SBA Laundromat Loans

SBA laundromat loans by the numbers

Lenders know this business. From FY2015 through June 30, 2026, the SBA approved 1,834 laundromat loans under 7(a) and 254 under 504, net of cancellations.^[1]

The typical deal is modest in size, and most of it appears to be the business and its machines rather than a building. A long term usually signals real estate, and only 24% of 7(a) laundromat loans run 25 years or more.

Your first choice: buy a store or build one

Buying gives the lender something to measure: the seller's tax returns. Building gives you new machines and a site you chose, but the lender has only your projections.

• Buying is a change of ownership. The lender tests the seller's past cash flow at 1.25 or better, and your projections can't be used to pass.^[2]
• Building is a start-up. Your projections must show at least 1.15 coverage within 2 years of funding, and you need enough cash to carry the early months.

Neither path is easier in every way. The rest of this guide covers what each one asks of you.

Unreported cash counts as zero

If the seller says the store does more business than the tax return shows, the lender will not count the difference. It checks the seller's numbers against IRS tax transcripts, and adjustments it can't support are ineligible.

In the book's main example, Marcus Bell finds a store with $560,000 of revenue on its last tax return. The seller asks $680,000 and says another $40,000 a year came in as cash that never reached the return. To the lender, that $40,000 does not exist.

You get to choose how to respond. You can argue about whether the cash is real, or you can anchor every conversation on the documents. Only the second one changes the price.

Pay the asking price, or negotiate to the valuation

When the business price is above $350,000, the lender needs an independent business valuation. If you pay more than that valuation supports, the SBA says the difference must be made up with equity. Your lender can't lend it.

Marcus's valuation came in at $620,000. At the $680,000 asking price, he would have needed $60,000 of extra cash on top of his down payment. He took the valuation back to the seller and they settled at $600,000, below the valuation, so no gap to fill.

Total debt is capped by the same number. The SBA limits total debt on a purchase (including any seller debt not on full standby) to the business valuation.

Machine age decides what the equipment is worth

In a laundromat, the machines are the business. When you buy a store, you buy machines with part of their working life already used, and that shows up in three places.

• Collateral. For an SBA 7(a) loan, used equipment counts at no more than 50% of net book value, or 80% of orderly liquidation value if the lender gets an appraisal.
• Your home. When business assets fall short of the loan, the lender must take available equity in personal real estate you own alone, unless the equity is under 25% of its value. With older machines, expect that question.
• Cash flow. The SOP lets a lender adjust cash flow for unfunded capital expenditures. Machines near replacement are that kind of cost.

Marcus's store has 38 washers and 34 dryers, and the newest are 6 years old. He asked his lender early how it would value them and whether his house would be pledged, and he planned a replacement reserve from day one.

The lease can stop the loan

A laundromat can't pack up and move. Floor drains, gas lines, venting and machine foundations stay with the building, so the SBA has a lease rule that often applies to laundromats.

It kicks in when $500,000 or 30% of the loan (whichever is less) pays for leasehold improvements, or when that much of the collateral is attached to the leased space. A new build often hits the first test, and a store full of hard-mount washers the second. Then the lease term, counting only renewal options you alone can exercise, should equal or exceed the loan term. If the lender can't get an assignment of lease and a landlord's waiver, it must.

Marcus's lease has 5 years left plus two 5-year options he controls. That is up to 15 years against a 10-year loan. Read the lease before you fall for the numbers.

Down payment and seller notes

For a first-time buyer, the SBA minimum is 10% of total project cost, and it can't be reduced or waived. Total project cost means the price plus working capital and the other costs of becoming operational.

A seller note can count toward that 10% only on full standby: no principal and no interest for the life of the SBA loan. Seller notes and other limited sources can cover no more than half of the required injection. A temporary exception for veterans: from November 11, 2026 through September 30, 2027, the SBA has announced that an eligible veteran purchasing an existing business with a 7(a) loan may raise the full 10% from these sources (SBA News Release 26-117); ask your lender how it applies.

Marcus needed $63,000. He put in $45,000 of his own cash, and the seller carried $18,000 on full standby. Half of $63,000 is $31,500, so the note fits. Many lenders ask for more than the minimum, and your lender sets the standby terms in writing.

Marcus's deal, start to finish

Every number below comes from the book's worked example. The interest rate is illustrative.

Building a new laundromat

A start-up 7(a) loan needs an equity injection of at least 10% of total project cost. Your projections must reach 1.15 coverage within 2 years of funding, and the lender will test every assumption behind them.

In the book, Lena Park builds a 3,200 square foot store in leased space for $730,000: $420,000 of new equipment, $210,000 of build-out, $25,000 of utility fees, $30,000 of soft costs and $45,000 of working capital. She puts in $73,000 and borrows $657,000.

Her projections show 0.65 coverage in year one and 1.62 in year two. The $45,000 of working capital covers the year-one shortfall of $32,559. Year one can lose money if you have planned and funded it.

Check the site for a former dry cleaner

Laundromats and dry cleaners share an industry group, and SBA lists it as environmentally sensitive "if dry cleaning operations have ever existed on site." For a property with a current or past on-site dry cleaner, SBA requires a Phase I followed by a Phase II environmental assessment.

Those rules apply when the real estate or a leasehold mortgage secures the loan. Lena's first choice of site was a former dry cleaner. The Phase I flagged it, and she walked away. On a leased store, ask your lender what review applies, and ask the landlord whether a dry cleaner ever operated there.

SBA 7(a) or 504 for a laundromat

In the book's expansion example, Ray Castillo uses both programs at once. He buys his first store's building for $750,000 through 504 (bank $375,000, CDC $300,000, Ray $75,000) and a competitor's store for $450,000 through 7(a).

Related guides

• SBA 7(a) vs 504 Comparison
• SBA Collateral Requirements
• Global DSCR for SBA Loans
• Verifying Seller Financials
• What Changed in SOP 50 10 8.1