When it comes to lawn care businesses, most require small business loans at one point or another to help survive the slow season. However, most of these loans are not straightforward. The good news is, you have more than one option, this is what we’ll discuss below.
3 questions to help you find the best business loans
Before you start the search and application process to get loans for your lawn care business, you want to ask yourself a few questions. Depending on your answers, you’ll have a better idea of where to look for the best loan to suit your situation.
1. What do you want to finance?
Do you need working capital to pay your bills or purchase of lawn care equipment? Maybe you need cash to hire more staff or pay your current ones. Do you need to pay for marketing materials, or are you having cash flow issues?
2. How healthy is your cash flow?
Next, take a look at your lawn care business’s cash flow. Are you having trouble keeping cash flow consistent due to customer payments or sporadic jobs?
Perhaps you have solid cash flow, but you don’t have enough money for emergency funding, or you’re just starting out. Also, consider whether you have money coming into your business all year or seasonally.
3. How healthy is your business?
How long have you had your business? What is your revenue? When you apply for your new business loan, do you have other loans open? What are your credit scores and your business’s credit score? These scores will affect your loan rates.
Answer all three questions truthfully. When you decide what you want to finance, this can guide you to the correct loan.
Your cash flow answers will be very important to any potential lenders because they use cash flow to gauge whether or not you’ll pay back your loan.
Finally, the last question about your business’s health will help decide which loans you’ll qualify for.
The Top Small Business Loans for Lawn Care
We’re going to go over the most popular lawn care business loans, and you can see which one applies to your situation the best.
Best Loan for Cash Flow – Invoice Financing
Many lawn care businesses rely on cash, and this is great because you don’t have to wait for checks. However, cash financing can add a complicated layer to your finances if you have to wait for your customers to send payments.
Payroll and overhead depend on steady cash flow, and invoice financing can make sure you have all the money you need to pay your obligations.
With this loan, you’ll work with a lender who will give you around 85% of your outstanding invoices in advance. When your customers start to pay you, the invoicing company will release any excess funding, minus their fee. Universal Funding Company and Fundbox are two loan entities.
Best Loan for Upgrading Tools – Equipment Financing
Another common business loan is equipment financing. Buying the lawn mowers, trimmers, leaf blowers, and a trailer to haul all of that equipment is a major expense of owning a landscape company. No matter if you need smaller tools like shears or larger equipment like a professional mower or a shed to store your items, this financing can help.
How this loan works: You get a quote for whatever equipment you want to buy and take it to the lender. These are self-collateralized loans. So, whatever you buy becomes your loan’s collateral if you default.
As a bonus, you usually don’t need an older business, an excellent credit score, or high revenue to secure this financing.
However, you should buy equipment that has a long life. Lending Tree and Currency both have equipment financing loans with competitive rates.
Best Loan for Miscellaneous Expenses – Business Line of Credit
You can consider a business line of credit as a mix of a traditional loan and a cash advance on a business credit card. A lender will work with you for approval like a traditional loan, and they’ll approve you for a set amount. You’ll be able to draw money out until you reach your maximum approval amount.
Additionally, you pay only interest on the money you use, and not the total amount. These are revolving accounts, meaning they re-up when you pay them back. They can have maximum amounts up into the millions, and they offer lower interest rates.
Street Shares will give you a line of credit up to 20% of your annual revenue, or Ondeck is another option.
Best Loan for Excellent Credit – SBA
Business owners who have excellent credit can apply for SBA loans for up to 85% of your company’s annual revenue. These loans have more favorable terms than other options, and they give you lower interest rates with longer repayment periods. These loans are more difficult to get, and you’ll need at least a 650 credit score. Your business has to be a few years old too.
SBA loans take time and a lot of paperwork to process, but most small banks offer them for their customers. The Small Business Administration will match you with lenders for this loan, or you can try any local bank.
Which Loan is Right for Your Lawn Care Business?
It takes a huge amount of dedication to run a small lawn care business, especially if you’re a seasonal operation. However, doing your research and picking out the best loan possible for your situation can help your company thrive all year round. We’ve given you four options you can compare side by side.
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