SBA Loans for Laundromats: Financing an Existing Store Purchase
Most buyers of existing laundromats do not pay cash. Because much of a laundromat’s value is in its equipment, lease and customer base rather than in real estate, many buyers look to SBA-backed financing, which can allow longer repayment terms and lower down payments than some conventional loans. SBA loans for laundromats are commonly used to purchase existing, operating stores, sometimes together with the building.
This guide explains how SBA financing is generally used for laundromat acquisitions, what lenders review and how to prepare. It focuses on buying an existing store, not opening a new one. Program rules change, and eligibility depends on the borrower, the business and the lender, so confirm current requirements with your lender.
How SBA Lending Works
SBA loans are made by participating lenders and partially guaranteed by the U.S. Small Business Administration. The guarantee reduces the lender’s risk, which can make it possible to finance business acquisitions with longer terms than many conventional business loans. Borrowers must still meet the lender’s credit standards and SBA eligibility requirements.
SBA 7(a) for Laundromat Acquisitions
The SBA 7(a) program is commonly considered for:
- Purchasing an existing laundromat business, including its equipment and goodwill
- Purchasing the business together with the building, where the buyer will occupy the property
- Working capital as part of the acquisition
- Closing costs related to the purchase
When real estate is included, see our page on SBA 7(a) business real estate loans.
Equity Injection and Seller Notes
SBA acquisitions generally require the buyer to contribute equity. Depending on current SBA rules and lender policies, a seller note may be able to count toward part of that requirement under certain conditions. Our article on buying a business with 5% down using SBA financing explains how seller notes may be treated, and our guide to laundromat seller financing covers seller notes in laundromat deals.
What SBA Lenders Look At in a Laundromat Deal
- Documented cash flow: tax returns and financial statements that support the purchase price and loan payments
- Revenue verification: how well bank deposits, collection records and payment-system reports support reported income
- Equipment: age, condition and any near-term replacement needs
- The lease: remaining term, renewal options and assignment to the buyer
- Buyer experience: management or business ownership experience and a plan for running the store
- Credit and liquidity: personal credit history and cash reserves after closing
- Guarantees and collateral: personal guarantees from owners as required, and available collateral
The Lease Matters
For a store in a leased space, lenders typically want the lease term, including options, to align with the loan term, and they will want the lease assigned to the buyer or replaced with a new lease. Many lenders also require landlord documents. Our guide to the laundromat lease explains what to look for.
Preparing an SBA Loan Request
- A signed letter of intent or purchase agreement
- Seller tax returns and financial statements for several years
- Supporting records such as bank statements, collection logs and payment-system reports
- An equipment list with ages and condition
- The current lease and any landlord correspondence about assignment
- Your personal financial statement, tax returns and resume
- A business plan describing how you will operate the store
Before applying, estimate payments with our SBA loan calculator.
Common Mistakes
- Agreeing to a price based on revenue the tax returns do not support
- Assuming the landlord will assign the lease without conditions
- Not budgeting for equipment repairs or replacement after closing
- Leaving too little cash on hand after the down payment
Is SBA Financing the Right Fit?
SBA financing can be a strong option for many laundromat acquisitions, but it is not the only one. Some buyers with strong credit and larger down payments may consider conventional financing, and some deals combine bank and seller financing. The right choice depends on the store, the buyer and the terms available.
US Professional Funding helps buyers evaluate SBA and conventional financing for the acquisition of existing laundromats. Learn more about our laundromat acquisition financing.
