Starting or expanding a laundromat is a significant investment—but for many entrepreneurs, it’s also a profitable and recession-resistant business model. With consistent demand, low labor costs, and the potential for passive income, laundromats remain a popular small business opportunity. However, getting one off the ground—or upgrading your current operations—requires capital. This is where laundromat financing becomes critical.
This article explores the full spectrum of laundromat financing options, outlines the process of applying for funding, and offers expert tips to help you make informed decisions and secure favorable terms.
Financing isn’t just about securing money, it’s about building a foundation for long-term success. By selecting the right funding type, you can avoid unnecessary debt burdens and align your financing with your business goals. For laundromat owners, access to capital can mean the difference between stagnation and growth. It can help you modernize operations, attract more customers, and create more reliable revenue streams. The laundry industry has evolved with new technology and services, so investing in upgrades can provide a major competitive edge. As you explore financing options, it’s essential to understand both the risks and opportunities that come with each approach.
Why Laundromats Require Financing
Unlike many service businesses that can launch with a small footprint, laundromats are capital-intensive from the outset. Owners need to invest in durable infrastructure and specialized commercial equipment, which can run into six figures. The need for financing typically arises from one or more of the following scenarios:
Startup Costs
Opening a brand-new laundromat involves:
- Equipment purchases: Commercial-grade washers and dryers, folding stations, soap vending machines, change machines, and water heaters. Equipment costs typically range from $150,000 to $400,000.
- Location build-out: Leasehold improvements such as plumbing, HVAC, and electrical upgrades are necessary to support high-capacity machines and customer comfort. These renovations can add another $100,000–$300,000.
- Permitting and regulatory fees
- Working capital
The financial requirements of launching a laundromat can be daunting without external support. With costs ranging from six to even seven figures depending on location and scale, most entrepreneurs can’t fund the project out-of-pocket. Equipment alone often surpasses $150,000 and requires specialized installation and configuration. On top of that, extensive building modifications are usually required to meet commercial plumbing and power needs. Permits and municipal approvals can delay progress and add fees. That’s why many first-time owners consider financing not just optional—but essential.
Equipment Upgrades
If you’re purchasing an existing laundromat or already operate one, you may still need financing to:
- Replace outdated machines with high-efficiency models that lower water and energy costs.
- Add new equipment such as stackable dryers or express washers.
- Install modern payment systems including laundry card readers, mobile pay integration, or kiosks.
As machines age, they become more prone to breakdowns, higher utility consumption, and reduced customer satisfaction. Financing new equipment allows you to stay competitive while minimizing costly maintenance and repairs. Upgrading to energy-efficient washers and dryers can also lower your water and electricity bills—improving your bottom line over time. Customers increasingly expect modern payment methods and user-friendly tech, which older equipment may lack. Financing gives you the flexibility to meet these evolving demands without sacrificing cash flow. By reinvesting in equipment, you’re also reinforcing the long-term value of your business.
Business Expansion
Growth-oriented owners may seek financing to:
- Open additional locations.
- Acquire a competing or nearby laundromat.
- Invest in automation, delivery services, or other revenue-generating improvements.
Expanding a laundromat business often involves seizing the right opportunity at the right time. That might mean buying out a competitor, adding pickup and delivery, or launching a second store in an underserved area. However, even profitable laundromats rarely have the liquidity to fund large-scale growth without financing. With access to capital, owners can act quickly when promising opportunities arise. In many cases, expansion loans pay for themselves by unlocking new income streams and improving operational efficiency. Whether you’re scaling locally or investing in new services, financing is often the catalyst that makes growth possible.
Main Types of Laundromat Financing
Let’s explore the most common and strategic financing vehicles for laundromats, including how they work, eligibility criteria, and when to use each.
Each financing type comes with its own trade-offs in terms of speed, cost, flexibility, and approval requirements. It’s important to match the funding source to your specific business goals. For example, if you’re buying real estate, an SBA 504 loan may be best. If you just need a new dryer, equipment financing may suffice. Online lenders may offer speed, but often at the expense of interest rates. Knowing how to navigate this landscape is key to securing not just funding—but the right kind of funding.
1. SBA Loans
Small Business Administration loans are one of the most popular options for laundromat financing, particularly for borrowers who may not qualify for traditional bank loans. The most relevant programs include:
- SBA 7(a) Loans
- SBA 504 Loans
SBA loans remain the gold standard for small business financing due to their low rates and long terms. These loans are partially guaranteed by the federal government, which gives lenders more confidence to approve riskier borrowers. This also means borrowers can access better terms than most private loans. While the approval process can be slow, it’s well worth the effort for those who qualify. You’ll need a detailed business plan, strong personal credit, and a down payment. But in exchange, you get financing that can fuel sustainable, long-term growth.
