Laundromat Loans

[DADEAU]

I have been interested in owning a laundromat and have a chance to buy a local one that is only 2 years old with all new equipment. The owner has a lease on the new equipment that is not assumable so I am looking for a 75% loan. Does anyone know of any lenders that will do a loan for a purchase? I was told by my bank that I could get a loan to start a new one, but not to purchase an exsisting business. It is in a strip mall, so there is no real estate.

I would love any information I could get!!

Thanks

[RWSmith]

I would contact the leasing company directly and ask if you could begin a new lease with them.
If that doesn't work I would try and work out some type of arrangement with the owner. lf he really wants to sell he could pay off the lease and finance the laundry.
Good Luck

[petefritz]

If you have a house you can get a home equity.
25% down on a business is not much, I would never sell mine on those terms, to risky.

[JamesWash]

I am selling my laundromat to a newbie. He got a SBA loan to buy my existing mat. I don't see any problems for him. /ubbthreads/images/graemlins/cool.gif

[coin]

would it be too much trouble to have that guy contact me. i'd love to chat with him/her and see how they qualified for the SBA loan and how he found yours and what made them buy yours versus someone else's mat.

thanks.

[neal]

To get a SBA loan you need to put up everything including your first born. Start a new mat and let the equipment co. finance it.

[alexx5000]

Depends in large part on your bank. I bought a laundry with an SBA loan with 20% down. My banker told me that some banks do not like loaning for laundries, while others do. If you can buy the laundry with an SBA loan, then get equipment financing for new equipment from the manufacturer.

If the bank won't work with you then contact another bank.

[JamesWash]

My buyer got approved for SBA loan, even without high net showing on the last 3 year tax return. I don't know how he got it. I only know I don't have to do owner financing for him. I got a cool big $$$ check from him on the settlement day. I am going to use this money to build my new dream laundromat. My buyer can hardly speak or write English (English is not his first language). I think his banker helped him write up a business plan for SBA application. It was much easier than I thought (for him) !

[udt89]

i looked at the SBA website, and all the loans that are listed are to help existing business owners.

please advise.

[RBHII]

I was able to get a loan approved with about 30% down, loan amount would have been $300k (I didn't go through with the purchase). I was actually surprised how easy it was....as I told them the current owner would NOT be able to back up profits, income, etc given the two mats I was buying were combined with two others on taxes, etc. I think you need to keep shopping lenders, as some are much better than others. I used Citizens bank.

[Harv]

When we were shopping for a loan, none of the banks would help us directly on a new business. Without some kind of track record to look at, they just don't want to take the risk. They suggested we go for an SBA loan, which we did.

The SBA is quite supportive of new businesses, but it was a stretch even for them to consider a loan the size we would need to build a laundromat from scratch. We had to put up a lot of our own money and submit a really comprehensive business plan to get their attention. Keep in mind that these are still bank loans, but they are backed by the SBA.

We submitted our business plan to two different SBA banks, and they both came back quickly with a pre-approval. We made it almost to the wire with the first bank and the underwriter even complimented us on our business plan. A couple of days later, the same underwriter declined our application for the sole reason that we had no previous experience managing a laundromat. /ubbthreads/images/graemlins/frown.gif

The second bank came back with a loan commitment two days later. Go figure. /ubbthreads/images/graemlins/crazy.gif

Find out who your SBA banks are in your area and submit a well-written business plan to all of them. Something will turn up for you. /ubbthreads/images/graemlins/wink.gif

[udt89]

but is a loan feasible? i have 20% down, trying to buy an existing business of the last 10 years. Does equipment in the business count to get funding?

[Harv]

I t seems like every lender has their own preference for collateral. The first one we talked to didn't want to deal with the equipment, but they were happy to use a piece of property we are fortunate enough to own. The second one was not interested in the property, but agreed to take our yet-to-be-purchased shiny new machines.

The phrase "shopping for a loan" is really what it's all about. Talk to lots of lenders and you'll be surprised at all the different flavors loans come in. /ubbthreads/images/graemlins/wink.gif

[udt89]

where is the best place to start?

[Harv]

If you're looking at an existing business, you can bypass the SBA and go straight to banks. Start with the one(s) you already have accounts with and go from there. If that doesn't give you results, let your fingers do the walking and just go through the yellow pages. You'll learn something from each phone call, and you can talk to a lot of banks in one afternoon.

For a new business, the SBA will tell you which lenders they back. Get a list and just start dialing.

Also, talk to other small business owners in your area and find out where they got their financing.

We didn't get around to talking to private lenders, but from what I've read, they're out there.

Again, have a good business plan ready. It took us 6 weeks to complete the first draft of ours, but lenders pay a lot more attention when they see you've done your homework.

Good luck! /ubbthreads/images/graemlins/smile.gif

[petefritz]

key words from harv
"a lot of out own money"
" a piece of real estate we were lucky enough to own"

SBA is not really interested in your idea, only what assets you have to back up your plan. I got an SBA loan for equipment over the phone for my new mat. They never "took" the equipment or even the building it is going in that I own. They just latched on to another property I have large equity in. It is so simple. This is not to say you can't get a loan without having money, after all, I learned this years ago, and have been on both sides of the money pit /ubbthreads/images/graemlins/smile.gif if you need money it is hard to get, if you don't need money they throw it at you. In a small town, or a comunity bank you might be able to razzle and dazzle. But time is money, a good mat is not going to wait around for SBA loans when cash buyers are at hand.

[Harv]

<font color="blue"> if you need money it is hard to get, if you don't need money they throw it at you </font color>

So sad. So true. /ubbthreads/images/graemlins/frown.gif

Since you've been around this block more than I have, let me ask you this, Pete -- a couple of bank lenders told us that if we make a success of this mat we are building, it will be much easier to get subsequent laundromat loans. Have you found this to be true, or is it just lender hype?

[petefritz]

very true. Once you have been around the block a few times, the lenders are more at ease with your ability to earn cash flow from a business, and will use that business cash flow now in thier lending.

[nymex]

Talking with some banks it seems like you need to use much collateral. Was that reflected in your experience?