support various business needs. SBA loans tend to have the strictest qualification requirements, in terms of credit score, annual revenue, and time in business.
• Equipment financing: The best equipment loans secure a loan with the piece of equipment itself, so if you default on the loan, the lender can seize the equipment. This reduces the need to put up collateral to secure the loan and makes it a great funding option if you’re looking to acquire concessions equipment, building equipment, or other key equipment.
• Business lines of credit: Lines of credit offer flexible financing for businesses by approving a borrower for a maximum loan amount. However, you only pay interest and fees when you withdraw from the line of credit. So, you could make withdrawals in the offseason to address operating and summer prep costs, and then repay the line of credit as business picks up in the summer.
• Commercial real estate loans: A commercial real estate loan can help you purchase the land necessary to build a new slide, open a food court, expand the main entrance, or simply plan for the future. These funding options often require a down payment but can support long-term planning.
• Revenue-based financing: Water parks have a seasonal business model, so flexible repayment models may make sense. Revenue-based financing is a type of capital that aligns payments based upon estimated future receivables.

Key Factors in Financing for Businesses

Whether you’re looking for financing from traditional or online lenders, you must know the key factors that lenders consider when vetting financing for businesses.

• Credit history: Lenders often have minimum requirements for a company’s time in business and credit score, because businesses with a more proven track record of repaying debt are safer borrowers. A better credit history can help you lock in more favorable loan terms and interest rates.
• Annual revenue: When applying for financing, you’ll have to show financial statements and tax returns to prove your business is profitable and capable of repaying the loan.
• Business plans: A good business plan indicates clearly how you plan to use the loan amount to expand your business and scale your revenues. Lenders may be willing to take a slight risk on a water park with a clear plan to use the money for growth.

Final Thoughts

Financing for businesses is a crucial support for growth and expansion, especially for water parks that are dealing with cash flow variances throughout the year. Funding can support regular operations and maintenance costs, or help you expand your business by building new rides or acquiring new real estate. As you research and compare lenders, make sure your business plan is in good shape and you have your financials ready to prove that you’ll make a good borrowing partner.

FAQs About Financing for Businesses

What are some of the risks of lending to a water park?

Water parks are much bigger than the average small business, so they often need significant loan amounts to make a real difference in their business. Combined with the high costs of building new attractions and liability potential, many lenders view them as risky.

How can you use a business loan?

Some loans may have restrictions, like if you use an equipment loan to purchase a specific piece of equipment or commercial real estate loan for a property. However, many types of financing are flexible, allowing you to use the money for any business need.

How do you get a business loan?

To get a business loan, you must first determine your funding needs and research lenders to see what kind of loan programs you may be eligible for. After comparing lenders to find the right interest rate and loan terms for your business, you can often apply online. Then, it’s just a matter of waiting for approval and funding into your bank account if approved.

What are the best types of financing for businesses?

It depends on your business needs. Term loans, lines of credit, or some SBA loan programs offer flexible lump sum payments that you can use to address a range of business challenges. Secured loans like equipment financing or commercial real estate mortgages may offer more competitive rates for specific types of assets.

How do you build a new water park attraction?

Many water parks won’t have the liquid capital to build a new slide, so they’ll typically have to search for financing. Whether you try to find an angel investor or focus on traditional lending, getting funding will give your business the best financing options for a business will provide the necessary funding to complete the project.

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