2. Equipment Financing
This type of loan is secured by the equipment being purchased, allowing borrowers to access funding quickly and preserve working capital.
Equipment financing is ideal when you know exactly what you need and want a fast path to purchase. Since the equipment acts as collateral, lenders face less risk—and can often approve loans more quickly. This is especially helpful when you need to replace a broken machine or take advantage of a limited-time vendor promotion. You can typically finance 80–100% of the cost, including installation. For laundromat owners, keeping equipment modern and operational is essential to customer retention and profitability. Equipment financing helps you do that without disrupting your cash reserves.
3. Term Loans from Banks or Credit Unions
These are traditional lump-sum loans with fixed interest rates and monthly payments, usually offered by regional banks or credit unions.
Term loans are a time-tested solution for businesses looking to borrow a large, fixed amount over several years. If you have strong credit and a few years of financial records, a bank loan may provide lower rates than online lenders. These loans are ideal for renovations, large projects, or refinancing other debt. Many laundromat owners prefer the predictability of fixed payments. However, you may need to offer collateral or a personal guarantee. Building a relationship with a local lender can also help improve your chances of approval.
4. Business Lines of Credit
A revolving credit line gives laundromat owners flexibility to draw funds as needed for repairs, marketing, payroll, or short-term needs.
Lines of credit offer valuable financial agility to manage short-term cash flow. Rather than applying for new loans every time something breaks or business slows, you can draw from your credit line as needed. This makes it perfect for maintenance costs, bulk detergent orders, or slow winter months. Because you only pay interest on what you use, it can be more cost-effective than lump-sum loans. Many laundromat owners also use lines of credit to take advantage of bulk discounts or limited-time deals. It’s a good backup to have, even if you don’t use it regularly.
5. Alternative and Online Lenders
Fintech lenders like OnDeck, Fundbox, or BlueVine offer fast access to funding through online portals, usually with less red tape than traditional institutions.
Online lenders fill a vital gap for laundromat owners who need cash fast or lack bank-level credit scores. These lenders prioritize speed and accessibility over ultra-low interest rates. Many approve loans in 24–72 hours with minimal paperwork. That makes them ideal for emergency repairs, short-term opportunities, or new operators. While rates are often higher, the speed and ease of access can outweigh the costs in urgent situations. Just be sure to compare terms and avoid predatory lenders who disguise fees in confusing language.
Specialized Financing for Laundromats
Because laundromats are such a unique asset class, some lenders specialize in laundry businesses.
Lenders familiar with laundromats understand the recurring revenue model, equipment lifecycle, and utility costs that come with the territory. They are often more flexible and realistic in assessing loan requests for this niche industry. Specialized financing can also bundle equipment and servicing into a single, easy-to-manage payment. This can simplify accounting and ensure regular maintenance. These lenders may also offer industry-specific advice, such as how to increase throughput or improve customer retention. If you’re serious about growing your laundry business, it’s worth finding a financing partner who truly understands it.
What Lenders Look for in a Laundromat Loan Application
To secure financing, you’ll need to demonstrate that you are a low-risk borrower and that your laundromat will generate steady cash flow.
Loan approval depends on more than just numbers—it’s about building lender confidence. Lenders want to see a clear path to profitability, and that starts with your business plan. Solid credit and reliable income history certainly help, but even startups can succeed if they show thoughtful planning. If you’re buying an existing laundromat, historical financials can be key. Be prepared to answer questions about foot traffic, pricing, location demographics, and utility management. The better you prepare your documentation, the more negotiating power you’ll have when it comes to terms.
Tips to Improve Your Approval Odds
- Polish your credit report
- Prepare a detailed business plan
- Document equipment quotes
- Work with industry professionals
- Consider co-signers or partners
The difference between approval and rejection often comes down to preparation. Before applying, take time to clean up your credit, reduce unnecessary expenses, and organize your paperwork. A lender is more likely to approve a well-prepared borrower who demonstrates professionalism and planning. Don’t go it alone—seek help from local business development centers or financial advisors. Even a small improvement in your loan terms can save thousands over the life of the loan. By showing lenders that you’re informed and prepared, you increase both your credibility and your chances of success.
Final Thoughts
Financing a laundromat is both a challenge and an opportunity.
When used wisely, financing is a powerful tool to build long-term wealth and stability. It allows you to spread out the cost of major investments and preserve your working capital for day-to-day operations. By aligning your financing strategy with your growth goals, you can minimize risk and improve performance. Whether you’re launching your first laundromat or upgrading your fifth, there’s a loan product that fits your needs. Take your time, compare offers, and seek expert advice where necessary. The right financing partner can make all the difference between survival and scalable success.
