Question – I am in the process of purchasing a laundromat and to develop my company further i need huge loan-FAST! Is it possible to acquire quick accessible money to finance a laundromat and be able to build my credit at the same time? My business requires a large sum of money, do you think i’ll be able to get this amount in a reasonable amount of time?
Our Response – I’m not sure what you consider a huge loan but there are a few things to think of. Without knowing anything about the project I assume you are paying a fair price for this laundromat. We have run across a few that claim a certain amount of sales but when analyzing water usage against annual sales the numbers don’t match. With any cash business be sure to do your homework as it can be easy to fudge the numbers. Also make sure you get a sales agreement with a contingency on getting financing to make sure someone else can’t come in and scoop up the deal before you can acquire financing.
But on to your question about getting a loan – fast, a few things to prepare for. First check your credit to be sure you are “bankable”, meaning 650 or above. Next you need to be prepared to put 20% into the project. There may be opportunities for a SBA or USDA guarantee but at best you will be looking at 10%. The big issue will be related to collateral. Hopefully you are getting real estate and the real estate appraises higher than the purchase price, but I will assume you are paying some for “goodwill” which is the amount over book value of the business to compensate the owner for their sweat equity. Banks have a hard time financing goodwill since it’s intangible and should your loan default they can’t recover any goodwill money. In situations like this the bank will require additional collateral which means personal collateral such as a position in personal real estate or an equity injection from an investor.
For fast funding, having the bank loan the money in-house is fastest (expect two weeks to two months). If you need a guarantee figure an additional two week to six months depending on the program. Neither of which may be fast enough for you but they are as fast as can be expected.