Laundromat Loans and Financing: Fund Your Laundromat Business

Common Ways Laundromat Owners Fund Their Business

A lot of laundromat owners actually end up combining multiple financing options from this chart. For example: Someone buying an existing laundromat might opt for an SBA 7(a) loan for the acquisition itself, and then separately get money for new dryers through equipment financing.

Why Equipment Financing Is the Backbone of Many Laundromat Deals

One of the best, if not the best, financing options for laundromats is equipment financing. That's because in a laundromat business, the highest and most prohibitive cost is the equipment: washers and dryers.

Equipment financing is a great path for aspiring and current laundromat owners because it's specifically meant for buying equipment. This type of loan can be for anything from machinery to tech and vehicles, and washers and dryers fit perfectly into that mix.

If you get approved, the lender pays for the equipment (either directly or by reimbursing you), and then you make monthly payments (plus interest) over a set period, usually somewhere between one and six years. So if you need to buy equipment but can't front the high cost on your own, this loan will help you spread out those payments over time.

Other than just washers and dryers, you can also use equipment financing for things like:

Payment kiosks

Card and app payment systems

Water heating systems

Change machines

Tables for folding stations

Carts

Vending machines

Surveillance and security systems

Key to this funding is that the equipment serves as collateral, so if you default on payments, it can be taken away. The equipment-as-collateral part helps to reduce the lender's risk and can make qualifying easier overall.

New vs. Used Laundromat Equipment

Buying new washing and drying machines for your laundromat will come at a high cost, but a lot of owners see them as a long-term investment. Some modern machines can last up to 15 to 20 years if well-maintained.

Getting pre-owned and used machinery can save money up front, but it can also cost you in repair and maintenance costs or other unexpected issues.

Should You Lease or Buy Commercial Washers and Dryers?

There's actually a third option you may come across for machinery besides buying used or buying new: leasing. Like buying used, leasing can save on up-front costs (and sometimes maintenance, if it comes with certain warranties). But it also has trade-offs, like the fact that you never own the equipment.

Financing Coin-Op vs. Card and App Payment Systems

If you're buying an existing laundromat, you'll probably be inheriting an old-fashioned coin-based payment system. Though a lot of people still use quarters at these facilities, you'll definitely need to consider getting:

• Card readers

• Mobile app payments

• Contactless payment systems

• Reloadable customer accounts

The good news behind these expenses is that you can often use equipment financing to upgrade your payment systems.

Other Equipment Costs Owners Forget About

Some other commonly overlooked expenses you should take into account when planning a new laundromat venture include:

Folding tables

Seating

Signage

Surveillance systems

Vending machines

Utility upgrades

Plumbing modifications

Water heating infrastructure

Buying a Laundromat vs. Building One

If you're set on starting a laundromat but are still debating whether to buy an existing one or start from scratch and build one yourself, these are some important factors to consider:

Buying	Building
Usually easier to finance because the business already has revenue history, existing customers, existing cash flow	Usually a bit harder to finance because there's no operating history yet
Business owner and lender can evaluate historic utility costs and customer traffic to inform business potential	Requires stronger financial projections and a more detailed business plan
You can often get to profitability faster than if starting from zero	Longer ramp-up period before becoming profitable
Existing equipment may reduce up-front startup costs (if in good condition)	Requires major up-front spending on machines and buildout (including construction, infrastructure)
Often requires due diligence on lease terms and the true condition of the existing equipment	Often requires plumbing, drainage, electrical, and gas upgrades/installations
You may be able to get an SBA 7(a) loan for the acquisition	Often requires combining multiple financing products (commercial real estate loan plus equipment financing, for example)

Why SBA Loans Can Be a Strong Fit for Laundromats

The Small Business Administration (SBA) is a federal agency that helps expand loan access to more small businesses. SBA loans are offered through participating lenders and are often sought after because they can come with competitive rates, favorable terms, and a partial government guarantee.

7(a) loans are the most common and flexible of the SBA loans. They can be as much as $5 million and, according to the SBA's website, can be used for business needs like:

• Acquiring, refinancing, or improving real estate and buildings

• Short- and long-term working capital

• Refinancing current business debt

• Purchasing and installation of machinery and equipment, including AI-related expenses

• Purchasing furniture, fixtures, and supplies

• Changes of ownership (complete or partial)

That makes them a nice fit for laundromat purchases and buildouts. If you're thinking about buying the actual building the laundromat is in, the SBA 504 loan is another great option.

