When you first start to look into buying a Laundromat most buyers know enough to inspect the washers, dryers and other equipment. You probably go in and check out how the machines wash your own clothes. Good idea that you're looking at the business operation but you also need to look at yourself. Most sales of Laundromats require someone to borrow money in order to make the purchase.
Sources for these loans are often the buyer's bank, equipment manufacturers, distributors, owner
carry-back loans, SBA loans and second trust deeds on other real property owned by the buyer. It
is difficult to buy a Laundromat with little or no money down. Most of the time an amount between
25% to 50% of the total purchase price is required by the buyer. Lending institutions look at three
areas when making a business loan. First, the credit history of the applicant, or how well have you
repaid your previous loans to other people. Second, lenders look for alternate means of repayment
(your overall financial condition) including income from your job, real estate you own, insurance
policies, retirement funds, stocks, bonds and other investments. Third, lenders look to your exper-
ience in the business; most prefer to see three years of successful operation by the applicant in the
same type of business.
You've heard of them, but they're pretty hard to get because they look at the three items listed above but they also want to see the books and tax returns of the Laundromat including those of the people who operated it before you. They want to make sure that the cash flow can service the loan payment. It's sometimes very hard to get someone who's selling their Laundromat to provide these records and tax returns. We have an excellent source for SBA funding through one loan officer who has been developed over the years with excellent results on customers referred to her bank.
COMMON SOURCES OF FUNDING
Here are the common sources of funding for buyers of Laundromats:
1. Cash from checking and savings accounts
2. Conventional bank loans
3. SBA loans
4. Loans (or leases) from companies specializing in Laundromat loans
5. Retirement funds (401k, pensions and IRA accounts)
6. Sales of stocks and bonds
7. Gifts from family
8. Loans from family and friends
9. Certificates of deposit
10. Second trust deeds on real property owned by buyer
11. Lines of credit from buyer's bank
12. Seller provided loans
13. Credit card financing
14. Loans from manufacturers
15. Proceeds from the sale of personal property or other real estate
16. Trades of real property or personal property
WHAT ARE MY CHANCES OF GETTING A LOAN?
If you fill out one of the forms on this web site, we should be able to assist you in finding a good source of funding for your particular situation. Being pre-qualified makes buying a Laundromat easier and less stressful on both the buyer and the seller. All responses are kept strictly confidential and are used to obtain credit approvals and financing commitments from industry sources.