The Great Recession shaped the US economy, laundry industry
The first signs of the Great Recession appeared almost a decade ago now, and the march toward recovery has been slow and meticulous. The impact from the collapse of the housing and financial markets have been felt across all industries, including laundry.
As a result, today’s laundry owners – and prospective owners – are facing unique challenges and an economic and financial climate not seen in decades. At Eastern Funding, Chief Lending Officer and Executive Vice President Marc Stern pointed out that he has seen firsthand the effects this recent recession has had on laundry businesses.
“The economic recession has created a new type of laundry owner today.”
“First of all, this recession was deeper and lasted longer than others in the recent past,” he explained. “Second, the country’s climb out of the recession has been much lengthier than in past recessions. The slow recovery has resulted in flatter growth, not only in our industry, but in the entire U.S. economy.”
Economic confidence in a precarious position
For six years following the Great Recession, economic confidence was quite low, with many Americans’ typically believing that the U.S. economy is on the way down. However, according to Gallup, that finally changed near the end of 2014.
At that time, Gallup’s U.S. Economic Confidence Index climbed into the positives at plus two. It then reached its recent peak of plus four, but has been slipping as of late. The tenuous nature of Gallup’s index is a sign that Americans’ economic confidence is fragile. The index could easily dip back into the negatives. The Gallup poll found that only 26 percent of Americans feel that the U.S. economy is “excellent” or “good,” while 46 percent said that it is “getting worse.”
Right now, it appears that many people are waiting for that next round of bad news – a stock market decline, lower wages or lost jobs – and that has resulted in tempered economic expectations.
US economy impacts laundry financing
Naturally, the widespread changes to the U.S. economy have had an impact on the laundry financing segment. Today, owners looking for funding will have to take the current climate into account.
“Interest rates continue to be low, and as long as that is the case the financing climate for the self-service laundry business should continue to be robust,” Stern noted. “We do expect rates to increase during 2015; however, we do not believe that the increase will be dramatic.”
“Even with the recession, borrowers today will have to meet familiar requirements.”
The more things change, the more they stay the same. Even with the unique post-recession climate, your collateral requirement will be no different today than it has been in the past, according to Stern. The qualifications you’ll need for financing haven’t changed, either.
“We still look for credit worthiness of the borrower, cash investment into the transaction and the quality of the site,” he added.
Recession has created a different breed of owner
While many of the requirements for getting laundry financing are the same as they were in the past, some things are different. Primarily, the type of business owner found across the country.
“Over the past years, the borrowers who have been getting into our business are more mature and better business people,” Stern pointed out.
These types of people are often in a better position to acquire financing, especially as the credit score is not the only determining factor for loan approval. If you want to break into the laundry business – or grow your existing company – then you may benefit from taking the current climate into consideration. What worked in the past may not work today, but this doesn’t mean new opportunities aren’t there waiting to be found.