4 steps to refinance a laundromat (Infographic)
Your laundry business doesn’t have to be set in stone. You have ways to leverage your existing business by using some of the equity you’ve built up to invest back into your business.
This latter option can be perfect for many laundromat business owners. Even if you have a wealth of savings and other financing options, refinancing your current laundromat can help you pay for equipment upgrades, store improvements or other renovations. The bottom line is to think of your laundromat as a tool – use it to help pay for new expenses.
With that said, though, you’ll need to complete a few simple steps before you can take money from your existing business to invest back into other areas of your laundromat. Here are four steps to refinance your laundromat:
1. Get your documents in order
The first step is to get your documents in order. As you refinance, you’ll have to work closely with your lender to determine the value of your business, in order to get an accurate picture of how much you’ll receive via refinancing.
Beforehand, gather these documents:
- Financial/cash flow statements
- Tax returns
- Utility bills
- List of your equipment and machines
By bringing these relevant documents, you’ll be able to expedite the refinancing process and ensure you get the most equity possible out of your existing business.
2. Estimate the project’s cost
If you’re using your equity to finance another project within your business, like buying new equipment or renovating the store, the second step is to estimate the project’s cost.
It is incredibly important that you have the right amount of funds for your goals. You don’t want to go into refinancing thinking you’ll have one amount only to find out you’ll get another. Furthermore, knowing the cost of the project will help you negotiate refinancing terms with your lender. The cost of the project, and what you’ll use the equity for, both factor in.
Items to bring to the table include:
- Vendor agreements
- Project estimates from contractors
- Sales orders/invoices
Then, you can accurately illustrate how much you need to spend to complete the project, and your lender will know what the refinancing will be used for.
3. Apply for financing
The next step is a big one: applying for financing. It is at this time you’ll share all the information you’ve gathered in the previous steps, especially your financial data. You’ll also have to fill out the credit application itself.
Do your homework before you get to this stage, so you are confident in your laundry business’s credit history. Once you apply, it is up to the lender to review the refinancing application and determine whether or not to move forward. Make sure you share an accurate and complete picture of your laundromat.
4. Receive your funds
The last step is the best step: receiving your funds! After your lender approves your refinancing application, you fill out the appropriate paperwork and sign your name, the funds taken from your existing business equity will be given to you.
It is at this time that you can begin your next laundry project. As a business owner, you have a number of viable options to finance projects and grow your laundromat. Even so, keep refinancing in mind. This can be a smart way to use the existing equity you’ve already built to turn your current business into something bigger and better. You can also lock in more favorable financing terms and set yourself up for the future.
So, remember these steps as you move forward with your laundromat refinancing.