As a startup, one of your most pressing issues is how to get financing for your new car wash. Yes, you might have initial funds for your project, but sooner or later, you’ll find that your savings is not enough. Establishing a business, however small, requires more than just the initial investment. There are fees to pay, related expenses to settle, at a time when your small biz is just gaining steam.
Based on an article written by Neil Patel for Forbes, 90% of startups fail, and the lack of financing knowledge and inadequate borrowing practices are, according to Statistics Brain, two of the reasons why.
So, if you want your car wash business to be among the much-desired 10% winning startups, you have to know how to get financing the realistic way.
7 Ways to get financing for your car wash business
1. Credit Cards
Though risky due to their high-interest rates, credit cards are still one of the fastest ways to get financing for your new car wash business. And once you get your loan, pay on or before your due dates religiously. Ideally, you should pay your monthly balance. If you can’t afford it, then pay more than the minimum. Paying only the minimum amount per month can put you in a very compromising financial situation later on. Here’s a good article on understanding credit card interest.
2. Family and Friends
Who says you cannot borrow from family and friends? You can, but do so in a business-like manner, not as a family conversation. Yes, you can throw your elevator pitch during a reunion, but no more than that. To get financing from the people closest to you, set up an appointment, show your car wash business plan, and let them know what’s in it for them.
3. Join a franchise
Did you know that investors prefer franchises over independent startups? It’s because they (investors) know that they will be putting their money on first, a proven business formula that can guarantee ROI; second, support and training to ensure the success of the franchisee; and third, a brand image that is already recognized by consumers.
4. Bank financing
If you need financing for your car wash business, chances are, you will be considering this option. But here’s a thought – bank financing may be popular, but difficult for a startup to get approval, even if you have the required initial capital for buying a business, which is 25% of the build cost. Why? Banks have the following reasons to turn down most applications made by small businesses: increased regulation, a downturn in community banking, and less profits in smaller loans.
But, if you get lucky enough to get a loan from banks, you will have a smaller interest to pay as against other forms of financing. And also, to qualify for SBAs (which is the next option in this list), you will need to apply to banks and get rejected.
5. Small Business Administration
Got the thumbs down from banks? You can try to secure a loan with the help of the Small Business Administration (SBA). If you qualify, the SBA can bridge you to investors and tell them that yes, through them, you can pay your dues. You’ll have two options under SBA: BA 7(a) or SBA 504 loan. The beauty with SBA loans is that you typically get 90% of the funds you need to purchase a business and payment schedules are not too strict. This is why the SBA is the most popular option for startups. For more information, click this link: https://www.sba.gov/loans-grants/see-what-sba-offers/what-sba-offers-help-small-businesses-grow.
But getting a loan from SBA is not that easy. You have to prove that you are a small business; have tried but failed to get loans from other financing options; that you will be using the funds properly, and more. Also, you will need to furnish a lot of paperwork – SBA application, personal background and financial statement, etc. Here’s a complete list of required documents.
The Internet of Things has definitely changed how we live, love, and get financing. Just look at crowdfunding. This financing option was not available decades ago, but today, if you have a brilliant product or service that can change lives and the world, a huge crowd of people, mostly strangers, just might fund your project.
Kickstarter, Indiegogo, GoFundMe, Crowdrise are some of the best crowdfunding sites out there. The great thing about it? You get to keep the money, meaning you are not obliged to pay your investors back. But before you create a campaign and set a goal, it will be best to learn how to do it well. Otherwise, your campaign – and hopes of getting funds – will disappear into oblivion. Here are some tips to help you out.
7. Real Estate Equity Loans
Your home can be your door to get financing, but be very careful. Lenders are especially interested in this type of loan because they benefit from it in more ways than one – they get a secure loan, they earn from the interest, and gain more by repossessing your home and resell it if you default.
So make sure you do not default if you decide to get financing through Real Estate Equity Loans. Click here to find out how to use this option wisely.
Credit cards, family and friends, joining a franchise, bank financing, SBA Loans, crowdfunding and real estate equity loans are just some options to get financing. Have a solid car wash business plan to present to investors and you will have more chances of acquiring the funds you need.
How about checking the DetailXPerts franchise opportunity? Aside from joining a proven green business model, we help our franchisees secure financing too.