What You Need to Know

Running a landscaping business can be a bit of a balancing act. You have to keep your cash flow healthy while investing enough in your business to keep bringing in new customers. To keep business humming along, you need to buy expensive equipment like a truck, mowers and spreaders, and supplies like plants, mulch and seeds.

Between the seasonal nature of your business and the lag in getting customer invoices paid, you can also often run into cash flow gaps.

Financing for your landscaping services business can help. A line of credit or short-term loan can help you manage your cash flow or invest in new equipment. Learn more about how to use small business loans as a landscaping service.  

Types of loans available for your landscaping business

1. A Business Line of Credit:  A business line of credit gives you access to flexible, revolving funds when you need them for your shop. With a line of credit, you borrow what you need, pay down the balance, and the funds are replenished so you can use the line again. Most landscapers will use a line of credit to cover upfront inventory costs, bridge cash flow in between invoices, or cover expenses during their slow seasons. Learn more about OnDeck's Business Line of Credit. 

2. A Short-Term Business Loan:   Many online lenders offer short-term business loans for small businesses like landscaping services. With terms that range from three months to three years, this type of financing makes it possible for a landscaper to borrow capital and repay it quickly—often making the total dollar cost lower than a longer-term loan. Getting a short-term business loan from an online lender is usually much faster than getting a loan from the bank. You typically can apply in minutes and get funds within days. Many landscapers will use a short-term business loan to purchase equipment and tools, get inventory and supplies, or run marketing or advertising campaigns. Learn more about OnDeck's Short Term Business Loan.

3. Equipment Financing: Equipment financing is another way to finance the purchase of business equipment (besides just using a loan or line of credit). Any tangible asset used in business operations can be considered business equipment. For landscapers, this can include a mower, auger, truck, or even an office computer. Many landscapers use equipment financing to purchase new equipment for their business, which also allows them to keep their existing cash free for other business expenses.

4.  A Bank Loan:  As a business owner, the financing option you’re likely most familiar with is a traditional bank loan. A bank loan typically requires collateral to secure the loan, and the application process tends to take several weeks. The length of the loan can be anywhere from 2-20 years. While the interest rates on a bank loan can be attractive, many landscaping business owners may find it hard to qualify for a bank loan and find the application process too slow for their cash flow needs.

5. The SBA (Small Business Administration) Loan Guarantee Program:   Although the SBA is not a lender and provides financing through participating banks and credit unions (among others), the SBA Loan Guarantee Program will sometimes qualify a borrower who might not otherwise meet the more rigid criteria required by the bank. If your landscaping business is an established business, with a few years under its belt, and your personal credit score is above 680, this could be an option for your practice. 

6. Factoring:  A “factor” is a third party that purchases part or all of a company’s accounts receivables in exchange for a percentage of the invoice. The factor then owns the outstanding invoices and collects from the customers directly. The factor earns a profit from the difference between the discounted rate negotiated to buy the accounts receivables, and the full invoice amount collected from the customer. Factoring can be a common source of funding for landscapers who regularly bill for larger projects by invoice.

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