These loans can go up to as much as $5.5 million and are long-term, fixed-rate loans. They're meant to be used for major fixed assets that promote business growth and job creation, like:

• Building construction

• Owner-occupied commercial real estate

• Long-term use machinery or equipment

• Facility improvement

• Streets, parking lots, land, utilities

The perks of all of these programs also mean they're harder to qualify for and come with slower approval processes and a lot of paperwork. So just beware that lenders will look for solid financials, credit, and established business history.

What It Actually Costs To Open a Laundromat

Among all the hype about laundromats being a form of passive income, a lot of first-time owners severely underestimate how much it costs to get a laundromat up and running before it turns a profit. Here's a list of some common expenses for laundromat infrastructure and their cost estimates.

The Ongoing Costs That Catch New Laundromat Owners Off Guard

Now you're a bit more familiar with all the up-front costs that come with starting and operating a laundromat. But there are still other ongoing expenses that come up as you go along in your business journey to know about and plan for, like:

Water

Electricity

Gas

Maintenance

Chemical supplies

A good financing option that a lot of laundromat owners use for these types of costs is a business line of credit. Similar to a credit card, it's a way to have flexible access to capital that you repay as you use. It's great for:

• Emergency equipment repairs

• Temporary utility spikes

• Slower seasonal periods

• Short-term cash-flow gaps

• Operating expenses while a new location gains customers

What Makes Laundromats Attractive to Lenders

Applying for financing with the intention of using it for a laundromat business can be an advantage for securing loans and funding. In lenders' eyes, laundromats are attractive businesses to lend to because they:

• Generate predictable cash and card-based revenue

• Are an essential service resistant to economic challenges and technology like AI

• Don't have many employees and therefore save on labor costs with their self-service model

• Have generally high margins after machinery/equipment is paid off

Minimum Qualifications

$10,000 in monthly revenue

Your business must earn at least $10K per month in a business bank account.

500+ credit score

You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.

Minimum six months in business

Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.

Have a business bank account

Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.

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What You Can Actually Expect To Earn From a Laundromat

Once you're up and running, laundromats can generate solid cash flow, but their overall profitability can really depend on things like utility costs, equipment condition and maintenance, lease terms, and debt payments.

Let's make up an example to get a better idea of how it can actually look in real life to balance operating costs and financing:

Imagine you have a laundromat business that averages $35,000 in monthly revenue. You usually pay about $20,000 in utilities, rent, repairs, supplies, insurance, and other operating costs per month. That leaves you with $15,000 in cash flow before debt payments.

Then you decide to get $100,000 in equipment financing so that you can buy new machines. Your loan term is seven years with an APR of 15%, making your monthly payment about $2,000. That's on top of those monthly expenses.

In this case, financing fits into the business's costs and makes sense. Yes, the $2,000 payment adds an extra strain on monthly obligations. But the newer machines will hopefully help reduce repair costs, lower utility usage, and increase customer traffic.

What Would Make Me Walk Away From a Lender

Funding options that claim to have limited requirements or credit checks are often used as lures by predatory lenders. In the laundromat industry specifically, it's also common for equipment manufacturers to offer in-house financing with unfavorable terms. You need to look for a lender that is clear and up front about what they can and cannot offer.

Avoid companies that make claims of:

• Guaranteed approval

• No revenue verification

Or that:

• Push you to buy more equipment than the location needs

• Have balloon payments (small monthly payments early on and then a large lump sum at the end of the loan term)

• Ask for up-front fees before approval

• Have entrapping prepayment penalties

• Disguise equipment financing as leases (you never own the machines)

You deserve low rates and an honest lender who has your back.

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Finance Your Laundromat Through Clarify Capital

If you want to explore funding options for your laundromat business with a two-minute application process, a dedicated advisor, and a network of more than 75 lenders, start your application with Clarify Capital. It won't impact your credit score.

FAQs About Laundromat Loans

Here are answers to questions I often get about laundromat loans and financing.