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 bill
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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.
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What are the eligibility requirements for an SBA 7(a) loan for a landscaping business?
In order to be eligible for an SBA 7(a) loan for a landscaping business, you must meet the following criteria:
- You must be a for-profit business
- You must be operating legally in the United States
- You must have a good credit history
- You must have a demonstrated ability to repay the loan
- You must have collateral to secure the loan
For more information, please visit the SBA 7(a) Loan Program page.
What are the advantages of an SBA 7(a) loan for a landscaping business?
The SBA 7(a) loan is a great choice for many landscaping entrepreneurs, as it can be used to purchase new landscaping equipment, provide working capital financing, purchase a landscaping business, and refinance debt.
Advantages of an SBA 7(a) loan for a landscaping business include:
- Equipment financing with 10-year terms
- Working capital financing for gas, marketing materials, and employee salaries
- Purchase of an existing landscaping business
- Refinancing of existing business debt
For more information, please see SBA 7(a) Loans for Landscaping Companies.
What are the disadvantages of an SBA 7(a) loan for a landscaping business?
The disadvantages of an SBA 7(a) loan for a landscaping business include:
- Lengthy approval times (for standard SBA 7(a) loans)
- Lots of documentation
- Collateral is often required
- Certain businesses, including real estate investing, lending, gambling, and speculation are prohibited
- High credit scores are typically required (typically 680+)
- May be restrictions on supplemental/additional financing
For businesses that need a smaller source of working capital, the SBA CAPlines program may be best. For businesses that need 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.
What documents are required to apply for an SBA 7(a) loan for a landscaping business?
To apply for an SBA 7(a) loan for a landscaping business, you will need to provide the following documents:
- Agreement to purchase the business
- Letter of intent to buy the business
- Business tax returns for the past three years
- Any outstanding business debt
- Long-term business contracts
- Documentation of business assets
- Business lease agreement
- Incorporation documents and/or business license
- Business plan
In addition, the SBA will usually order an independent business appraisal to give lenders an idea of what the true value of the business is.
To complete your application package, you’ll be required to submit SBA-specific forms and documents. The forms and documents commonly required in the application package include:
- SBA Form 1919 (borrower information form)
- SBA Form 912 (statement of personal history)
- SBA Form 413 (personal financial statement)
- Financial statements, including a balance sheet, profit and loss, and income projection.
The SBA allows applicants to get help (for example, from a lawyer or a translator) filling out the application paperwork, but your lender will be required to submit information about who gave you help to the SBA, so you’ll need to document who this person is as well.
How long does it take to get approved for an SBA 7(a) loan for a landscaping business?
For landscaping businesses, the SBA 7(a) loan program is a great choice. If you are working with a certified lender, the SBA is able to expedite application approvals and the process only takes three business days. For more information on the SBA 7(a) loan program for landscaping businesses, please see this page.