5 Small Business Loans for Landscaping Businesses
When looking to expand or grow your landscaping business, you’ll definitely need cash – and a lot of it. Even though you may be ready to expand or branch out, your wallet may not be. If cash isn’t readily available or your budget isn’t enough to cover expenses, there are a number of landscaping loans you may want to consider.
Most business owners are of the opinion that banks are the only way to secure a small business loan. Then, when they’re denied a loan due to minimal collateral, insufficient business records, or poor credit history, their dreams of starting or expanding their business dies.
But it doesn’t have to be that way. Fortunately, there are numerous funding options available for landscaping businesses that need a bit of a financial push to get their business operations going in the direction they want.
The Best Landscaping Loans for Your Business
Instead of relying solely on banks, consider a landscaping loan as an alternative solution to fund your landscaping business. Here’s a list of the best options:
1. Merchant Cash Advance
A merchant cash advance enables businesses to access immediate working capital without having to show perfect credit or provide collateral. Technically, a merchant cash advance is not a loan but a cash advance against your future credit sales. In paying back the advance, lenders take a percentage of your credit or debit sales until it has been paid back in full.
2. Line of Credit
A business line of credit works much like a credit card. Lenders assign you a credit limit to withdraw funds from when the need arises. You don’t have to pay back the loan until you’ve actually withdrawn the money, and you only have to pay interest on the amount you’ve used. Once the loan has been repaid, you can use the money again as needed – just like a revolving credit.
You can use a business line of credit to purchase inventory, buy equipment, cover employee payroll, pay off debt, or bridge cash flow gaps.
3. Equipment Financing
In order to start or operate a landscaping business, you need a variety of equipment like trash bins, vehicles, lawnmowers, leaf blowers, sprayers, and string trimmers, among other things. Equipment financing provides you with the funds needed to purchase these essential items. The rates, terms, and the amount you can borrow depend on the type of equipment purchased, and whether you bought it brand new or used.
In most cases, you won’t have to put up any personal or business assets to secure your loan since the equipment you purchase serves as collateral. Depending on the lender, equipment loans have a fixed interest rate and term length so you also don’t have to deal with fluctuating monthly payments.
4. Invoice Financing
If your landscaping company has outstanding invoices from your customers, you can try invoice financing. Invoice financing allows you to sell your pending invoices to third-party companies so you don’t have to wait for 30, 60, or 90 days to get paid. Once qualified, lenders can advance up to 90% of the total invoice value upfront. Your customers will directly pay their dues to the lending company you’re working with. The lender will then release the remaining balance, minus a small fee (usually 3%).
Even though invoice financing is slightly pricier than traditional loans, it’s worth the price, especially if you need funds as soon as possible.
5. Short-Term Loans
Lawn care companies are seasonal businesses. If you think you don’t have enough cash to repay a long-term loan, you can check out short-term loans. As the name suggests, short-term loans are structured like a traditional term loan, but in a shorter period. The repayment terms for this type of loan ranges from a few weeks to months.
However, short-term loans are more expensive than long-term financing options, with interest rates going up to 10%. The main advantage of short-term loans is that it’s easier to qualify for, even if you have low credit, less time in business, and low revenue. It can also help protect your cash reserves during slow seasons, and you can repay the loan during peak season.
Landscaping Loans for Your Lawn Care Business
A lot of thought goes into running a landscaping company. It’s important to be diligent and you should manage finances well. If you plan to apply for a business loan, you can choose from any of the loans mentioned above. If you need help deciding, you can contact a financial advisor to help you decide which type of loan is perfect for your business.