Top Financing Options for Growing Your Laundromat Business
February 18, 2025 | Last Updated on: February 19, 2025
By Nick Perry
Top Financing Options for Growing Your Laundromat Business
A laundromat may seem like a business from a bygone era, but they remain important and profitable staples of many communities. By one estimate, laundromats can make up to $25,000/month. That said, with so much equipment and people coming in and out of the business all day, there are many costs associated with the business, too.
Maintaining fluid cash flow and working capital is important for any entrepreneur, but it’s sometimes easier said than done. When you’re trying to grow your laundromat business, existing operating costs may make it difficult to reinvest profits into growth. Likewise, high startup costs can keep you from growing as fast as you might like.
In either case, getting a business loan for laundromats may be the right option for you.
In this article:
- How much it costs to start and grow a laundromat
- The best business loans for laundromats, from SBA loans to laundry equipment financing
- How to get approved by lenders or laundromat financing companies
How much does it cost to start a laundromat business?
Laundromats have significant startup costs, with estimates ranging between $200,000 to $500,000. These costs require most new business owners to get a loan for a laundry business. They can also make it difficult to expand your laundromat business given the high cost of machine upkeep and other expenses on top of a monthly loan repayment.
Some of the most significant costs include:
- Equipment: Laundromats require a lot of equipment, including commercial-grade washers and dryers to vending machines for customers waiting for their laundry, change machines to support coin-operated machines, and miscellaneous equipment like laundry carts, seating, and signage.
- Location: Typical brick-and-mortar costs include rent or mortgage payments for real estate and renovation costs to make the property suitable for a laundromat. Depending on the location, you may also need to invest in security costs like surveillance cameras, alarm systems, or a nighttime security guard.
- Permits and licenses: Like any other business, you’ll need to get a business license, receive the proper zoning permits, and ensure you meet any local environmental regulations like wastewater discharge permits. Each of these items may have associated startup costs.
Whether you’re starting from scratch or considering expanding your existing laundromat business, a business loan for laundromats can help cover each of these costs. Entrepreneurs with more liquidity and good credit might also consider starting a franchise location to get support from a larger national headquarters.
Some financing options for laundromats
Regardless of where you are on your business journey or how much you need; business financing can be a major asset for laundromat owners. In addition to business loans for laundromats, you might consider some alternative funding options, too. These are some ways to fund your business goals.
Term loans
The most conventional business loan option, term loans are simply loans in which a lender pays a borrower an upfront lump sum of money that the borrower must pay back, plus interest, over some time. Both traditional lenders like banks and online lenders offer term loan products.
With a term loan, you can use the money how you see fit. That makes them a useful business loan for laundromats since you can purchase new equipment, buy real estate for a new location, fund renovations, cover unexpected business expenses, and more.
To qualify for the best interest rates, you’ll need a strong credit score, and many lenders require a certain amount of time in business and minimum annual revenue requirements. Depending on the lender, you may be able to get a term loan as a startup loan provided you have a detailed business plan and a vision for growing your laundromat business.
SBA loans
The U.S. Small Business Administration offers loan programs that partially guarantee loans on borrowers’ behalf. This lowers the risk of default and incentivizes lenders to approve more loans.
The SBA has several loan programs, the most common of which is the SBA 7(a) loan. SBA loans tend to have competitive interest rates and favorable repayment terms, making them very desirable for business owners. Like a term loan, an SBA loan for a laundromat may be used to cover a variety of costs and fund growth.
The downside of SBA loans is that the application process is typically complex and lengthy, and you must meet strict requirements to qualify. Laundromat owners are more likely to qualify if they have several years of profitability, a business plan that shows a clear vision for the money, cash for a down payment, and make a personal guarantee or collateral.
Business lines of credit
A business line of credit is part loan, part credit card. Once approved, you’ll have access to a maximum loan amount. Like a credit card, lines of credit tend to have higher interest rates than term loans, but you only pay interest on the amounts you withdraw. Lines of credit often revolve, meaning that once you pay back the money you’ve drawn, plus interest and fees, you’ll have access to the full amount again.
