SBA 7(a) Loans for Landscaping Companies
There are nearly 500,000 landscaping businesses in the United States, producing more than $60 billion in revenue each year and employing almost a million people. From 2006-2015, landscaping firms around the U.S. took out more than 8,000 SBA 7(a) loans, with a combined loan volume of almost $1 billion, and an average loan size of nearly $120,000. If you’re looking for a loan for your landscaping business, SBA 7(a) financing can be a great option, as it typically has lower credit score requirements than comparable bank loans, and can be used for equipment, working capital, and commercial real estate financing.
Landscaping Companies and SBA 7(a) Loans: The Basics
SBA 7(a) loans can be used to buy, expand, or refinance debt on a landscaping business. Common 7(a) loan uses include:
Purchasing new landscaping equipment: Whether you need a riding mower for your lawn care company, or a cherrypicker for your tree-trimming business, an SBA 7(a) loan can help. And, with 10-year terms for equipment financing, you won’t have to worry about high monthly payments.
Working capital financing: In addition to being used for equipment, SBA 7(a) loans can also be used for working capital, whether that means gas for equipment and vehicles, investing in marketing materials, or even paying employee salaries when you’re low on cash.
Purchasing a landscaping business: Whether you want to get into the landscaping business for the first time, or you’re already in it and you want to buy out a competitor, the SBA 7(a) program is a great way to acquire an existing business. Plus, if you have a business partner that wants to move or retire, you can also use SBA 7(a) financing to purchase their stake in the company.
Refinancing debt: If you currently have business debt on unreasonable terms (very high interest rates, excessive fees) and you want to refinance it, a 7(a) loan could be a good way to do so. Keep in mind, however, that the debt you want to refinance must have been used for business purposes, such as a funding working capital or financing a commercial real estate transaction.
Other Forms of SBA Financing for Landscaping Firms
The SBA 7(a) loan is a fantastic choice for many landscaping entrepreneurs, but some businesses might be better served by other SBA loan options. For example, since landscaping businesses are often seasonal, the SBA CAPlines program, which offers a revolving line of credit for eligible businesses, could be best for businesses that want a smaller source of working capital. Or, if you own a landscaping businesses that needs up to $350,000 fast, an SBA express loan may be the best choice. And, if your business has less than stellar credit, and doesn’t need any more than $50,000 in financing, an SBA microloan might be the best solution.