Can a lender finance the replacement of a commercial laundry’s old washers?
Often a lender will consider it, because the washers themselves can back the loan. What they look at is the quality of the equipment, how the laundry earns money, and whether the new machines will lift output or cut costs. Bring quotes, an equipment list and a clear explanation of what the old machines cost you now.
Lenders like equipment financing when the equipment is easy to identify and holds some value. Commercial washers fit that description, but your lender will still want to see the business case rather than only the price of the machines.
Prepare a short package. Include quotes from suppliers, the age and condition of the existing machines, and what you spend each year on repairs, downtime and utilities. If the new washers use less water or energy, or let you process more linen in a shift, explain how you know that and ask the supplier to put it in writing.
Show how the laundry earns money today. Lenders will study your financial statements, contract customers and cash flow to judge whether repayments fit comfortably. A laundry that serves a few large accounts may be asked more about those relationships. Compare options before choosing. A lender may offer a term loan, a lease or a line of credit, and each treats the old machines, the down payment and the ownership of the new ones differently. Ask what happens to the loan if the laundry is later sold. Your accountant can compare the choices for your situation.
Key takeaways
- Bring supplier quotes and a plain account of what the old machines cost you in repairs and downtime.
- Expect questions about customers and cash flow, not only the equipment.
- Compare loan and lease terms, including what happens if you sell the laundry.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to finance a business acquisition
- 02Business Development Bank of CanadaIndustryBusiness Purchase or Transfer Loan
- 03Business Development Bank of CanadaGovernmentEquipment purchase financing for entrepreneurs
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