A business line of credit is something of a flexible business loan for laundromats, allowing you to access capital when you need it without the burden of a regular monthly payment. It’s a good asset for laundromat owners who are trying to grow slowly and don’t want the added monthly expense of a loan for a laundry business.
Equipment financing
Equipment is such a significant cost for laundromats that it may make sense to cover laundry equipment financing as its own loan. While you can pay for equipment using other types of loans, by working directly with an equipment supplier or wholesaler you could get a better price on a large amount of equipment and lock in a competitive interest rate through laundry equipment financing.
Some laundromat financing companies work directly with laundromat owners to offer compelling business loans for laundromats and laundry equipment financing.
Merchant cash advances
Merchant cash advances (MCAs) are the one funding option on this list that isn’t a loan. They are a commercial arrangement between an MCA provider and a business owner in which the provider pays an upfront sum to the business owner in exchange for a percentage of future credit and debit card sales. Usually, you make payments daily or weekly based on the day’s sales until you’ve reached a final repayment number determined by a factor rate.
MCAs can be a good way to get the money you need now and repay it quickly as your business grows. Since MCA repayments are structured as a percentage of sales, you won’t pay much if your business struggles to make a profit. If business booms, you’ll pay more, but you’ll also pay off the advance faster.
That said, as laundromats are primarily a cash business, this isn’t an option for every laundromat owner. It can be a good way to get a quick influx of cash, but you’ll need equipment that’s set up to process credit card payments to pay the advance back.
How to get a business loan for laundromat
There are three primary partners to get funding for your laundromat: Traditional lenders, online lenders, and laundromat financing companies. Each has a similar process.
- Identify funding needs: Whether you need a startup loan for a new laundromat or a small business loan to support growth, you should have a clear idea of how much funding you need, how you’ll use the money, and repayment terms you can afford. You should also determine how quickly you need the funding, as online lenders tend to process some types of loan applications faster than traditional ones.
- Compare lenders: Research business lending programs at banks, online lenders, and laundromat financing companies to compare interest rates, loan terms, and reputations before choosing a financing option.
- Gather documentation: While the required documentation will vary between financial institutions, you will most likely need to submit business information, financial statements, tax returns, and a business plan.
- Apply: When you’ve found the right financing option with the right partner, submit your application in person or, if available, online. Then, it’s just a waiting game to see if you’ve been approved for a business loan for a laundromat.
Final thoughts
Getting a business loan for a laundromat is a great way to finance growth, pay off debts, or get the startup funds you need to make your business dream a reality. Whether you work with a traditional or online lender, there are many loan programs out there that can help you get the financing you need to grow without overburdening your business.
FAQs on business loans for laundromats
How much does it cost to start a laundromat?
It costs between $200,000 to $500,000 to start a laundromat.
Why are laundromats so expensive to start?
The simple answer is the equipment. Washers and dryers take up a lot of space and you need a lot of them to run a profitable business. So, not only do you need to pay for a large commercial property, but you also need to lease or purchase a lot of expensive equipment. These are the two biggest factors in the high startup costs for laundromats.
What business loans for laundromats exist?
Some of the best business loans for laundromats include term loans, SBA loans, business lines of credit, and equipment financing.
How do you get a business loan?
Regardless of the loan product, getting a loan follows a fairly similar process. You need to determine how much funding you need, the repayment terms you’re comfortable with, and how you’ll use the money. This will inform your research into lenders and loan products that you’re eligible for and help you decide where to apply. When you’re ready to apply, gather your business information, financial statements, tax returns, business plan, and any other necessary documents and complete your application.
Can you get an SBA loan for laundromats?
Yes, several SBA loan programs would be suitable for supporting a laundromat business, including the popular 7(a) program and SBA working capital lines of credit.
